The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, it is a privilege to open this debate on Her Majesty’s gracious Speech. We will be considering the Government’s priorities for business, employment, pensions, welfare, agriculture and the environment for the year ahead. The Government are committed to fostering and assisting the entrepreneurial spirit which thrives in the UK today. The measures in Her Majesty’s gracious Speech will open up new opportunities for businesses to innovate, compete, grow and, of course, to export.
The Government plan to introduce a small business, enterprise and employment Bill. This will contain a number of specific measures to better ensure a business environment that is supportive of small businesses, as well as further enterprise and employment measures. There has never been a better time to start, grow and operate a small business in the UK. Small businesses, as noble Lords know, make a huge contribution to the UK, accounting for around half of jobs in the UK and a third of private sector turnover.
In December last year, the Government published Small Business: GREAT Ambition, which set out our commitment to make it easier for small firms to establish and grow in the UK. The small business, enterprise and employment Bill will help deliver on that commitment and will further enhance it. Furthermore, the Bill will ensure that the UK continues to be recognised globally as a trusted and fair place to do business. It will deliver on the UK’s G8 commitment to introduce new rules requiring companies to obtain and hold information on who owns and controls them, which will encourage trust and growth within the UK.
The Bill will make it easier for small businesses to access finance. It will help improve payment practices between small businesses and their customers, particularly through greater transparency. It will provide small firms with better access to the £230 billion spent each year in public procurement contracts. The Bill will also aim to cut red tape by ensuring that there are frequent reviews of regulations which impact on business in particular.
The changes proposed to UK Export Finance’s powers will make it easier for small businesses to access export finance, which they so often need. The Bill will widen the powers of UK Export Finance, enabling it to support exporters itself, rather than, as is currently the case, only in relation to specific export contracts. UKEF will also have more flexibility when providing support for small businesses, such as instances where they are part of a wider and larger supply chain. The Bill will also enable UKEF to support exports of intellectual property rights and other intangibles. All this means that UKEF will be able to increase the number of small companies it can help.
The Bill will also introduce a number of measures to reduce unfairness. There will be tougher rules to make sure that public sector workers do not get high payouts if they are re-employed in the public sector. It will tackle misconduct by directors and unfair employment practices and will provide reforms to increase the efficiency of the employment tribunals system and further reduce its burden on businesses. It will increase the penalty for failure to adhere to the national minimum wage and prevent abuses of zero-hours contracts. Honest, hard-working businesses can be more confident that they will not be disadvantaged by those who do not play by the rules.
The Government are already playing a key role in supporting the success of small businesses. Last year alone almost 500,000 new businesses were created in the UK, a testament to the business environment that we have created. The measures outlined will help them prosper in a UK that prides itself on being very much open for business.
The Government’s long-term economic plan is working. We are seeing more people in work than ever before and unemployment is falling rapidly. To confound our detractors, it is the private sector that is providing these jobs, the number rising by more than 1.7 million since the general election. Government should be about creating the right environment for jobs, not about being the employer. We are committed to building on this outstanding progress and continuing our work to reduce long-term and youth unemployment.
The Work Programme is growing and transforming lives. Nearly 250,000 people have been helped into lasting jobs, but we are determined to improve the results still further. We are rewarding better performing providers and expecting weaker providers to improve. Nearly 200,000 young people have benefited from our work experience and pre-employment training. We are trialling new types of help for young people, including intensive support for 16 to 17 year-old NEETs—that is, those not in employment, education or training, and not in receipt of benefits.
We are piloting new day-one help for unemployed 18 to 21 year-olds to help improve their maths and English skills and thereby their employability. We are requiring some young people to undertake work-related activities at the six-month point of their claim. We are committed to supporting young people to expand their skills and long-term employment opportunities through apprenticeships and newly introduced traineeships. At the same time, the Government are delivering the biggest welfare reforms in 60 years. The Government have brought in universal credit, personal independence payments and the new Child Maintenance Service, alongside employment initiatives such as the Work Programme, Help to Work and Disability Confident.
We have capped benefits so that households no longer receive more in out-of-work benefits than average earnings. At the same time we have delivered employment programmes that have seen record numbers of people in work. We are delivering programmes that make work pay, encourage personal responsibility and deliver a fairer deal for the taxpayer.
