Welfare Reform and Work Bill
Chuka Umunna Excerpts(8 years, 10 months ago)
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David Mundell
Further to that point of order, Madam Deputy Speaker. I am able to confirm that the documentation will be available for scrutiny. On the timing of my statement, I cannot commit to exactly when it will be.
Mr Chuka Umunna (Streatham) (Lab)
On a point of order, Madam Deputy Speaker. I wonder whether you might provide some advice and give me your view. This afternoon in our proceedings, we were scheduled to have a Backbench Business Committee debate on serious youth violence and gang violence, which are blighting many of our inner-city areas. Unfortunately, because our business is overrunning, we will not have time for that debate and I will not be able to move my motion. However, do you not think it appropriate that we send out a message today, for those who may not be familiar with the proceedings of the House of Commons, that the fact that this debate has been delayed in no way sends a signal that this House does not appreciate the importance of the issue? I am pleased to inform the House that the Chair of the Backbench Business Committee has indicated to me that an alternative slot will be found for us to have the debate at the earliest opportunity, which I hope will be next week.
Madam Deputy Speaker
The hon. Gentleman is well aware that that is not strictly a point for the Chair to deal with. However, I commend him for taking the opportunity to make that very important point for those who are not familiar with the proceedings of this House, and to emphasise the fact that the subject matter of the debate that he tried to instigate today is extremely important and taken very seriously by Members from all parts of the House. I sincerely hope that the Backbench Business Committee will find time in the near future, when I am quite sure that the House will welcome the opportunity, to debate the hon. Gentleman’s very important motion.
Education and Adoption Bill (programme) (No. 3)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Education and Adoption Bill for the purpose of supplementing the Orders of 22 June 2015 (Education and Adoption Bill (Programme)) and 16 September 2015 (Education and Adoption Bill (Programme) (No.2)):
Consideration of Lords Amendments
(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement at today’s sitting.
Subsequent stages
(2) Any further Message from the Lords may be considered forthwith without any Question being put.
(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Margot James.)
Jobs and Work
Chuka Umunna Excerpts(10 years, 6 months ago)
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Mr Chuka Umunna (Streatham) (Lab)
I 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.
Mr Umunna
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.
Mr Marcus Jones (Nuneaton) (Con)
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?
Mr Umunna
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.
Geraint Davies (Swansea West) (Lab/Co-op)
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.
Charlie Elphicke (Dover) (Con)
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?
Mr Umunna
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.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
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?
Mr Umunna
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.
Caroline Lucas (Brighton, Pavilion) (Green)
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?
Barbara Keeley (Worsley and Eccles South) (Lab)
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.
Mr Umunna
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.
Stephen Mosley
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?
Mr Umunna
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.
Mr Umunna
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.
Christopher Pincher
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?
Mr Umunna
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.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
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.
Mr Umunna
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.
Mr Umunna
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.
John Hemming (Birmingham, Yardley) (LD)
Is it still the Opposition’s policy to get rid of the intermediate apprenticeship?
Mr Umunna
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.
Andrew Gwynne (Denton and Reddish) (Lab)
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.
Mr Umunna
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.
Mr Umunna
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.
Mr Gordon Marsden (Blackpool South) (Lab)
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?
Mr Umunna
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.
Roberta Blackman-Woods (City of Durham) (Lab)
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.
Mr Umunna
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.
Vince Cable
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—
Vince Cable
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.
Vince Cable
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.
Job Insecurity
Chuka Umunna Excerpts(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Chuka Umunna (Streatham) (Lab)
I beg to move,
That this House believes that insecurity at work has increased under this Government, compounding the cost of living crisis facing families; further believes that the Government’s policies have made life less secure for people at work by watering down their rights, including protections against unfair dismissal and by abandoning an evidence-based approach to health and safety; notes that the number of employees working part-time who want to work full-time has grown by over 350,000 since the Government took office to over 1.4 million, alongside a marked rise in zero-hours contracts; recognises that insecure jobs add to pressure on the social security budget by making it harder for people to buy a home or save for their own pension; calls on the Government to reverse the trend of rising insecurity at work by reforming zero-hours contracts so they are not exploitative, addressing false self-employment by closing loopholes which allow it to take place, scrapping the failed ‘shares for rights’ scheme, strengthening and properly enforcing the National Minimum Wage, including by increasing fines to £50,000 and giving local authorities enforcement powers, and incentivising employers to pay a Living Wage through ‘make work pay’ contracts; and further calls on the Government to adopt a proper industrial strategy to help create more high-skilled, better paid jobs so the UK can earn its way out of the cost of living crisis with stronger and better-balanced growth.
