Chuka Umunna
Main Page: Chuka Umunna (Liberal Democrat - Streatham)Department Debates - View all Chuka Umunna's debates with the Department for Work and Pensions
(10 years, 5 months ago)
Commons ChamberI beg to move an amendment, at the end of the Question to add:
“but regret that the measures in the Gracious Speech fail to ensure that those who put in a hard day’s work get a decent reward for doing so, or cut the costs to the social security system resulting from the current record 5.2 million workers on low pay and the rising tide of insecurity at work; and call on your Government to bring forward measures setting the Low Pay Commission a five year target to raise the National Minimum Wage faster than average earnings while retaining the capacity to take account of shocks to the economy.”.
We are here to debate the Queen’s Speech, and in particular its impact on jobs and work. Ultimately, to create jobs and work so that someone can raise a family we need sustainable and balanced growth. We cannot legislate our way to sustainable and balanced growth, but a Queen’s Speech and the proposed legislation therein has a role to play. Essentially, today we are debating the economic policies of this Government.
Just one moment. I will give way in a bit.
When I first arrived in this House—together with the hon. Member for City of Chester (Stephen Mosley), I think—I remember that all Government Members wanted to do was talk about the previous Government. This is now their fourth Queen’s Speech and fifth year in office, and it simply will not do to drone on about the last lot. They are in government; they have a record and we will hold them to account for it.
When this Government entered office the country was recovering from a recession that was caused by a global financial crash and precipitated by irresponsible behaviour in the banking sector. When they took office, a recovery was under way, unemployment was falling, growth was rising and stability was beginning to settle in. Those are the facts. However, the extreme fiscal consolidation that they attempted to embark on choked off growth for the best part of three years, causing the Business Secretary, the Work and Pensions Secretary and their ministerial colleagues to fail completely to meet their deficit reduction targets. That led to a huge amount of misery for the British people as unemployment soared beyond 2.5 million. Consequently, they borrowed more in three years than the last Labour Government did in 13—again, the facts.
During those three wasted years, the eurozone slumped almost as badly as Britain. Indeed, the Government frequently pointed to the impact of the crisis in the eurozone on our economy. Of course, that crisis hit our exports, and the Business Secretary, like others, referred to that and its impact in this House during previous Queen’s Speech debates. There are, however, a couple of important points. As the economist Lord Skidelsky put so well in his essay on this subject in March, we should have done so much better than the eurozone, given that we retain the pound and control of our exchange rate. The eurozone slump arose in part because European Finance Ministers were pursuing exactly the same kind of failed policies as the Business Secretary and his colleagues.
Things have thankfully moved on. I know the Prime Minister and Chancellor like to take the credit for the return to growth that we are seeing, but let us be clear: the fact that the recovery has kicked in is down to two things. First is the utter determination and hard work of our businesses and firms in weathering the storm, as well as their ingenuity and continuing capacity to innovate, and second is the hard work and compromises made by their employees.
So often we have sat in this House and had to listen to Government Members, week after week, smearing and denigrating our trade unions. I will be most surprised if we get through this debate without that happening again. The agreements that so many workplace convenors reached with firms and businesses in this country—taking pay cuts; accepting reduced hours—helped keep those firms afloat during these difficult times. That is why I am proud to be a member of the GMB and Unite.
We are certainly not out of the woods. The fact that the Bank of England still has the pedal on the floor with a 0.5% interest rate illustrates how fragile the economy still is, and how far the recovery has to go. More than three quarters of a million young people are still out of work. On average, people are still earning £1,600 a year less than they were when this Government came to office. In fact, just before I came into the Chamber, I was speaking to my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) who told me that she has a 42% rate of poverty among the children in her constituency, so we still have a lot more to do.
The 2008-09 crash exposed long-standing, big structural problems in our economy that go back decades, admittedly under Governments of different persuasions, and have to be dealt with. This is in spite of the progress made by the previous Government and the stronger supply-side conditions we achieved. What we have now is an economy unbalanced by sector and region, short-termism in our corporate culture leading to low levels of business investment and low productivity, a dysfunctional finance system, and a stubborn and increasing trade deficit.
