Jobs and Work

Debate between Lord Sharma and Rachel Reeves

Wednesday 11th June 2014 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

The debate that we have called today and the amendment that we are now considering are based on the values and ideals that brought the Labour party into being. They are about securing for all people in this country the dignity of a decent day’s pay for a hard day’s work, so that people can both provide for their family and spend time with them, sharing in the wealth and prosperity that we all help to create. That is why the last Labour Government faced down those on the Conservative Benches who said that extreme low pay was a fact of life and who were happy to live in a world where there were adverts in jobcentres such as the one pointed out to me by a constituent of mine recently. It was advertising for a security guard and it read, “£1 an hour. Uniform provided. Bring your own dog.”

Labour Members were not happy with that world. We set up the Low Pay Commission and we legislated for the national minimum wage, which for the first time put a legal floor, and a rising floor, under the wages of millions of workers, particularly women, below which their wages could not fall.

Today, however, we need to learn from and build on that success. Since this Government took office we have seen the national minimum wage fall by 5% in real terms in just four years and the number of workers stuck on low pay has soared to well over five million. That is more than one in five workers, and one in four women, who are paid less than a living wage.

That is one of many symptoms of an economy that is just not working for working people today. Along with the 1.5 million people on zero-hours contracts, whom my hon. Friend the Member for Streatham (Mr Umunna) mentioned at the beginning of this debate, there are also 1.4 million people in part-time work who desperately want to work full-time; 600,000 people on temporary contracts who desperately want a permanent job; and numerous reports of a pervasive sense of insecurity, which affects not only the lowest paid but workers right up the income spectrum, including those in what were traditionally seen as middle-class or professional occupations.

We have had a number of contributions from hon. Members about the impact that this is having on their constituents. My hon. Friend the Member for Inverclyde (Mr McKenzie) spoke about real wage falls, particularly for young people, while my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) spoke about youth unemployment and the lack of prospects for so many of her constituents. My right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) quoted Bevan and Beveridge in his speech, and spoke about the Government’s policies leading to extremes.

My hon. Friend the Member for North Ayrshire and Arran (Katy Clark) spoke about the living wage, but also about the insecurity that so many of her constituents face, with 21% paid less than a living wage. My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) spoke about how this Government’s programme was just too timid, and said that they must do much more both to tackle the abuse of zero-hours contracts and to stop this recovery being one that leaves far too many people behind. He speaks with a great track record, having done so much to campaign on rights for temporary and agency workers.

My hon. Friend the Member for Blackpool South (Mr Marsden) spoke about job insecurity, particularly in seaside towns, and the use of sanctions, which often go too far and penalise the wrong people. The hon. Member for Banff and Buchan (Dr Whiteford) spoke about the gender pay gap and how it is often women who suffer the most. My hon. Friend the Member for Wansbeck (Ian Lavery) made an impassioned speech about zero-hours contracts and the restriction of justice that so many people feel. He made an important point about the disconnect that so many ordinary people feel between them and politics and Parliament, which my right hon. Friend the Member for Doncaster North (Edward Miliband) spoke about last week. That is something we must all be aware of and address.

As well as resulting in so much indignity for so many people, the challenges we face also pile pressure on to our social security system, with taxpayers left to foot the bill for wages that do not cover the cost of living and insecure and irregular earnings making it harder for people to keep up with their rent, arrange a mortgage, save for a pension or do all the other things that so many of us take for granted. The bill paid by taxpayers for people being paid less than the living wage has been estimated at a staggering £2.4 billion a year, including £750 million in extra tax credits and £370 million in extra housing benefit. The cost to taxpayers of the number of people stuck in part-time jobs who want to work full time is now £4.6 billion, including £1.7 billion in additional housing benefit, with the cost of housing benefit for people in work rising by a staggering 66% since this Government came to office.

All in all, over this Parliament this Government are set to spend £13 billion more than they budgeted for on benefits and tax credits because too many people have been left out of work for too long and because the squeeze on wages has been so severe. Expenditure on in-work benefits and tax credits is set to go on rising in real terms over the years ahead. That is the price that we are all paying, and will continue to pay, for this Government’s failure to secure a recovery that benefits everybody.

The impact of that on people is so stark, as has been mentioned in other speeches today. My hon. Friend the Member for East Lothian (Fiona O'Donnell) spoke about her constituents feeling left behind, despite the fact that the economy is now starting to grow again. My hon. Friend the Member for Sheffield Central (Paul Blomfield) made an incredibly powerful speech about the growth of payday lenders and the fact that nobody, especially those in work, should have to rely on that sort of credit to be able to feed their family and pay the bills. My hon. Friend the Member for Harrow West (Mr Thomas) spoke about an alternative world where credit unions are used more widely and supported more and about saving through the payroll, which I think was an important contribution in the debate. My hon. Friend the Member for Walsall North (Mr Winnick) spoke about the fact that far too many people in all our constituencies are being forced to go to food banks in order to support their families.