In the past, welfare spending was not subject to firm controls and we saw the benefit bill rising under the last Government, even at a time of economic growth. We are determined to ensure that this does not happen again. The Government have already taken significant action since 2010 to bring welfare costs under control. To build on this programme, we have for the first time introduced a welfare cap that will bring over £100 billion of welfare spending under control. This cap will ensure that welfare spending remains on a sustainable footing for the future.
On pensions, we want very much to build on our achievements so far. Around 12 million people are not saving sufficiently to achieve their desired level of income in retirement, especially given—we hope—longer life expectancy. It is therefore vital that we ensure that there are high-quality, value-for-money pension schemes to encourage people to save sufficiently.
We have already made significant pension reforms: the new single-tier state pension from April 2016; automatic enrolment which will see millions more savers joining pension schemes; capping charges on default funds in defined contribution schemes; and setting minimum quality standards to ensure that savers get value for money. However, we are planning to do more still. Defined benefit schemes, where the employer bears all the risk and the employee is promised a specified pension, are, of course, in decline. On the other hand, defined contribution schemes, which are more flexible for employers but have no promise for the employee, are on the rise.
The best employers, of course, still want to offer good pensions, and for some, defined benefit or defined contribution schemes may still be the right pension arrangement. However, for those who want an alternative, our pensions Bill will allow a greater range of options. It will give employers and pension providers the opportunity to create defined ambition pensions, which will encourage greater risk-sharing between parties and allow savers to have greater certainty about their pensions. The Bill will also allow for new collective pensions, recognised in many countries as providing high quality, and enjoying support across the political spectrum.
The Budget announcement on new flexibilities in how savers can access their defined contribution pensions has been warmly welcomed. A Treasury consultation on this, named Freedom and Choice in Pensions, is due to close very shortly. The necessary changes to the tax regime will be via a Finance Bill later in the year. Those with a defined contribution pension will be offered free and impartial guidance on the options available to them at retirement. We will implement related measures through the pensions Bill.
I turn to environmental matters. The Government will publish a draft national parks Bill, which will enable the composition of national parks authorities and the Broads Authority to be widened in future, by an order of the Secretary of State. The main purpose of the draft Bill will be to provide for holding local elections to the authorities to improve local accountability.
We are also committed to reducing the use of plastic bags to help to protect the environment. Discarded plastic bags blight our towns and countryside; they are a waste of resource and a very visible form of littering, and can cause injury to marine wildlife and harm the marine environment. Over 7 billion single-use plastic carrier bags were given out in England by supermarkets alone in 2012; that is 133 bags per person. I am sure that noble Lords will consider that next time they stand in a Tesco self-service queue and they are asked the question, “Are you using your own bag?”. I hope that the answer will be yes, next time. In October 2015, the Government intend to introduce a 5p charge on all single-use plastic carrier bags in England. In another measure, the Government will allow for species control orders to control the invasive, non-native species that pose serious threats to biodiversity.
The measures in Her Majesty’s gracious Speech will help make the UK the most attractive place to start, finance and grow a business. The Government’s pension reforms will allow for innovation and give greater control to employees, and the Government will introduce measures to help protect the environment. I am most grateful for the opportunity to introduce this part of the debate on Her Majesty’s gracious Speech and I look forward to listening to the contributions to the debate from all around the House. I know that I speak for the whole House in saying how much we look forward to hearing in particular from the right reverend Prelate the Bishop of Durham and my noble friend Lord Bamford, who will make their maiden speeches today. They have contributed much to the spiritual and economic welfare of this country.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, I thank our two maiden speakers today, my noble friend Lord Bamford and the right reverend Prelate the Bishop of Durham, for two excellent speeches giving us the promise of some really formidable contributions in the years to come. They are on notice that more are required. I also need to thank my noble friend Lord Smith of Clifton for his account of his encounters with HMRC and BT. Clearly he has a future as a novelist along the lines of Kafka; I commend him.
I will start off with the two private pensions Bills that we have coming. We have the pensions tax Bill, which gives people far more discretion over what to do with their retirement funds when they come up to retirement; and much greater innovation within the private pensions market in the other Bill. One of the issues raised by a number of noble Lords—the noble Baronesses, Lady Sherlock and Lady Drake, and my noble friends Lord Holmes and Lord German—is about guidance. We agree that guidance needs to be impartial and to meet the needs of those who need to access it. The consultation closes tomorrow, so clearly I cannot tonight pre-empt its outcomes. However, I assure noble Lords that the response to that consultation will be out before Recess.