Does the hon. Gentleman think it was a measure of the success of the previous Labour Government when our country lost 1.7 million manufacturing jobs?
I absolutely agree with the hon. Gentleman that we need to diversify our economy and grow our manufacturing base, but, as I have just said, these structural issues have grown up over a number of decades under Governments of different persuasions.
At the same time as we are dealing with these structural issues, we face more competition from emerging markets and others than we have ever experienced before, with technological advance and automation creating new jobs but destroying old ones too. That has left our economy failing to meet the material needs of too many families. The problems of these imbalances have resulted in our country having one of the highest incidences of low-paid work in the OECD.
I, of course, accept that any job is better than no job. I note that the Chancellor gave a speech earlier this year committing his party to full employment. They say imitation is the sincerest form of flattery. The only problem with what the Chancellor said is that it is almost 70 years late. It was, of course, the great reforming Attlee Government who first committed to full employment, in our manifesto “Let us Face the Future” in 1945. Unlike the Chancellor, however, we have long sought to build on that commitment. What we want is for everyone in this country to be able to access good work that affords them a level of dignity and respect, and, importantly, that is secure and pays a wage that they can live off. That is simply not the reality for far too many people in Britain in 2014.
There are now 1 million people on zero-hours contracts. Does my hon. Friend accept that their lives consist of moving in and out of benefits? When there is discontinuity in benefits, people have to go to food banks. That is not the way to build a strong economy. Surely, we need infrastructure in city regions and to move forward with export-driven growth, rather than having people living in poverty on zero-hours contracts.
A few moments ago, the hon. Gentleman talked about a wage that people can live on. Will a future Labour Government commit to having a living wage in place of the minimum wage, or will his speech be more about rhetoric than firm commitments and pledges to the British people?
The hon. Gentleman raises a good point, because 22% of employees in his constituency under this Government are paid less than a living wage. I will come on to what we intend to do and what is so sorely lacking in the Queen’s Speech.
We do not want to wait until a Conservative Chancellor sees the light and matches our ambition in 2084. What we are hoping is that in the Queen’s Speech, and the Bills that follow, he will match our commitment and ensure that we have a better-waged economy. There are two parts to this challenge: first, action to tackle low pay and insecurity at work—I will come on to what the hon. Member for Dover (Charlie Elphicke) talked about—and, secondly, the implementation across Government of an industrial strategy to nurture and grow the sectors that produce the better-paid jobs we want to see across the country.
On low pay, we make no apologies for reminding the House at every opportunity that it was this party, in the face of strong opposition, that introduced the national minimum wage. When we entered office, some people were earning as little as £1 an hour, a practice I am proud to say we outlawed. To give just one of the many examples of the opposition we faced, when we introduced the national minimum wage into this House 17 years ago, a member of the then shadow Cabinet said:
“If, as I and all my Conservative colleagues believe, the DTI’s minimum wage comes into effect, it will negatively affect, not hundreds of thousands but millions of people.”—[Official Report, 4 July 1997; Vol. 297, c. 526.]
That shadow Cabinet member is now the Work and Pensions Secretary. We had the good sense to ignore him.
On low pay, is my hon. Friend aware of allegations that several UK parcel carriers, namely Hermes and Yodel, are using so-called lifestyle couriers and effectively paying less than the minimum wage to the staff they use?
I thank my hon. Friend for that intervention. I was not aware of that, but I am sure the Business Secretary has heard what he said and will no doubt ensure that his Department looks into those two firms.
We have to build on the national minimum wage. Many Members, for example my hon. Friend the Member for Wansbeck (Ian Lavery), have argued for us to do so. It is currently £6.31 and is due to increase to £6.50 in October, but that is just 53% of median hourly earnings. We want to set—this in part relates to the point raised by the hon. Member for Dover—a more stretching target for the minimum wage for each Parliament, within the Low Pay Commission framework, to increase it faster than average earnings, while retaining capacity to take account of shocks to the economy. We would also give local authorities new powers of inspection and enforcement of the minimum wage, alongside central Government, to ensure it is enforced properly. We would also increase fines for non-payment to £50,000.