That is putting strain on our social fabric and the functioning of our democracy, as more and more people are feeling left out and cut out. The gains of growth are going to a privileged few and many are feeling left behind. No one in this House can be happy with the turnout in the local and European election just three weeks ago. If we are to turn that around and restore people’s faith that voting can make a difference, we need to show those who are feeling sidelined and short-changed that we understand their plight and that we will take action to address their worries and problems.

We have heard powerful speeches today about the problems faced by people in low-paid and insecure work, but we have also heard powerful speeches about businesses in our communities doing great things, employing people and growing their businesses. We need to build a stronger and better balanced economy in which growth and prosperity are more fairly shared. I therefore welcomed the speech we heard from my hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Business, Innovation and Skills Committee, who spoke about apprenticeships. My hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) spoke about not enough young people doing vocational subjects at school and college and the need to improve and reinvigorate our careers service.

My hon. Friends the Members for City of Durham (Roberta Blackman-Woods), for Glasgow North East (Mr Bain) and for Blaenau Gwent (Nick Smith) spoke about regional policy, local enterprise partnerships, the failure of the regional growth fund and the importance of creating a proper British investment bank. My right hon. Member for Warley (Mr Spellar) spoke about trade promotion, manufacturing and the need to put British business first. My hon. Friend the Member for Bristol East (Kerry McCarthy) spoke about the creative industries and their impact on our communities and on jobs.

We also heard speeches about small businesses. My hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) talked about the red tape facing many small businesses and the costs that it imposes on them but also on Government. My hon. Friend the Member for Rochdale (Simon Danczuk) gave a plug to Danczuk’s Deli and spoke about the problems with business rates and the need for a British investment bank.

We also heard some powerful speeches by Government Members, of which I will mention just three. The hon. Members for Macclesfield (David Rutley), for Cleethorpes (Martin Vickers) and for Stourbridge (Margot James) spoke powerfully about businesses in their constituencies and the good that they are doing in creating jobs.

Those speeches show the difference that can be made and that Labour can make. It is time to set an ambitious five-year target for the national minimum wage so that we narrow the gap between the minimum wage and average earnings over the life of the next Parliament. That would be the effect of the amendment, which would ensure that those who take the shifts and put in the hours in some of the toughest jobs in our economy have a chance of building a decent life for themselves and their families. A Labour Government would beef up enforcement of the national minimum wage, with new powers for local authorities to investigate infractions and larger fines of £50,000 for non-payment. We would also take action to end the abuse of zero-hour contracts, and crack down on agencies that use migrant labour and discriminatory recruitment and working practices to evade and undermine minimum employment standards.

All these measures form an integral and complementary part of the wider path that my hon. Friend the Member for Streatham spoke about, which would secure increased investment in infrastructure and innovation and support the creation of good-quality, high-skilled, well-rewarded jobs and apprenticeships across the country. We need to build an economy that can succeed in the global race to the top on quality and productivity instead of trying to win a race to the bottom on wages and working conditions—sadly, that seems to be the limit of this Government’s ambitions.

We heard evasion and excuses from Government Members, in many cases going back to the arguments of the 1980s and 1990s. The hon. Member for Reading West (Alok Sharma) even suggested that we should be careful about treating employers who do not pay the national minimum wage too harshly in case they did it by mistake. Well, I do not think that is good enough.

[Alok Sharma]

I hope that the hon. Lady listened to my speech in full. I welcomed the fact that we should be clamping down on rogue employers but said that we also need to make sure that employers who make genuine, one-off mistakes should not necessarily be penalised for that.

[Rachel Reeves]

I wonder whether the hon. Gentleman is so lenient on people who over-claim benefits. I think we need to get tough on people who are not paying the minimum wage to their employees. It is against the law, it is the wrong thing to do, and it puts pressures on those employees’ families that they should not have to face.

Figures from the Office for National Statistics show that over the past year the richest 1% have increased their share of national income from 8.2% to 9.8%. The top 1% have almost 10% of our national income, while 27 million taxpayers who make up the bottom 90% have seen their share of income fall. Wages have fallen further and further behind prices, as we saw again today, and the number of working families in poverty is set to soar. Only today, the latest figures from the ONS showed nominal pay growing by just 0.7% a year at a time when inflation, as measured by the consumer prices index, was running at 1.8%.

Earlier this week, a report from the Trussell Trust highlighted an increasing number of people in work who rely on their food banks. On Monday, the Government’s own commission on child poverty reported that

“twice as many poor children now live in working homes than in workless homes”

and called for

“real action to tackle low pay, create more secure jobs and enable more people in low-paid jobs to progress in work.”

