Workers (Economic Affairs Committee Report)

Lord Bilimoria Excerpts

Thursday 8th February 2024 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, my first public appointment was 25 years ago, when I joined the New Deal taskforce in what was then the Department of Employment. It then became the national employment panel in the Department for Work and Pensions. Our sole purpose was getting people from welfare to work. Right up front, I ask the Minister: is there such an initiative now in government, with the pure objective of helping people get from welfare to work? Work is good not only in enabling people to earn money, but for well-being, health and mental health, which the noble Lord, Lord Layard, spoke about.

I thank the noble Lord, Lord Bridges, and his Economic Affairs Committee for its report, Where Have All the Workers Gone?, published in December 2022, as the noble Baroness, Lady Noakes, said. As the noble Lord said in his excellent opening speech, the answer is that the UK’s workforce has been squeezed by four factors: retirement among those aged 50 to 64, increasing sickness, changes in the structure of migration, and the impact of an ageing UK population.

We have had the latest labour market statistics, hot off the press on 5 February, and we know that unemployment is now at 3.9%. That is fantastic; it is a really low rate—it is back to where it was before the pandemic. However, we have this figure of 9.25 million aged 16 to 64 who are economically inactive, revised up from 8.68 million. The report says that the Learning and Work Institute said that

“since the pandemic if the UK had matched the economic activity rate growth of Australia, France or Netherlands, there would be an additional one million people in the UK workforce”.

The noble Lord, Lord Skidelsky, in his excellent speech, pointed to page 13 of the report, which has graph after graph of country after country showing that other countries have recovered, while we are still up there, with our graph very high, showing economically inactive people. So we have not done as well as other countries have done.

My friend Andy Haldane, the chief executive of the Royal Society of Arts, of which I am a fellow, has said:

“Having been a strong tailwind for two centuries, health is now a strengthening headwind to UK economic growth, for perhaps the first time since the Industrial Revolution”.


The noble Lord, Lord Skidelsky, said in his speech that Britain is the sickest country in Europe.

Every day now in the press we hear about the crisis in dentistry. The UK spends barely £3 billion of the NHS budget on dentistry. That is shocking. In real terms, it has fallen by 33%, because it is at the same level as it was in 2010, when the current Government came to power. The overall national health budget is £170 billion. Why are teeth less important, given the agony that every one of us has experienced with teeth? Dentistry is not free at the point of delivery; you have to pay for it, and it is expensive to go privately. The NHS is meant to provide a service for everyone on demand, but the reality is different. The latest is that nine out of 10 practices are not accepting new adult patients.

As the chancellor of the University of Birmingham, one of the proudest moments of my tenure was when we opened our brand-new dentistry school on the old Pebble Mill BBC site, and Her Majesty Queen Elizabeth and Prince Philip, the then Duke of Edinburgh, came to open that school. Do you know that we have now only 1,000 dentistry school places available each year? If we do not put health first, we will be the sickest nation in Europe.

The report refers to the furlough scheme and the effect of lockdown on early retirement. As president of the CBI—the Confederation of British Industry—I was one of the first people during the pandemic, as early as August 2020, to ask the Government to provide free lateral flow tests to everyone, at home and in the workforce, therefore preventing lockdowns. I am convinced that we could have avoided the second and third lockdowns if we had used those lateral flow tests earlier. Noble Lords may remember that, by the time we started to use them, in December 2021 and January 2022, we ran out of them, because we were using them so much. Oxford University conducted a test with schools in the summer of 2021—it was published in July—proving very clearly that effective use of lateral flow tests could control the spread of the disease. We did not do it early enough—and, to my knowledge, the Covid inquiry, which is costing so much money and taking so much time, is not even looking into that aspect. So many operations could have taken place, and so many children could have not missed out on school and university, and we would not have a 30 million waiting list at the moment.

On immigration, the committee noted that the end of EU free movement and the introduction of the UK’s points-based visa scheme changed the structure of UK immigration. The committee said that many lower-paid roles in the economy, such as in agriculture, hospitality and care, had previously been filled by EU workers, while the new immigration system prioritises skilled workers. The report said that this had

“contributed to a mismatch within the labour force, accentuating labour shortages in these sectors”.

In my own business of Cobra Beer, in the hospitality industry, we supply 7,000 restaurants—a £54 billion industry in terms of tax receipts alone, employing 3.5 million. The changes to the immigration system, set to be implemented in April, mean that the minimum salary needed to get a skilled worker visa will rise from £26,200 to £38,700. That will further shrink the talent of good people that the hospitality business needs. The reality is that 75% of hospitality jobs are domestic, but we still need to recruit from abroad. How is our economy meant to grow without access to labour?