A number of measures are contained in the small business, enterprise and employment Bill. We are told, among other things, that the Bill will strengthen UK employment law by tackling national minimum wage abuses. It does not appear, however, that the Government will come close to matching our commitments to strengthen the national minimum wage. There will be no stretching target, no enhanced role for local authorities and much lower fines than we envisage. We will be pushing the Government to adopt our package during the passage of the Bill.
I am glad to hear that the hon. Gentleman is talking about moving towards something that might eventually look like a national living wage. He will recall that it was the Greens on the London Assembly who made the Living Wage Commission a possibility. Will he also consider, as inequality is such a major issue, maximum pay ratios between the highest and lowest paid in companies?
May we add to our consideration of people who end up not being paid the minimum wage the scandal of workers in the care sector? A constituent told me recently that although she is contracted to work 40 hours, she is lucky if she is paid for 15 to 20 hours. She is not paid travel time, is paid in dribs and drabs, and short-notice cancellations are the norm. In many weeks she has ended up being paid for only 15 to 20 hours, yet these are the people we are trusting to provide care for our most vulnerable people.
I will just make a little progress and I will give way in a bit.
As my right hon. Friend the Leader of the Opposition said last week, under this Government the shocking fact is that for the first time on record more people who are in poverty are now in work than ever before. The minimum wage is important. It is set with an eye to the impact on jobs, but we want employers to pay a living wage. Record numbers are currently paid less than the living wage—I have talked about the 22% in Dover, for example. It is estimated that we have 5.2 million people earning less than the living wage, which is costing the Treasury, at the very least, £750 million in tax credits and £370 million in means-tested benefits. We want to do all we can to ensure that anyone who puts in a hard day’s work gets a decent reward for doing so. That is why it is disappointing to see nothing, not just in this Queen’s Speech but in all four to date, to incentivise employers to pay a living wage.
The proposals to increase the national minimum wage are welcome, but they are no use if the Government then increase taxes and take more money out of people’s pockets. Will the hon. Gentleman do what his leader failed to do last week and rule out any increases in national insurance contributions if Labour were to win the next election?
I note that 18.2% of employees in the hon. Gentleman’s constituency are paid less than the living wage. I hope he will be encouraging Ministers in his Government to adopt our proposals to incentivise people to pay it, so that he can reduce that percentage in his constituency.
As for the tax and spending policies of any Government in a future Parliament, these will be set out in a Budget at the time. One of the questions that the hon. Gentleman and others will have to answer is whether they envisage making further reductions in the top rate of tax, giving people earning millions of pounds an even bigger tax cut than they have already.
I thought that would rile them. I am going to get on, because I want to ensure that we get other people into this debate.
If elected next year, we would introduce “make work pay” contracts to encourage employers to pay a living wage and help businesses to raise the wages of millions of low-paid workers. This is fully costed and will be entirely funded from the increased tax and national insurance revenue that the Treasury would receive. Again, I encourage the hon. Member for City of Chester to encourage those on his Front Bench to adopt that proposal. If they do, we will support it. However, the silence we have heard from those on the Government Benches when it comes to doing anything on the living wage is quite extraordinary. People will remember the Prime Minister’s speech to London citizens back in 2010. In the last week of that campaign, he said he would do all these things to promote the payment of the living wage and he has done next to nothing—nothing—in office.
However, wages are one thing; insecurity at work is another, and never in recent times has it been so resonant an issue, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) said. I am not at all surprised by that, because since they came to office this Government have mounted a full-frontal attack on people’s rights at work. This is often talked about by Government Members as though it were a trade union issue, but it is an every person issue. Every single person in this country who works has had their rights at work attacked by this Government. They have increased the service requirement to claim for unfair dismissal from one to two years, depriving people of the right to seek justice when they have been wronged in the workplace; they have reduced compensatory awards for unfair dismissal; they have reduced the consultation period for collective redundancy; and they have watered down TUPE protections for people. I could go on. Most starkly, this Government have erected a barrier in the way of those seeking redress with the introduction of tribunal fees.
But perhaps the biggest symbol of insecurity is the extensive use of zero-hours contracts in 2014. The Office for National Statistics estimates that there are 1.4 million zero-hours contracts in use right now.
I am obliged to the hon. Gentleman for giving way. Just in case his Front-Bench team want to prompt him with statistics, my constituency is Tamworth.
