Lord Blencathra
Main Page: Lord Blencathra (Conservative - Life peer)
Lord Blencathra (Con)
My Lords, I congratulate my noble friend on initiating this important debate. It is not the sexiest subject to debate, but it is vital for the continuing extraordinary success of our economy and equally important because good jobs and work are the surest means of lifting people out of poverty, however that may be defined.
So I want to begin by congratulating my right honourable friend the Chancellor on his extraordinary success over the past five years, which has been hard won. He inherited an economy with a record deficit and government spending was out of control. The deficit has now been halved to 5% of GDP and we are on track to be the fastest growing major advanced economy for the third year in a row.
Our economy is now 11.8% larger than at the 2010 election. Statistically, we were then about as bad as Greece, but whereas Greece decided to do nothing to grasp the nettle of government overspending, George Osborne decided that we had to take steps to balance the books as soon as possible. It was certainly optimistic to reduce the deficit as much as he hoped in the last Parliament, but if we did not send a signal that we were serious about austerity and living within our means, we would have had a run on the pound and interest rates out of control. Despite that really awful starting position left by Gordon Brown, we have got economic credibility because of the action taken by George Osborne.
Therefore, in looking at education and employment opportunities in the UK today, we can see a completely different scenario than if that disastrous, overspending programme of the last Labour Government had continued. Let us just look at employment and unemployment figures. The employment rate is at a new record high, 73.6%. The employment level is at a record high, 31.1 million—up by more than 2 million since 2010. Full-time employment made up 81% of the annual rise in employment, up 291,000 on the year. The female employment rate has maintained a record high of 68.8%. There is close to a record number of women in work, 14.55 million. The number of people working part time because they could not find a full-time job is down 85,000 on the year. The number of disabled people in work is up by 226,000 on the year. More than 3.2 million disabled people are now in employment. On average, 1,000 more people are in work each day since 2010. There are a million fewer people on the main out-of-work benefits since 2010. The claimant count rate is at its lowest level since 1975. Unemployment is down to 1.77 million, or 5.4%. The claimant count is down 796,000, down almost 160,000 on the year. Long-term unemployment has fallen to its lowest level since 2009: that is down 526,000, a fall of a quarter compared with this time last year. Finally, vacancies are at a near record level of 738,000. So we should recognise that the Government have been doing something right somewhere when we look at what else we should do in the future.
By any measure, that is an outstanding achievement which we now take for granted. It has been achieved because we have the strongest growing economy in Europe. As the EU falls further behind the rest of the world in competitiveness and its economy is in relative decline, the UK has been powering ahead. Some 2.3 million apprenticeships have been started. There are 760,000 more new businesses than five years ago. Corporation tax has been cut from 28% to 20% and will go down to 18% in the next few years.
We now need to concentrate on two areas. The first is getting more of those 1.7 million unemployed into those 738,000 vacancies, and second is making sure that work pays more than being on benefits. I support the work of the Department for Work and Pensions in trying to transform lives by supporting people to find and keep work. I do not know how many of those 1.7 million would be regarded as unemployable by employers. That is not a term I like, but it possibly describes the attitudes of some people rather than their abilities. Did some Opposition spokespeople say that my right honourable friend Iain Duncan Smith’s reforms would not work and we were doomed to an unmovable number of workless households and permanent long-term unemployment for many people? Those messages seem to be wrong. His welfare reform and work incentives have resulted in tens of thousands of people moving from benefits into work, so that the workless household rate is the lowest since records began and our long-term unemployment rate is less than half that of the EU.
For many years, Governments of all persuasions have said that work must pay more than being on benefits. Indeed, Tony Blair commissioned the excellent Frank Field MP to deliver such a scheme. Frank did so but it was kyboshed by the then Chancellor, Gordon Brown, who wanted everyone on his tax credit scheme. That is why universal credit is so important: it reduces poverty by making work pay. It provides a new, single system of means-tested support for working-age people and does away with half a dozen other benefits. I am led to believe that early results show that universal credit claimants do more to look for work, enter work quicker and earn more than jobseeker’s allowance claimants, and that is the way it should be.
I will say a few words about the minimum wage and the tax credits issue without straying too much into a debate we may be having next week. When Gordon Brown introduced tax credits, they cost £4 billion. This year they will cost £30 billion. Something has gone terribly wrong with his system so that, by 2010, nine out of 10 families with children were eligible. That is not what Gordon Brown initially intended. It was barking, and coalition Government changes brought the figure down to six out of 10 households. I understand that the changes, which are currently controversial, would bring it down to five out of 10 families. It is patently obvious what we should do to close the gap between pay and benefits, and it is not increase benefits.