The noble Lord, Lord Bridges, spoke about the record 740,000 net migration figure. However, as chancellor of Birmingham University, president of UKCISA and co-chair of the All-Party Parliamentary Group for International Students, I ask why the Government keep including international students in the net migration figure. Other countries treat them as temporary migrants; we should exclude international students from the net migration figure.

We have a low-growth economy, high debt at 100% of GDP, high government spending and low productivity, as the noble Lord, Lord Londesborough, said, and what nobody else has mentioned is that we have the highest tax burden in 70 years. High taxes and freezing the thresholds affects everybody: it is a disincentive to work. We need to reduce our taxes, which will help people to get back to work as well. I hope that I have now answered the mystery posed by the noble Lord, Lord Skidelsky, of where all the workers have gone.

Cost of Living Support

Lord Bilimoria Excerpts

Thursday 22nd June 2023 Lords Chamber

[Viscount Younger of Leckie (Con)]

I hope the House will recognise that I am certainly not playing down the seriousness of the position at the moment. I am very aware, as the House is, of the further interest rate rise today. The Government absolutely recognise the pressures that people are facing and have acted, providing total support of over £94 billion, which I mentioned earlier, over 2022-23 and 2023-24. I have already mentioned the uprating, which I will not go over again, and that we will be making further cost of living payments totalling £900.

However, there is more to say, given the noble Baroness’s question. I have already mentioned that the Chancellor is meeting mortgage lenders tomorrow to see what more can be done, but he has already met the Competition and Markets Authority, to be sure that there is fair competition between the supermarkets so that we make sure that food prices come down. As we are all aware, food inflation is still far too high. It was 19% last month; it has now nudged down a bit but it is still far too high. That is really important, particularly for those who are the most vulnerable. I reassure the noble Baroness that we really do take this seriously. I think we all know that it is a defining moment.

[Lord Bilimoria (CB)]

My Lords, I remind the Minister that, in February 2021, when I was president of the CBI, I asked Rishi Sunak, when he was Chancellor, if he was worried about inflation, because I was worried about it then. Today, we have the highest inflation in the G7, while the United States of America is already at 4% inflation—less than half our rate. Today, our interest rate is at 5%, the highest in 15 years, and we have the highest level of tax burden in seven decades. Today, we have a debt to GDP ratio of 100%; the last time it was at that level was over six decades ago. Does the Minister acknowledge that two of the Prime Minister’s five priorities are growth and halving inflation? Given the situation we are in now, where households are struggling to make rental and mortgage payments, which are increasing as a proportion of their income, is a recession likely? What are the Government’s plans to help people deal with their mortgage and rental payments, because there is a crisis looming in front of our eyes?

[Viscount Younger of Leckie (Con)]

I hope I can help the noble Lord. As I have already mentioned, inflation really is one of the Prime Minister’s key priorities. He has made it clear, as we have, that reducing inflation is absolutely key. He also speaks about growth, while making it clear that growth comes as a secondary item to inflation. However, it is also important that the economy grows. In previous answers, I have made it clear that we are doing as much as we possibly can to look at what more banks can do to be helpful. One thing which I have not said is that we are working closely with the Bank of England, while making it clear that the Bank is independent in also working as hard as it is in the fight to bring down inflation. It is not just us in the UK; as others have said, there are similar issues in other countries, particularly in Europe. However, I realise that in the UK we still have a lot of work to do.

Kickstart Scheme

Lord Bilimoria Excerpts

Thursday 29th April 2021 Lords Chamber

[Baroness Stedman-Scott (Con)]

We are working closely with a whole range of employers in sectors impacted by the pandemic, particularly the hospitality sector, where we have enabled employers to create Kickstart opportunities sooner than the economy might otherwise allow. We have seen a strong response from the hospitality sector, with involvement from the national academy of food and drink and major employers like Greene King offering Kickstart jobs across the country, and we will continue to do so.

[Lord Bilimoria (CB) [V]]

My Lords, over half the people who have lost their jobs since March 2020 are young people. Kickstart is a fantastic scheme to help young people and businesses prevent the scarring of long-term unemployment. Will the Minister acknowledge that although, as she said, almost 200,000 placements have been approved by the scheme, only 16,500 have actually started—as the noble Baroness, Lady Sherlock, said—because of delays caused by the third lockdown and bureaucracy? The CBI, of which I am president, is calling for a six-month extension to the excellent Kickstart scheme until June 2022 to allow many young people to participate. Will the Government please agree to this?