The hon. Gentleman talked about the importance of having a job instead of no job. Has he had correspondence with Labour-run Liverpool council or Labour-run Newham council, which make extensive use of zero-hours contracts?
What I have said time and time again in this House when we have debated zero-hours contracts—I will come to this point in a moment—is that the Opposition are not opposed in principle to any use of zero-hours contracts. The question is: what are the Government going to do about their exploitative use? What they have announced so far comes nowhere near close to what we have proposed to deal with the exploitative use of such contracts.
Zero-hours contracts do not oblige employers to offer guaranteed hours of work to their workers. Sure, some workers—it is for this reason that we do not oppose zero-hours contracts in principle—choose the arrangement because they like the flexibility, but for many it leaves them subject to the whim and demands of their employer to work at short notice, promoting insecurity. These arrangements make it almost impossible to own a home, save for a pension or plan family life.
My hon. Friend is making a powerful speech and rightly highlights the difference between the use and abuse of zero-hours contracts. We have seen high levels of youth unemployment in this country. Does he agree that the use of zero-hours contracts sometimes hides a problem that exists for young people getting on to the work ladder? A constituent of mine talked to me about the insecurity he feels. He cannot plan ahead and does not even know whether he can accompany his mum to a hospital appointment, because he has no idea what will come his way in the week.
That is a perfect example of the egregious and exploitative use of such arrangements. We are told that the employment Bill will help hard-working people to have confidence in the terms of their contracts and that it will crack down on the abuse of zero-hours contracts, such as the example my hon. Friend mentions. However, the details that we know of suggest that the Government are simply not going far enough. On its own, banning exclusivity clauses in such arrangements will not do the job. We need, among other things, to give workers the right to a fixed-hours contract when they have regularly worked hours with the same employer for a period of time—such as the constituent of my hon. Friend the Member for Worsley and Eccles South—and to protect them from having their shifts cancelled at short notice without compensation. Above all, we must ensure that people know that they are on a zero-hours arrangement.
I have talked about jobs, wages and security at work. The other part of reforming the jobs market is the implementation across Government of a proper industrial strategy, both to create the right conditions for businesses to thrive in all regions of the country and to put the full weight of Government behind those sectors that can win gold medals in the global marketplace for the UK, creating more of the middle-income jobs we want to see.
I will just make a bit more progress.
Part of that involves ensuring the right environment across the country in all regions for our businesses to grow, and part of it involves a sector-led approach, looking at where we have a competitive edge and comparative advantage relative to our international competitors. I am very supportive of the sectoral approach. It was of course the Labour Government who led the way in that by setting up the Automotive Council.
When it comes to creating the right environment, ensuring that people have the skills our businesses need is crucial. Increasing the quantity and quality of apprenticeships is a must. We have a record to be proud of. In government, we rescued apprenticeships from the scrap heap. We more than quadrupled starts—[Interruption.] Government Members do not want to hear it, but let me give them the facts. We more than quadrupled apprenticeship starts, from a woeful 65,000 under the Major Government to 280,000 in our final year in office.
Is it still the Opposition’s policy to get rid of the intermediate apprenticeship?
No, it is not, and I should say that the Deputy Prime Minister’s intervention on this subject while standing in for the Prime Minister at PMQs was deeply embarrassing, given that he was attacking an independent report that was produced by a group of experts for us which said exactly the same as his own Secretary of State’s report for his Department on the same subject.
Does my hon. Friend agree that one of the best ways of increasing the numbers of advanced and higher-level apprenticeships would have been to implement my Apprenticeships and Skills (Public Procurement Contracts) Bill? It would have meant that the billions of pounds of investment that we spend as taxpayers in public procurement could lever in extra apprenticeships at the higher and advanced level.
I am very grateful to my hon. Friend for drawing attention to his excellent Bill, which I and many of my hon. Friends were here to support, but which was disappointingly ignored by the Government.
What is happening to apprenticeships now? This issue, frequently raised here by my hon. Friend the Member for Blackpool South (Mr Marsden) and my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), is worrying.
No, I want to make some more progress—[Interruption.] I have been quite generous in giving way.