It was inspired of the Chancellor to push up the minimum wage and aim for a living wage, but I urge him to go further and faster. We get the usual misguided whingeing from the CBI that it will reduce company profits and increase unemployment. Enhanced company profits earned on the back of poverty wages is not moral capitalism. As for unemployment, is it seriously being suggested that the major supermarkets, Amazon, Starbucks and Pret A Manger—every 10 yards on the pavement—are employing additional staff because they are cheap and that if they had to pay more they would lay staff off and drive for more efficiency? What nonsense: the big supermarkets and others are employing the barest number of staff they can get away with and paying them the lowest wages they can get away with. However, the Chancellor’s announcement of the national living wage in the summer Budget has changed the conversation about low pay and we have seen pay increases announced to meet it early, before the increase to £7.20 comes into effect in April.
This dynamic effect on wages has not been taken into account in any analysis of the Government’s changes to date. Nearly 200 firms have agreed to pay the national living wage in recent months. Morrisons has pledged to increase hourly pay to £8.20 from March; Costa Coffee is increasing it; Sainsbury’s has put up pay to £7.36; Lidl is now paying £8.20 an hour; British Gas is now paying the living wage and IKEA has said it will put pay up. This has to be the way to go. If those companies can do it then so can every other business. I said this in the Budget debate and I make no apology for saying it again: it is morally indefensible for companies to pay poverty wages, the taxpayer then having to pay up so that a family can live.
The salaries of chief executive officers and executives of the FTSE 100 rose by 15% in 2014 and the gap between the highest paid executives and their lowest paid employees has never been wider. In 1998 chief executive officers’ salaries were 57 times larger than the average worker’s. Now they are 178 times larger, and there is no correlation between huge salary increases for executives and company worth, growth or profits. The Chancellor’s increase in the minimum wage is 6% per annum. Since many companies seem to have had no difficulty paying their directors 15%, I want to see the minimum wage pushed up to that level as soon as possible. Everyone should share in a company’s success. Being in work, with proper pay, is the route out of poverty for all and it will make Britain the most successful entrepreneurial country in the world.
There have been some excellent changes to vocational training but my instinct is that it is still regarded as inferior to a university degree. That is so wrong: just look at those brilliant A-level students who turned down a place at Oxbridge so that they could become apprentices at Rolls-Royce. These people should, as in Germany, be entitled to be called Herr Doktor, or at least the English version. Germany regards their engineering skills as being like a doctorate, but we see them just as car mechanics or grease monkeys. My noble friend Lord Baker has done a marvellous job enhancing the reputation of vocational training and building city technology colleges, but we need to do more to encourage young people to go down these routes, rather than doing some worthless degree.
When the battery in my laptop died recently, I could not easily replace it. Being a MacBook Pro, it had to be dismantled, have half the guts removed and a new battery ordered—one of about 30 possible alternatives—and be repaired by an expert. For anyone with a broken Mac or iPhone, I recommend Honeylight Computers in Pimlico, which is an Apple repair agent. I am not on any commission. I do not know whether the guy who fixed my computer had a degree or a technical qualification, but without him I would have had to buy a new one at £2,000 instead of paying the £150 it cost. His contribution to our, and my personal, economy was worth £1,850 for that one little job and I could not have done it without him. I contrast that with the contribution of those graduate social workers who destroyed families in the Orkney Islands because they thought they were performing naked, outdoor witch dancing in February. Your Lordships may remember the case in 1991: it was dismissed immediately by the judge as utterly incompetent. These two radically different examples are simply two of millions showing that a degree is no guarantee of competence, common sense or worth, and the ability to fix things and make things which make our everyday lives infinitely better is no guarantee of good pay or status.
In conclusion, I congratulate my noble friend again on securing this debate. There is, of course, always more to be done. We need to make all schools free schools; we need even more apprenticeships; we need far better career guidance in schools; we need to ensure that no one teaches a subject at secondary level unless they have a degree in it. I was appalled when I came to England and found teachers with only some teacher training certificate who were not qualified in their subject. We need to get into teaching, at all levels, people who have retired early and are experts—and, more importantly enthusiasts—in their subject and who can enthuse young people. We need to let our best universities grow and expand to rival the Ivy League in the USA. We have some absolutely rubbish universities and we should let them die, as students voluntarily switch to better ones.
Above all, we need Britain to get back its freedom to be a world trading nation again, taking control of its own destiny and economy and not shackled to a dying and declining European political union. However, that may be a debate for another day.