[Baroness Stedman-Scott (Con)]

I understand the noble Lord’s question exactly. I am advised at the moment that there are no plans to extend the scheme, but we never know what might happen in the future. I pay tribute and thanks to the noble Lord in his capacity as chairman of the CBI, which has been an outstanding supporter and helper in the establishment of Kickstart.

Employment

Lord Bilimoria Excerpts

Thursday 20th March 2014 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, when the United States was formed in 1776, it took 19 people on a farm to produce enough food for 20 people, so most people had to spend their time and effort in growing food. Today, it is down to 1% or 2% to produce the food. So let us consider the vast amount of supposed unemployment produced by that. There was not really any unemployment produced; what happened was that people who had formerly been tied up working in agriculture were freed up by technological developments and improvements to do something else, which enabled us to have a better standard of living and a more extensive range of products. That is freedom—arguing against the race to the bottom. The noble Lord, Lord Giddens, talked about robots, but I have gone back to 1776. Nothing has changed in that sense.

I thank the noble Lord, Lord Freud, for initiating this debate. I have just a few points to make. First, the rise in the overall employment rate is real and is at record levels and, correspondingly, there has been a fall in unemployment. With the economic dominance of the south-east, there is a need to rebalance the economy by supporting manufacturing, particularly in the regions. Continued tax reform is also needed. The Office of Tax Simplification is an oxymoron; our tax system is getting more and more complicated.

UK unemployment has fallen by 63,000 to 2.33 million. The unemployment rate now stands at 7.2% of the population. As the noble Lord, Lord Holmes of Richmond, said in his excellent speech, employment has risen to a record of more than 30 million. The bad news is that the NEETs are still close to the 1 million mark; although the figure is falling, it is still above 900,000. The number of people claiming jobseeker’s allowance has fallen to 1.175 million. Over the year that number has dropped by 363,200, which is terrific. That is all really good news.

The new Governor of the Bank of England, Mark Carney—I say new, but he has been in post for almost a year—made a fundamental mistake in saying that he was going to give us forward guidance and that when unemployment fell to 7% the Bank would think of raising interest rates. That figure has been reached more quickly than thought, and he has had to back-track on the forward guidance almost straightaway. Interest rates are still at a record low of 0.5%. Just think: what got us into this financial crisis was what was then perceived as being the longest period of low interest rates for a long time—and they were then at 5%. Interest rates are 10 times lower than that, but still we cannot increase them, although the unemployment figures are near, or at, what the Governor of the Bank of England wanted them to be. They have been kept unchanged at 0.5%.

The real issue is public expenditure. Public expenditure used to be around the 40% mark. It was 42% of GDP in the early 1970s. Then under the previous Government it went up to almost 50% of GDP. By the late 1980s it was below 40%. We need to get that public expenditure down to 40%, because our tax-collecting ability historically has been around 38% to 39%. If we can get our public expenditure down to 40% we will have a balanced economy and will eliminate the deficit.

UK manufacturing is not dead, by any means. We are excelling in manufacturing. Our aerospace industry is the second largest in the world. Our automotive industry, of which I speak regularly, is flying. When Tata Motors bought Jaguar Land Rover in 2008, I spent a whole day at the Land Rover factory. Wow—it was impressive. I am due another visit, because my last one is already outdated. The company is now making more in profits than it paid for a business that nobody was interested in buying in 2008: that is how well it is doing. It is also exporting and creating employment.

We have heard the great news that Bentley is moving its 12-cylinder engine manufacturing from Volkswagen in Germany to Crewe in the UK. How wonderful is that? Rolls-Royce is manufacturing at Goodwood. Therefore, we have the best of the best quality—the best cars in the world—being manufactured here in Britain.

Our chemical industry is huge; our defence industry is huge; our electronics industry is huge; and so is our food and drink industry. I speak from my own experience. I mentioned yesterday that we were manufacturing a great deal in Europe. In fact, the majority of our production was in Europe some years ago and we decided to reshore to the UK because here we can produce world-class beer. We now produce in Burton upon Trent; we are winning award after award and exporting around the world. I am proud of that.

We have a plastics industry and a steel industry; we also have a textile industry, which we thought was dead but which is not dead at all. There are still almost 80,000 businesses employing 340,000 people and generating £11.5 billion of turnover.

What about the regions and the whole focus on London? We have a country where one big city is the capital and the financial capital and is much bigger than the second biggest city, Birmingham—let alone Manchester or anywhere else. If we look at a large country such as the United States, New York is big but you have Los Angeles, Chicago and lots of other big cities. If we look at another large country, India, there is Mumbai but also Chennai, Bangalore, Hyderabad, Calcutta and Delhi, which are huge cities in their own right. We have this one big city. I am very proud of London; it is the greatest of the world’s great cities. But how can we encourage business and employment in the regions? The answer is simple: we must encourage manufacturing. We cannot manufacture in London; we have to manufacture in the regions. That can create the jobs.