It is a pleasure, Madam Deputy Speaker, to serve for the first time under your chairship. I move the motion at a time when our country’s economy has thankfully returned to some growth after three years—[Hon. Members: “Hear, hear!”] Government Members will not be “Hear, hear-ing” later on, Madam Deputy Speaker. We are not out of the woods yet. In my constituency, the number of people claiming jobseeker’s allowance has fallen over the past 12 months and I welcome that, but the number of young people claiming JSA for more than 12 months in Streatham has increased by 75% and the number of adults claiming JSA for more than two years is five times what it was in May 2010. That is a tragedy for them and their families; they are not patting the Chancellor on the back.
We are all too aware that the fall in the headline rate of unemployment in some areas, such as mine, is not matched across the country. In the north-east and the south-west, for example, unemployment is up compared with this time last year. It might surprise people to learn that in London our unemployment rate is 8.1% compared with a national average of 7.1%. For those of our constituents who are in work, living standards have never before been under so much strain. A living standards crisis has impacted on households all over the country, which is why the shape and nature of growth matter. Will the rewards from growth deliver better living standards and security for the people we represent?
Nadine Dorries (Mid Bedfordshire) (Con)
The hon. Gentleman is incredibly generous to give way and I thought I might make an intervention to try to cheer him up a little. Center Parcs is bringing 1,700 jobs to my constituency in a project that has been on the table for long time—since I first became an MP nine years ago. It is happening now because Center Parcs has faith and confidence in the economy that means that it can go ahead with the project and create the jobs. I think that the hon. Gentleman will find that many employers will follow suit and the picture will be much brighter.
Mr Jim Cunningham (Coventry South) (Lab)
Although we always welcome any improvement in employment, the fact remains that the purchasing power of people out of work has dropped about 5%, and that mostly hits women.
Mr Umunna
My hon. Friend is right. It is worth recalling that when my right hon. Friend the Leader of the Opposition first talked about the cost of living crisis and the squeezed middle, Members on the Government Benches and their supporters ridiculed the very notion, but the existence of that living standards crisis is now undeniable. Indeed, since my right hon. Friend first talked about the squeezed middle, in 2011, I think, the people who compile the Oxford English Dictionary named it their word of the year, despite the fact that it is two words.
Words are one thing, but they are backed up by the reality of what we see in our communities. Ministers can do whatever jiggery-pokery they want with the figures, as the Chancellor did the other day when he claimed that the top decile of earners was the only decile that had lost out from his measures. In so doing, he miraculously forgot to take into account the huge tax cut he had given the top 1% at the same time as heaping a VAT rise on working families and taking away support from them.
The average employee is earning substantially less than when this Government came to office—over £1,600 less a year. It is important to remember that on Wednesday 13 February last year—almost a year ago—the Prime Minister at Prime Minister’s questions in this House pledged that people would be better off in 2015 than in 2010, and we will hold him to that. The head of the Institute for Fiscal Studies, who is often cited in all parts of the House, thinks differently. He said last month:
“We will be able to say definitively—I’m pretty sure—that, come 2015, average household incomes will be lower than they were pre-recession and lower than they were in 2010.”
Mr John Redwood (Wokingham) (Con)
Can the hon. Gentleman assure the House that no one working for a trade union or a Labour council is on a zero-hours contract or is a part-timer who wants a full-time job?
Mr Umunna
I will come on to zero-hours contracts shortly, if there is some patience on the Government Benches.