Countless other colleagues have talked about opportunities for young people. My hon. Friend the Member for Rotherham (Sarah Champion) has drawn attention to the lack of apprenticeship opportunities for people in her constituency. Under-19 apprenticeship starts have fallen by 17,000 over the last academic year, and there are now 2,000 fewer under-19s starting apprenticeships than in 2009-10, and less than 2% of apprenticeship starts last year were at level 4 or above. Where was the Bill in this Queen’s Speech to require all large companies taking on large Government contracts to provide apprenticeships, as we called for? It was not there. Where was the requirement for all apprenticeships to last at least two years and to be at level 3 or above to ensure we maintain their quality? It was not there. We need to see more done on that.
It is important to help those who want to get into work through jobs and training, but it is also important to help those who want to create their own jobs, and they will not be able to do that without the finance. We are told that the small business Bill will make it easier for small businesses to access finance. I really hope so, because in the last year, net lending to small and medium-sized businesses fell by £3.2 billion. Scheme after scheme after scheme—from Project Merlin to funding for lending—has simply failed to resolve these problems. In the last quarter, net lending to businesses by funding for lending participants actually fell by £700 million—an issue on which I know my hon. Friends the Members for Rochdale (Simon Danczuk) and for Feltham and Heston (Seema Malhotra) have been campaigning.
Let me inform my hon. Friend that what I hear in my Blackpool surgeries, particularly from small businesses and hoteliers, about the continued failure of a number of banks, including those still supported by this Government, underlines what he is saying. Does that not also underline the fact that we should be looking at the regional initiatives on banks that he and his colleagues have brought forward rather than having the long-standing dithering from the Secretary of State on the whole question of the investment bank?
I agree with my hon. Friend. The problem with the Government’s scheme is that, to date, the main transmission mechanism to our small businesses has been the very high street banks that have been the problem. That is why we want to set up not only a British investment bank, but a network of regional banks like the Sparkassen in Germany, to ensure that we get the money to our small businesses.
Finance is one thing, but cash flow is an issue too. If, as we are told, the Government are to extend the obligation for public sector bodies to pay small businesses as their suppliers within 30 days and to apply it all the way down the supply chain, that would be welcome, but on its own it will not be sufficient. We will press Ministers to introduce—I think this will be in the small business Bill—more stringent reporting requirements for customers of small businesses to crack down on those who do not pay on time. I think that the practice of late payment is an absolute national scandal that needs to be dealt with.
I saw the Business Secretary and the Deputy Prime Minister make their trip to the pub the other week. On the one hand, I suppose this was a “kiss and make up” event after the activities of a certain rogue pollster—perhaps the Liberal Democrats’ equivalent of Lord Ashcroft; and on the other hand, it was to draw attention to the measures in the Queen’s Speech on a new statutory code and independent adjudicator to ensure that the sole traders and small businesses that run our 20,000 or so tied pubs are treated fairly. To be honest, after the dither and delay we have seen from this Government and the numerous debates we have had to force on the issue, any action from this Government is welcome, but my fear is that the real reforms that we and others across the House have campaigned for will be watered down. We will scrutinise the detail when the provisions are introduced.
I want to say a word about rebalancing, particularly between regions and within regions. It has simply not happened, and I see nothing in this Queen’s Speech to change that.
My hon. Friend is making a really strong point about the need to get additional help to the regions. Does he agree that it is unacceptable that start-up businesses in Durham have reduced by 14% over the last year? It is clear that the Government’s policies are not addressing the issues facing the north-east.
This is an important issue. Since the recovery kicked in, we have seen around 54% of GDP growth coming in London and the south-east, and around 75% of new jobs created in the same region. It is essential that we see more of that happening in my hon. Friend’s constituency and others around the country.
Let us be honest about it, the Government’s flagship scheme that was supposed to address this problem—the regional growth fund—has become a bit of a joke. More than a third of winning bidders under that scheme’s first round have now withdrawn entirely, while others have been left waiting almost two years to receive their money. Hundreds of millions of pounds of growth fund moneys across the regions are gathering dust in Government coffers and have not yet reached the winning bidders.