The Financial Times analysis tells a story in which the percentage of people on jobseeker’s allowance benefits dropped by more than 30% last year in places as varied as Oldham in the north, Stafford in the Midlands and the Suffolk coastal region. This is great news. If we can carry on in that vein, we will have growth and employment outside London.

Again, worries about lopsided economic growth are not new. The noble Lord, Lord Giddens, talked about developments 50 years ago, at a time when the economy was also recovering after a period of stagnation. The then Labour leader, Harold Wilson, complained in Parliament of a two-nations economy and said that,

“the Chancellor has to try to restrain the overheating which he sees in the South at a time when large areas in the North are still in the chill grip of his predecessor’s freeze”.—[Official Report, Commons, 14/4/1964; col. 285.]

Those were the comments of Harold Wilson on Reginald Maudling’s 1964 Budget speech.

We should look at the great signs of success. We have already heard that Hitachi is to move its rail business headquarters from Japan to the UK, and that Bentley is to move from Germany to the UK. Companies from Japan and Germany, the pinnacles of high-tech manufacturing, are moving to the UK. This is fantastic. Hitachi says its move will expand the number of rail jobs to 4,000, which is excellent. I have already mentioned Jaguar Land Rover and Bentley. The Chancellor has promised to cut the costs of manufacturing to boost growth, and he has done it. He predicts that energy costs will go down by £7 billion. Again, that is excellent.

Immigration is one area where I fundamentally disagree with the Government. Their immigration policy has sent out the wrong signals around the world to foreign students and academics. That affects not just universities such as Oxford and Cambridge, where 30% of the academics are foreign. For example, more than 30% of the academics at Birmingham University are foreign. As I say, bad signals have been sent out, and the number of Indian foreign students is now plummeting, but we should look at the contribution Indians make to our economy. On Friday, I went to the celebrations for the principal of West Nottinghamshire College, who has been made a dame. She is the first Indian-born dame in 83 years. She came to this country as a young bride unable to speak English but today heads the most successful further education college in the UK, and probably one of the most successful in the world. That is the power of immigration.

The statistics show that Indians make a huge contribution to our economy. In 2013, Indian men topped the ethnicity employment table in the UK and Indian women came second. Indian men had the second lowest rate of unemployment—and so it goes on. One in seven companies is founded by a migrant entrepreneur. Migrants make a huge contribution to our economy and create jobs. Migrant entrepreneurs have been a benefit to this country.

In looking at overall business performance, we must not neglect SMEs. The Minister talked about all the Government’s initiatives. I was on the National Employment Panel for eight years and on the New Deal task force before that. SMEs account for 59% of private sector employment and 48% of private sector turnover. Within SMEs, small businesses account for 79% of employment and 69% of turnover. We need to encourage these small businesses to grow, because the argument about big companies not paying corporation tax misses the point. Yes, we would like them to pay more corporation tax, but that tax makes up only 8% of our tax take. Most of our tax take comes from the tax that is generated by employment—more than 50% comes from PAYE and NI-paying employees and NI-paying employers. The more jobs we create, the more tax we will generate; therefore we should encourage SMEs to grow.

I have suggested to the noble Lord, Lord Young, that we should have a competition in this country to sponsor staff from 100 companies to attend the Cranfield School of Management business growth programme or the University of Cambridge Postgraduate Diploma in Entrepreneurship. It costs £10,000 to attend these programmes. The businesses that send people to attend those programmes will grow faster than other businesses because we will be training our entrepreneurs to perform better and grow their businesses.

We need to go further on national insurance breaks. Ralf Speth, the chief executive of Jaguar Land Rover, said that the secret of his company’s success was innovation. UK Trade and Investment was mentioned by the noble Lord, Lord Shipley. Exports are crucial. The further we go down the route that I am suggesting of training our entrepreneurs, encouraging manufacturing in the regions and generating jobs, the more exports will follow. I have mentioned my own experience as an example of that.

To conclude, what is the purpose of business? I think that, yes, you want to create a product that people love, but you also want to create employment for the well-being of the people whom you employ. In every survey that asks people what is most important to them, they say family. What else is important to them? They say health. What else is important to them? They say their working life. If people do not work, they are not going to be happy. A happy country is a country with, ideally, full employment. We will never get to full employment, but at least let us try.

EU Report: Women on Boards

Lord Bilimoria Excerpts

Tuesday 13th November 2012 Lords Chamber

[Lord Bilimoria]

My Lords, in 2003 I was a member of the Tyson Task Force on the Recruitment and Development of Non-Executive Directors, where we examined,

“how a range of different backgrounds and experiences among board members can enhance board effectiveness and by exploring how a broader range of non-executive directors can be … recruited”.