This living standards crisis is not just one of rising costs and falling wages. It is one, too, of increasing insecurity at work. People in work today feel less secure and more pressurised at work than at any time in the past 20 years, according to the most recent UK skills and employment survey. Members on the Government Benches shake their heads. It was the Government’s own UK Commission for Employment and Skills, which co-funded that survey, that described what we now have as a “climate of fear”. More recent research carried out towards the end of last year found that the number of people feeling insecure at work had almost doubled since this Government came to office, with half the working population believing that the economic policies of this Government have made them less secure.
There is a constant worry about whether people will be able to hold on to their jobs. There is a constant worry about whether they will be able to provide for themselves and their families—a continuing squeeze, yes, and an increasing amount of insecurity. That is the reality of life in this country in 2014.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Does my hon. Friend agree that this insecurity particularly affects young people? Nearly a million of them—940,000—remain unemployed, and this Government have failed to get them into work and to deal with the insecurity and sense of frustration they feel about not being able to make a contribution to the economy.
Neil Carmichael (Stroud) (Con)
I am grateful for the opportunity to point out that in the past quarter manufacturing grew by 0.9% and in my constituency that translates into meaningful jobs. I took the Secretary of State for Work and Pensions to Stroud last week to underline the value of apprenticeships at Delphi and so forth. Across my constituency overall employment in manufacturing has continued to rise and overall unemployment has continued to fall. Does the shadow Secretary of State recognise that that is a powerful statement of good government translating into economic success?
Mr Umunna
I think that I have had this discussion with the hon. Member for Mid Bedfordshire (Nadine Dorries) elsewhere. Some will say, as the hon. Gentleman suggests, in the context of falling unemployment, that the main thing is that people should have a job and that, unemployment having risen for much of this Parliament, they should be grateful to have a job at all. Of course we would all prefer to see our constituents in work rather than out of it, but we have to be more ambitious for the people we represent. We want them to achieve their dreams and aspirations. We want them not only to have a job, but to have decent work that pays a wage they can live on and offers a decent level of security. For the Opposition, any old job will not do, because we believe that we must do better for the people we represent, and for the people we hope to represent after the next general election—those in the constituencies of current Government Members.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
On the question of whether any old job will do, my hon. Friend might be aware that 10 years ago today 23 Chinese cockle pickers lost their lives in Morecambe bay under the instruction of illegal gangmasters. There is clear evidence that the gangmasters have now moved into other sectors, such as construction and care. Is it not time we registered illegal gangmasters so that they cannot exploit employees and damage our indigenous work force?
Mr Umunna
My hon. Friend is right to raise that issue. We all remember those who lost their lives a decade ago, and our thoughts are with their families. Of course, that was why we set up the Gangmasters Licensing Authority, and we believe that we should consider expanding its remit to include other sectors, construction being the obvious one.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
Does my hon. Friend agree that Opposition Members will not be celebrating the proliferation of zero-hours contracts, which allow our young people, in particular, to be exploited by employers who want them to be at the other end of the telephone waiting to be told when to come to work but do not guarantee them any weekly hours?
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
Is it not also the case that people on the minimum wage who are contracted for perhaps 16 or 20 hours a week are having to work more than that, with employers exploiting them in that way? That is a major problem, and their employment is very insecure.
Andrew Gwynne (Denton and Reddish) (Lab)
Other Members have mentioned the need for proper, decent employment rights in the workplace. Does my hon. Friend regret the fact that this Government seem to see protections in the workplace as burdensome regulation?
Mr Umunna
My hon. Friend is totally correct to raise that issue. Not only is it an issue of justice in the workplace, but it is also—[Interruption.] I have completely forgotten the point I was going to make—one of those moments. Ah, the thought has returned to me: it is also bad for the economy. If people are frightened out of their wits about whether they will retain their jobs, they will hardly go and spend money in our economy.