A question was raised by the noble Baroness, Lady Sherlock, and my noble friend Lord German about the impact of these various changes. We made an announcement at the Budget on the Exchequer impact of those reforms. We are currently consulting, as I said, on the guidance guarantee. The information gathered there will help to form the estimate of the reforms’ impact. I can confirm that we will publish a full impact assessment on the defined ambition reforms alongside that Bill.
There was a little bit of political teasing, I think I would call it, on compatibility of the two Bills from the noble Baronesses, Lady Greengross, Lady Hollis and Lady Drake, and the noble Lord, Lord Monks, the issue being the obtaining of savings at retirement age and the collective nature that some schemes may adopt under the defined ambition Bill. It is consistent, because members will be able to cash out their collective benefits if they are in that kind of scheme, in the defined ambition context, if they so choose.
The noble Lord, Lord Monks, raised a question about why we are looking at collective schemes when the Dutch are moving away. I am reliably informed that the Dutch are not moving away from collective arrangements. We are, however, looking very closely at what they are doing and learning lessons from their experience. The issue is that there needs to be a clear allocation of pension rights to individuals, as well as requiring schemes to disclose in detail what members are entitled to.
Moving to the issues of welfare and employment, on which there have been and continue to be a range of changes, I go directly to the points of the noble Lord, Lord Smith of Leigh, on his experiences in Wigan. I went up to Wigan and joined him when we started the pilots there. One of the things that we are doing is developing a quite intense relationship with the local authorities in various areas as we roll out universal credit. What he was describing—the responses that the local authority is becoming involved with—is exactly what we are talking about doing. For the first time we are getting real support, on a fairly holistic basis, for individuals who have never had that kind of support before. We are learning an enormous amount, including from Wigan. I therefore turn round the way in which he made those points to say that we are trying to get those local authority responses so we can get the kind of support to people that they have never had and which they need. As we roll it out in volume we have learnt and are learning the lessons of how to do that so that we do it successfully when we roll out the local support service framework, as we are doing.
On the other point the noble Lord made on the removal of the spare room subsidy—although he did not express it quite like that—I point out that the Homes and Communities Agency published figures yesterday which suggest that arrears are increasing, not decreasing in the social housing sector, despite various changes.
On the point raised by the noble Lord, Lord Morris, that work is not a sufficient route out of poverty, clearly that is one of the most interesting trends over the past decade. The previous Government tried to deliver their child poverty targets and managed to pay it out through raising benefits, but that did not have the impact on people who were in work. Universal credit is designed to do exactly that: to make sure that people who work full-time, even on low wages, are brought out of poverty by the way that universal credit works. We expect that it will take 300,000 children out of poverty through that sort of effect.
The noble Baroness, Lady Turner, made points on homes. In 2014 we are expecting to deliver over 60,000 more affordable homes in England, which is the largest number for almost 20 years. My noble friend Lord Addington made a point on the disabled students allowance; we are currently engaging with a wide range of stakeholders on the development of our guidance, which we plan to publish in the autumn. However, I will pass on his helpful comments to the Minister.
The small business, enterprise and employment Bill is designed, as my noble friend said in the introduction, to help ensure that the UK is the best place for businesses to start, to innovate and to grow.
A wide spread of noble Lords—the noble Baronesses, Lady Sherlock, Lady Hollis, Lady Drake and Lady Donaghy, and the noble Lords, Lord Monks, Lord Morris and Lord Young—focused on the zero-hours contracts issue, basically making the point that the Government are not doing enough here. The Government have made clear that zero-hours contracts play a part in a dynamic and flexible labour market, and recent figures published by the Chartered Institute of Personnel and Development support that. Those on zero-hours contracts said that they are equally satisfied with their jobs, happier with their work-life balance and less likely to think that they are treated unfairly by their organisation when compared to the average employee. However, zero-hours contracts can be abused, and shortly we will announce how we intend to tackle that through the Bill.