I thank the noble Baroness, Lady O’Cathain, for initiating this debate and I am relieved to see that the EU Committee’s report is emphatically against imposing quotas. There are two issues here: how can we continue to encourage UK plc to have the most effective boards, and secondly, how can we ensure that UK plc pursues equality of opportunity? It is not just about doing things right, but about doing the right thing because it makes sense.

Apart from chairing the Cobra Beer Partnership Ltd and Molson Coors Cobra in India, for the past five years I have been a non-executive director and the senior independent director of the Booker Group plc, a FTSE 250 company. When I first joined the board five years ago, there were no women, but that situation has changed. I am proud to say that we have a very effective board that has seen the company’s value increase virtually five times in five years. What is key is finding the best individuals for the board with diverse skill sets, backgrounds and experience that are as relevant to your business as possible, and increasingly that should include international experience. It is the responsibility of the chair to search as widely as possible to find these individuals, as well as the responsibility of headhunters. Although it is good news that more than 50% of FTSE 250 companies now have at least one woman on their boards, we could do so much more. As was said earlier, the Cranfield University School of Management, of which I am a proud alumnus, in its 2012 Female FTSE Board Report identifies more than 2,500 women who are ready and capable of taking on board positions.

We need to persist in encouraging and highlighting the benefits of diverse boards, and in particular having more women on boards. The report of the noble Lord, Lord Davies, is doing this in the same way as the Cranfield University School of Management report, and in the way that the EU Committee’s report is doing it. Jennifer Harris, the managing director of Board Intelligence, wrote last year that:

“Boards make important decisions and diverse boards might make better ones”.

From my experience, I have seen that they definitely do. I shall conclude by saying that we need look no further than your Lordships’ House. I would go so far as to say that this is the most expert and the most diverse upper House in the world. We did not need quotas to achieve this; we have done it because it makes us more effective, and because it simply makes sense.

Welfare Reform Bill

Lord Bilimoria Excerpts

Tuesday 13th September 2011 Lords Chamber

[Lord Bilimoria]

My Lords, from 1999 to 2001, I served on the New Deal Task Force of the then Department for Education and Employment, and thereafter from 2001 to 2007 I served on the National Employment Panel in the newly formed Department for Work and Pensions. When I look at Britain, I see a country that is so wealthy that we have been able to spend 50 per cent of our GDP on public spending—spending approaching £700 billion a year which enables every citizen of this country to access a welfare system and public provision that provides free school education, free health at the point of delivery, and access to all the areas covered in this Bill, including unemployment benefit, housing benefit and childcare benefit. Our welfare and pensions bill alone, as the Minister has said, is £200 billion a year, which is by far the largest element of our public expenditure.

Given our economic situation, the Government are of course trying to bring public expenditure down, but I believe that they are making cuts where they should not be. It is not appropriate, for example, to make cuts in our defence expenditure or to harm our competitive advantage in areas such as higher education. But in the area of welfare the Government are doing absolutely the right thing in attempting to reduce the giant burden of these costs, which have been escalating over the years. It is an area where, in many ways when standing back from it, a detached observer could quite reasonably ask, “Why, during the boom years until 2007, was welfare spending increasing? Why, with the advances in medicine and health, were more and more people claiming disability living allowance? Why, when reports from the Office for National Statistics show an increase in the number of workers in the UK who were born abroad from 1.9 million to 3.5 million since 1997, were there just 25,000 more British-born workers in employment in 2009 than there were in 1997?”.

During my several years working in welfare reform, it became very apparent to me that the system we had created in this country was too complicated and had resulted in a culture of welfare dependency and a culture of welfare entitlement, as the noble Lord, Lord Feldman, said in his excellent maiden speech. It was a system where, more often than not, it did not pay to work, as all the benefits combined often yielded more of an income than working. Also, the risk of taking a job and losing those benefits—in particular, housing benefit—along with the enormous bureaucracy involved in getting all the benefits back in this complicated welfare system, was a huge deterrent to working. The Government’s universal credit will try to address this, but is it going to be able to deal with the benefits trap? The Government’s plans have already been criticised for the way in which they are trying to phase in centralised control of housing benefit. At the moment these are dealt with by local authorities, but in future they will go through the universal credit. Are the Government going to be able to administer this in a fair and practical way?