Of course, having scrapped our regional development agencies, which I am sure the Business Secretary privately feels was a big mistake, the Government replaced them with local enterprise partnerships, which have simply not been given appropriate budgets or powers to do what was asked of them. In fact, the vast majority of bids made by LEPs to the regional growth fund have been rejected in some regions. Many colleagues across the House—my hon. Friend the Member for Telford (David Wright) has spoken of his area’s desire for a city deal—will tell us, as my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) has just done, that a lot more needs to be done to rebalance our economy geographically.
On sectors, the Business Secretary’s predecessor, the noble Lord Mandelson, started pursuing a course of industrial activism, which, in the main, the Business Secretary has continued in his overall approach. There is a degree of consensus on the principles—that is a good thing—and industrial strategy is part of agenda 2030, our plan for better balanced sustainable growth, which is winning support from businesses across the country. But unless we get the overall environment right—on skills and finance, as I have discussed—across the whole country, delivery on these sectoral strategies will be compromised.
Let me finish by saying a few words about our export position. The Government promised an export-led recovery in their plan for growth. That has simply not materialised, and the measures that the Business Secretary and the Chancellor have introduced to date seem to have made no impact on that. In fact, the Office for Budget Responsibility said that the Budget would have no impact on our net trade position.
The promise to increase exports to £1 trillion by 2020 is disappearing out of reach. It has been reported that civil servants have privately conceded that the Government’s promise to get 100,000 new companies exporting by the end of the decade is “not going to happen”. This is hardly surprising when the Government have not done enough to ensure that small firms are made aware of the support that is out there. Half the members of the Federation of Small Businesses do not even know that UK Trade & Investment exists. They need to be given much more information and to be made more aware of what help is available. But then the performance of some of these schemes has been totally lamentable. The £5 billion export refinancing scheme, which was launched in July 2012 as part of the Government’s UK Guarantees scheme, and the £1.5 billion direct lending scheme, launched to great fanfare several months ago, have not helped a single firm. We need to see much more competent delivery of these schemes.
It is clear that our country has huge potential, and there is a huge amount of talent waiting to be unlocked, but people need a Government to empower them to realise their dreams and aspirations. That is not happening under this Government. [Interruption.] The hon. Member for Worcester (Mr Walker) talks about the long-term economic plan. The fact is that for many people—including people in my constituency, where, on average, people are earning £2,300 a year less than they were when the Government came to office—this “long-term economic plan” is a long-term economic sham. That is why we aim to ensure that we can allow and empower people to meet their aspirations by making certain that, this time next year, we are sitting on the other side of the House.
I will take more interventions later, if hon. Members will let me make a little progress. That intervention prompts me to remind the House where we are with the economy. We are the strongest growing of the major G7 countries. Major forecasts by the IMF and the OECD suggest that this year growth will be between 2.7% and 3.5%, which is quite exceptional in current circumstances, with the trend continuing in 2015.
What is more important is the fact that that has been achieved in a balanced way. In the last three quarters, manufacturing has been growing faster than the economy as a whole. Business investment, which was seriously depressed through the recession, is now experiencing double-digit growth on an annualised basis. I was taken aback when the hon. Member for Streatham started to tell me about the industrial strategy. I was in the House for the 13 years of the last Labour Government. Throughout that period, any suggestion that we have the kind of industrial strategy that we are now leading was regarded with utter ridicule by—
I will in a moment. The hon. Gentleman has reminded us of some genuinely useful things that were left by my predecessor, including the Automotive Council. Of course no money or long-term investment was attached. We are now doing work with the high-value manufacturing sector through the Catapult centres. There has been a billion-pound co-investment in new automotive propulsion systems. That did not exist. However, some things left by my predecessor were useful. They were small, but they did contribute to what is now a valued industrial strategy supported on both sides of industry. I am glad that the Opposition have bought into it, albeit rather belatedly.
My Department is now very different. It now includes universities, science and many other things. In one period during the last Labour Government—the hon. Gentleman may remember it; I think that the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) was the Minister who started the change—there were about 186 different systems of industrial support, the cumulative effect of which was largely negative because we had large-scale deindustrialisation. We are pursuing the strategy in a much more concerted way, in partnership with business and on a long-term basis. That is what we are achieving.