We have moved from consultation to action on this in less than 12 months, which is fast and in contrast to the Opposition, who initially consulted on the abuses of zero-hours contracts back in 1998. I was interested to muse over their paper, as I am sure they have done. It was called Fairness at Work. It was clear in stating:
“Many employers ensure the contracts are used sensibly, but they have the potential to be abused”.
The White Paper went further by welcoming:
“Views on whether further action should be taken to address the potential abuse of zero hours contracts”.
But nothing happened in the next 12 years. So it is 16 years later and I am very pleased to hear the Opposition belatedly making some suggestions.
The noble Baroness, Lady Hollis, also focused on zero hours. We will not mandate the universal credit claimants to zero-hours contracts that do not allow the claimant to work for another employer. She expressed concern about the difficulty of vulnerable people in claiming credit. The current figures, a pilot having gone for a year in a place that is expanding, are that over 90% of claims to universal credit are made online. Clearly the local support service framework is designed to get that support and service to as many people as we possibly can.
Many noble Lords talked about apprenticeships and what the Government are doing, including my noble friends Lord Bamford and Lady Sharp, and the noble Lords, Lord Liddle, Lord Bhattacharyya, Lord Aberdare, Lord Desai, Lord Macdonald and Lord Young. It is not a numbers game, but we are on track to deliver 2 million apprenticeships. There were over 868,000 people undertaking an apprenticeship in the 2012-13 academic year, which is the highest in modern history. We are making efforts now, following the Richard review, to ensure that apprenticeships are more rigorous and more responsive to the needs of employers.
On the question of how we break down the barriers between academic and vocational training, we want it to become the norm for young people to go into an apprenticeship or go to university, or do both in the case of some higher apprenticeships.
On the question of careers advice, schools now have a legal duty to secure access to independent career advice to pupils in years 8 to 14 and this must include information on apprenticeship.
Industrial policy was raised by my noble friend Lady Sharp, and the noble Lords, Lord Liddle, Lord Haskel and Lord Desai. We have five main themes in our industrial strategy: technology; access to finance; skills; procurement; and sectors. We have invested in emerging technologies—the £200 million for the seven Catapults to speed up technologies’ commercialisation, which is getting products to the market faster.
There is also £600 million to develop and commercialise the “eight great technologies” that we have isolated. Space was the one that my noble friend Lady Wilcox focused on. She mentioned the others: big data, robotics, regenerative medicine, synthetic biology, agri-tech, advanced materials and nanotechnology, and energy storage.
We were reminded of the metric system by my noble and learned friend Lord Howe. The Government support a single system of units of measurement in principle but recognise that many people in the UK prefer or are more familiar with imperial units. Therefore the Government are committed to retaining the existing usages of imperial units for as long as consumers and business find it useful, which, I suspect, is not the answer that he wanted to hear from me.
On the issues of agriculture and environment, the noble Baroness, Lady Sherlock, and my noble friend Lady Parminter asked why biodegradable plastic bags were exempted. It is fundamentally a challenge to UK industry to produce a genuinely biodegradable bag that meets defined criteria. We have awarded four contracts for feasibility studies looking into developing biodegradable bags and economically viable methods for separating bags from the waste stream.
The noble Lord, Lord Soley, asked about our response to the Natural Capital Committee’s second report. It needs to be considered fully, and the work of that committee has given us some interesting insights into how to value natural capital in government policy.
The noble Lord, Lord Northbourne, made the point about preparing children for adulthood. The Secretary of State for Education has spoken publicly on a number of occasions about the importance of developing character skills in young people. The DfE is supporting schools in different ways to develop and build the characters of their pupils and is making it easier for them to choose how to do this.
The noble Lord, Lord Stevenson, raised an issue about public houses and why we were not pursuing a mandatory free-of-tie option. While there were many calls for the introduction of free-of-tie, there were also widespread concerns that such a move would create uncertainty for pub-owning companies and have an unpredictable impact on the wider pub sector. This is because, if significant numbers of tenants decided to go free-of-tie, the whole tied model might no longer be viable because pub companies would lose their purchasing power and with it the ability to service a smaller and potentially more disparate tied estate. Our reforms will rebalance the relationship between the pub-owning companies and their tenants without threatening the balance of the wider industry.
I hope that I have covered most of the points. I do not think that I have covered absolutely everything, but that was, of course, impossible. I will write on anything significant that I have missed out.