Another shocking observation during my years of working in welfare reform was that our labour force in the UK showed a huge reluctance to move in order to get a job, or even travel to a job—sometimes as close as going from one borough to another in London. Do the Government believe that their proposals are going to help improve the mobility of labour? After all, we have millions of European Union workers in this country who have travelled thousands of miles to get a job.

Along with simplification, one of the objectives of these reforms is to reduce fraud and administrative costs. But to me this seems like Groundhog Day. I remember that 10 years ago we had the formation of the Department for Work and Pensions with exactly the same objectives: delinking education and employment by putting social security together with employment. Those objectives were noble and logical. As people came in to collect their welfare support, you would be able to work with and try and get those individuals back into work, and you would be able to clamp down on fraud and abuse of the system. But what is the reality 10 years later? We still have an estimated £5.2 billion in fraud and error overpayments in the benefits and tax credits system—after the billions spent on reorganising, splitting up and putting back together giant departments employing some 125,000 people. The DWP needs a huge budget of £2 billion a year just to run all this.

Where are our priorities when we are cutting the higher education teaching budget by a few billion pounds, resulting in student fees being tripled and cutting one of this country’s key competitive areas—one in which, along with the United States, we are the best in the world? In our biggest spending department, these figures would be lost in the roundings. The Government’s implementation of universal credits and all these reforms is going to require huge new IT systems. Given the track record in implementing giant IT projects—let us look no further than at the NHS—and to reinforce what was said by the noble Lord, Lord German, do the Government really believe that they can deliver all they are promising for the £2 billion that they have budgeted?

I also remember that some of the best and most effective delivery of welfare to work initiatives was by private sector firms. However, it is unclear what the Government’s plans are in regard to using the private sector to deliver their reforms. What are they?

Throughout my experience working with the Government in welfare to work, we used to refer to the “Australian Example”. I had the opportunity to meet Prime Minister John Howard, who personally explained to me how his Government made what they thought would be an unpopular decision by clamping down on the abuse of their welfare system and bringing in tough measures of getting people who could work into work, including compulsory voluntary work while they were on benefits looking for work. They found that the working, tax-paying population were really happy and supportive of the Government’s toughness—the scheme ended up being popular. Therefore, it is no surprise that a recent ONS survey showed that 53 per cent of people in this country believe that the current welfare system is too generous. That has gone up from 38 per cent a decade earlier. This should give our Government the confidence to pursue their proposals. From my experience in welfare to work, there is no question but that a working society provides, in every way, a healthier and better life; that work is not only necessary to provide and contribute to society but is good for people as such.

One of the recent Indian high commissioners here remarked to me that, in his experience of having been a diplomat around the world, he felt there was a lack of hunger and drive in this country. Although we are the most amazing and resilient country in the face of terrible adversity and tragedy—which is something that has been proved for centuries—if we look in the mirror, we will see that our welfare system now has one out of four working-age adults not working. As things stand, work often does not pay. On the other hand, we must make sure that those who genuinely cannot work—those who are disabled—are looked after, and the Government must reassure us that their plans will not jeopardise this. We have heard that a lot in this debate, and will continue to, because recently there has been justifiable criticism regarding the DLA and compensation for carers. In addition, what are the Government doing in these reforms to address the needs of veterans, both old and young?

Do the Government really have confidence that what they are proposing will not only drastically reduce this multi-billion-pound area of spending, but produce a system that provides support for those who cannot work and makes sure it does all it can—in a fair and firm manner—to ensure that those who can work do work; and that work pays?

Welfare Reform

Lord Bilimoria Excerpts

Thursday 11th November 2010 Lords Chamber

[Lord Freud]

I thank the noble Lord, Lord Clinton-Davis, for his question. I hope I am not being too optimistic. On the handicapped issue, there are a few concepts buried in the question and I shall try to disentangle them.

First, how does the universal credit look to a disabled person? In the present system we have a conflation between disability and inactivity in the labour market. It is one or the other; you can do a little work, but not much. The beauty of the universal credit is that people on disability benefit will be on the same taper as others, with generous disregards, so that they are not in the desperate position of being inactive on disability benefit or working. We should remember that 40 per cent of people with disabilities are in the workforce—they want to be in the workforce—and that some of the most heavily disabled people want to work. We want to build up a system to help them to do so.

The second element of the noble Lord’s question deals with the work capability assessment process that we are now trialling. There will be an independent and elaborate tribunal process through which people can go. They can bring in legal support if they want but, in reality, most people do not need it because it has been accepted as a relatively balanced process, and robust systems will be in place to make sure that people do not get put into the wrong category. However, putting the money aside for one minute—clearly one likes to have more money than less and to be on a higher rather than a lower benefit—the reform will unlock the inactivity that we are in effect forcing on too many disabled people.