The same report says that the Government’s latest poverty strategy

“falls far short of what is needed”,

highlighting in particular the

“lack of new action on in-work poverty”,

as outlined by my hon. Friend the Member for Wansbeck. I am afraid that it is the same old story from the same old Tories: tax cuts for the rich and pay cuts for the poor.

Last month, my right hon. Friend the Member for Doncaster North and I met a mum called Rachel Palmer who is affected by some of the things we have spoken about. She works hard so that she can provide for her young son, but she struggles to make ends meet on a minimum wage job in retail. She fought back tears as she told us how hard it was. She said, “You cut all your outgoings, shop at cheaper supermarkets, make batches of food and put them in the freezer, and tour car boot sales and charity shops, but still there’s not enough money.” She said there are lots of people like her who do the right thing and go out to work but “can’t afford simple things.” She said, “You have to choose: do you give your child a nutritious meal, or do you let your standards drop?”

No one should have to make those sorts of choices for themselves or their children. Rachel Palmer is doing the best she can for herself and her young son, and we in this House need to do better for her and her family and millions more families in her position.

This Government have made it clear that they are content with the status quo. Labour Members are determined to aim higher. If the Government will not do more to help those who are struggling to find work and those who are working all the hours they can to provide for themselves and their families but are still struggling, the next Labour Government will. For millions of hard-working families up and down the country, that change cannot come soon enough. I urge this House to support our amendment.

Living Standards

Debate between Lord Sharma and Rachel Reeves

Wednesday 4th September 2013 Commons Chamber

[Rachel Reeves]

As my hon. Friend will know, the number of people earning less than a living wage has gone up from 3.4 million in 2009 to 4.8 million today, which means that 20% of the work force in this country is now earning less than a living wage. My hon. Friend is absolutely right to point out that that means more pressure on the Treasury, more money spent on tax credits and more money spent on housing benefit. As I said in answer to the earlier intervention, the budget deficit reduction plan has stalled because those payments are going up as the economy is not growing in the way that it was supposed to.

[Alok Sharma (Reading West) (Con)]

The Labour motion contains a long list, including a lot of things that the Government are already doing. I also note that it does not call for a temporary cut in VAT, which was one of Labour’s flagship policies. I know that Labour is a policy-free zone at the moment, but is that another abandoned policy?

[Rachel Reeves]

The list of the Government’s failures could have been an awful lot longer, but we wanted a motion that would fit on the Order Paper. He talks about VAT—[Interruption.] I would be grateful if he listened to my answer. Two years ago the shadow Chancellor said that as an emergency measure VAT should be cut to stimulate the economy. In the two years since, the economy has flatlined. The shadow Chancellor also said that as the economy gradually moved into the recovery stage, the emphasis should be on infrastructure investment, which I think is important. It is because the economy has flatlined for two years that family finances are in the state they are in today.

--- Later in debate ---

[Rachel Reeves]

We have had Project Merlin and the funding for lending scheme, and yet lending to small businesses falls and falls.

A one nation Labour Government would offer guaranteed work for young people and those who have been unemployed for over two years—work that they would have to take. We would cut the welfare bill and help people to gain the skills and experience they need to join the work force for the long term. A one nation Labour Government would reform our banking and energy sectors, improving our infrastructure planning and building a skills system that ensures that everyone can play their part. A one nation Labour Government would make fairer choices to ensure that the benefits of growth are fairly shared. We would reintroduce the 10p tax rate, helping 25 million basic-rate taxpayers; and we would not be cutting income tax or increasing pension tax relief for the very wealthiest while cutting tax credits for hard-pressed families. Different choices, different priorities: this Government and this Prime Minister do not get it.

As the LSE growth commission said earlier this year:

“prosperity is strengthened when everyone has the capacity to participate effectively in the economy and the benefits of growth are widely shared”.

[Alok Sharma]

rose—

[Rachel Reeves]

I will not give way to Members who have already intervened, but I will give way to those who have not yet made an intervention.

That will be the difference between us at the next election. We have a Tory party that is out of touch with the challenges facing families and that believes in the outdated orthodoxy that if the rich get richer, the wealth will trickle down; a Tory party that will not stand up to vested interests or stand up for British families; a Tory party that has overseen three years of falling wages; and a Tory party that offered warm words about the living wage at the time of the election, followed by a surge in the number of people working for less than the living wage over the past three years.

Meanwhile, one nation Labour, even in opposition, has driven forward this campaign. Labour councils are paying the living wage to their staff and extending it through procurement chains. Fifteen Labour local authorities are now accredited living wage employers, with another 80 in the pipeline. Labour is committed to doing all it can in government to support the spread of the living wage, and is now working with Alan Buckle, deputy chairman of KPMG International, to look how this can best be done.

All the examples that I am sure we will hear in this debate about the rising numbers of food banks, payday loans, part-time jobs and zero-hours contracts make it all the more galling for the Chancellor to have claimed earlier this summer that wages were rising.