[Lord Bilimoria]

My Lords, I served on the New Deal taskforce for many years and then on the National Employment Panel for seven years. I am delighted and heartened by many of the initiatives in the Government’s programme for welfare-to-work reform, in particular tackling the benefits trap.

We used to talk about the Australian experience. I spoke to John Howard after he stepped down as Prime Minister and asked him about Australia’s welfare-to-work experience, which we used to look to as a great success. He said that he did not want to remove the safety net but to get people back to work. One way in which his Government had sought to do that was a programme whereby people were made to do some community service. He thought that it would be a very unpopular move; it turned out to be very popular, because people who worked and paid taxes did not like to see people, quite a few of whom could have worked, not working. As a result, the Australian Government got public support for it. Have the Government looked at the Australian experience? Have they learnt from it? Do they think that it was a good and effective scheme, and will their scheme be as effective?

[Lord Freud]

My Lords, I thank the noble Lord, Lord Bilimoria, for that question. We have spent a lot of time looking at the lessons from abroad. When I was doing an independent report three and a half years or so ago, Australia was one of the places that I looked at very closely. I had someone who had been working there to inform me about what was happening. Australia and Holland are two places from which we learn a lot of lessons. There is a debate about whether action should be mandatory or voluntary. Voluntary action works if people have the self-confidence to say, “Yes, I want to try something”, but when you have been out of work for a long time, one of the first things that goes is your self-confidence. That is why mandatory action is not cruel. You need to pick people up and make them do things, because they do not have the self-confidence otherwise. That is one of the main lessons to be learnt from the Australian experience.

Poverty

Lord Bilimoria Excerpts

Thursday 22nd July 2010 Lords Chamber

[Lord Bilimoria]

My Lords, it is a great honour to follow the maiden speech of the noble Lord, Lord Boateng. As predicted and as expected, it was excellent. This is just a taste of what we in this House may expect to come from the noble Lord in the many years ahead.

Poverty is a cause which the noble Lord has spoken passionately about for years. In fact, in his maiden speech in the other place in 1987 he spoke of poverty in his constituency of Brent South. He played a leading role in establishing and launching the £450 million children’s fund designed to tackle child poverty—of which he has just spoken. In his young life—the noble Lord is still young; he has not yet reached 60 and middle age will come next year—he has achieved much as a passionate campaigner and activist, as a lawyer who is both a solicitor and a barrister, and he has achieved many firsts, including being the first black Cabinet Minister, as Chief Secretary to the Treasury in May 2002. During his victory speech as an MP in 1987, he famously said, “Today Brent South, tomorrow Soweto!” Of course, he was talking about South Africa being freed from apartheid, but he was also presciently talking about his future appointment as British High Commissioner in South Africa from 2005 to 2009, a role in which he excelled. He has made his mark throughout his career, and we are fortunate that he will continue to make his mark here in this House.

Soon in my role as president of the UK India Business Council I will accompany the Prime Minister on his visit to India, following up on what was said in the gracious Speech. I quote:

“My Government looks forward to enhanced partnership with India”.

Although I was born and brought up in India throughout my childhood, although I visit India several times a year, and although India is today a global emerging economic superpower with amazing capabilities in IT, aerospace and even in space, every time that I get off that plane I am hit by the dire, abject poverty. Sadly, 300 million people there live on less than a dollar a day, and many of those are not living, but merely existing. This poverty exists now as much as it did during my childhood in India and I console myself about the enormity of the problem and the challenges that this most diverse and complex country in the world, with a population of over 1 billion, faces.

Then I think about us here in the UK, one of the largest absolute economies in the world. Whichever way you measure it—absolute GDP or GDP per capita—we are one of the wealthiest countries in the world. We are relatively small, with 60 million people, yet it saddens me that we have such high levels of poverty and child poverty. According to Save the Children, 3.9 million children are living in poverty. There is no excuse at all for poverty in this country. After all, we have one of the most generous welfare states in the world. We have free education; people are entitled to free housing; those without work get an income to live on; and we have free healthcare from cradle to grave—all funded by the state. So surely poverty should not exist at all. And when I say poverty, I mean poverty of any sort, let alone the scale of the dire poverty in India.

Where are we going wrong and what should we do about it? One answer is that the welfare state is meant to address it and the Government are spending massive amounts on it. Public expenditure has reached 54 per cent of GDP, when it should be at around 40 per cent. This has led us to enter an age of austerity, as the Prime Minister put it. How can we maintain a safety net and at the same time work towards eradicating poverty? I am afraid that increasing taxes in the Budget, maintaining the 50 per cent higher rate tax, maintaining the non-dom levy, increasing VAT, and increasing capital gains tax, will not solve the problem. The Government are not meant to be Robin Hood—taking from the rich to give to the poor. We have seen that this does not work and that even in the boom time, with massive levels of public expenditure, poverty increased. The Gini coefficient that measures wealth and equality is the highest that it has been in 30 years, and over the past decade there has been no increase in the average income of the poorest tenth in our society.

The noble Lord, Lord Sheldon, recently asked a Question in this House: what proportion of wealth is held by the richest 10 per cent of the population? The Answer given by the Minister was 54 per cent. This was shown not to be out of line with other countries, with France on 61 per cent and the US on 69.8 per cent. I hope that the noble Lord will forgive me if I say that I strongly believe that the answer is not, as he suggested, to take action to reduce the level of wealth of the top 10 per cent. It is wealth generation that should generate opportunities for wealth creation. I have said it before and I will say it again that the job of the Government is to create an environment for business—in particular SMEs—to flourish and create the jobs that pay the taxes, that pay for the public services, that pay for the welfare that pays for those who genuinely need our help.

However, in my eight years on the New Deal task force and then the National Employment Panel, it became very apparent to me that work was the best way out of poverty. Yet, sadly, millions in this country are in a benefits trap where generations in certain areas have not worked, because work often does not pay. The difference between welfare support and a 40-hour week on a minimum wage is £37 a week—hardly enough to inspire people in difficult times to seek jobs. For this reason, the welfare reform Bill is welcome in its efforts to simplify the benefits systems, remove barriers to work and attempt to lessen the hold of the awful benefits trap that exists in this country.

However, it is even more challenging when our schools are letting our children and our country down, where over a third of 11 year-olds leaving primary school have difficulty reading, and a fifth leave their secondary school without being able to read and write with confidence. This makes it very difficult for them to be employable.

In my role at Cambridge University as a visiting entrepreneur and a member of the advisory board, I was presented with a paper from Professor Radjou, Jaideep Prabhu and their colleagues on whether the UK can win in an age of scarcity. Their theory is: “more for less for more”—an approach that places emphasis on delivering more value for less cost for more people. If necessity is the mother of invention, as they say, scarcity is the grandmother of innovation. This is where a developed economy such as ours can learn from some of the amazing innovative models that have been pioneered in emerging markets such as India, Brazil and China.

We have such advantages in this country. We have the finest higher education in the world and cutting-edge research. One university, Cambridge, has produced almost 90 Nobel Prize-winners. Our greatest strength is our people. The Government alone cannot eradicate poverty, even with the best of intentions; we have to work together, and this is where NGOs working together can really help, as we have heard. The coalition Government’s answer of promoting the big society and getting communities to work together is fabulous. However, is it not ironic that a big society goes hand in hand with smaller government? It is about people coming together to care, share, help each other and prosper together.

This country used to have a glass ceiling. As recently as three decades ago, it was not a meritocracy. However, today this country is a true meritocracy. It enabled me 21 years ago, with £20,000 of student debt to pay off, to start up a business from scratch. This is a country with opportunity for all, and the poorest person is given hope by that opportunity.

Earlier this week, we in Parliament had a visit from Bill Gates, one of the wealthiest men in the world. He addressed Parliament on development. How inspirational that here is an individual giving away tens of billions of dollars. He changed the world through his business; now he is going to change it through his development work on the alleviation of poverty. I have a saying that achievement leads to inspiration; inspiration leads to aspiration; aspiration leads to achievement—and a virtuous circle follows. We can just imagine that if only we had that virtuous circle in every corner of this country, we would obliterate poverty and genuinely make it history.

Recently, I met those running a charity in India called the Akshaya Patra Foundation. The foundation has a vision that:

“No child in India shall be deprived of education because of hunger”.

Today, it reaches 1.2 million children every day, giving them lunchtime school meals. However, the sad reality is that it has had to adjust its practices. On Monday, after the day off on Sunday, it has to provide double the amount of food for the children because they have not eaten on the Sunday. That is true poverty, and it depresses me that this wealthy nation of ours has poverty in the 21st century. We should be ashamed of ourselves. Our people need to come together, helping one another to succeed. We need to raise the water level for all the boats to float and to get bigger, and that is going to take a huge amount of work from government and NGOs and from communities and citizens. A friend of mine defined luck as being when opportunity meets determination. We have the opportunity; we have to be determined as a nation.

I conclude by quoting Jawaharlal Nehru’s famous “Tryst with Destiny” speech made on the occasion of India’s independence in 1947, as it is pertinent to what we are talking about:

“The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of the greatest man of our generation”—

he was talking about Mahatma Gandhi—

“has been to wipe every tear from every eye”.