Huw Irranca-Davies (Ogmore) (Lab)
May I draw my hon. Friend’s attention to another historical parallel that goes beyond the Morecambe bay tragedy? A few years ago we marked the centenary of the Tonypandy riots—Members might or might not be aware of them—which took place in the constituency of my hon. Friend the Member for Rhondda (Chris Bryant). The significance of those riots, and the parallel with today’s situation, is that mine owners and the representatives on the Government Benches argued tooth and nail that they could not afford to pay a fair wage to miners working in the most difficult seams in the south Wales valleys. Those miners were living in poverty. I suggest that the parallel is that we should all be working together, with businesses and others, to ensure that people are paid a proper wage.
Mr Umunna
I am going to make a little more progress and will perhaps give way a bit later.
I was about to go into the shape and the nature of the employment that we see. There are those who are in work but cannot get the additional hours that they want. Over 1.4 million people are working part-time because they cannot find a full-time job; that figure is up by more than a third compared with when this Government came into office. Over 3 million workers—more than 10% of the work force—are underemployed. These are people who are employed but wish to work more hours in their current role or are looking for an additional job or a replacement job that offers more hours. We want to change this.
Above all, as many of my hon. Friends have said, there are those who do not have any security at work but want it so that they can plan and provide stability for their families. Over half a million employees in temporary positions lack any job security because they cannot find permanent roles. Last year, we learned the true extent of the abuse of zero-hours contracts, which my hon. Friends just mentioned, when the Chartered Institute of Personnel and Development published its data suggesting that as many as 1 million people are employed on zero-hours contracts. To recap, we are talking about contracts under which the employee is not guaranteed work and is paid only for the work that he or she carries out. In practice, this means that people do not know where the next pay cheque is coming from, are unable to plan ahead, and, in many cases, are constantly living hand to mouth. Of course, insecurity at work increases pressure on the social security budget because it makes it harder for people to borrow to buy a home or to save for their pension. Again, we are determined to change this. We cannot go on like this.
It is important to say—it would be remiss of me not to admit it—that I do not pretend that all this pressure on household incomes and insecurity began under this Government. We do not deny that serious structural issues have grown up over the past three decades under Governments of all different colours, but the question is this: what are this Government doing about it? We are now in the fourth year of this Government: have they made things better or worse?
Mrs Main
The hon. Gentleman is making a great speech. I liked the bit where he said that not just any old job will do. Will that be his advice to young people who go to a jobcentre? Will he say, “Don’t get any job—a job where you might learn some skills, find the confidence to get up in the morning, or get a work ethic—but wait for the job of your dreams”? Surely it is better to get people back into work, with the dignity it gives, than just to say, “Wait for that dream job under Labour.”
Mr Umunna
The hon. Lady has completely misinterpreted what I said. I was very clear that we want to see more people in work. However, there is nothing wrong with being ambitious and aspirational for the people we represent. There is nothing wrong with wanting people to have more secure work and wanting to ensure that they actually earn a wage they can live off. I make no apologies for that whatsoever.
Andrew Bridgen (North West Leicestershire) (Con)
Could the hon. Gentleman confirm to the House whether the gardener and the cleaner at his villa in Ibiza are full-time or part-time employed, and what is their hourly rate of pay?
Mr Umunna
I have said this before and I will say it again: I think we should keep our families out of this place. The hon. Gentleman would do well to reflect on that. If he wants to make another contribution that is perhaps a bit more intelligent and adds something to the debate, I am happy to give way, but clearly he has nothing to add.
The Government have failed to tackle the cost of living crisis. Family energy bills have been allowed to rise by £300 since the general election. As I said, they have given a huge tax cut to people earning millions of pounds a year while increasing VAT and cutting support for working families. They have failed to act on transport prices. What is certainly clear is that this Government have heaped further insecurity on people at work with their attacks on their fundamental rights and protections. The other week, the Business Secretary said in his speech to the Royal Economic Society—I thought it was a good speech—that he has “resisted moves” in the direction of attacking people’s rights at work. That simply does not reflect the reality.
When people have been treated unjustly or discriminated against and wish to seek redress, he and his ministerial colleagues have put up a barrier in the form of tribunal fees of up to £1,200, which the Minister for Skills and Enterprise referred to as “moderate” despite the fact that £1,200 is about two weeks’ average earnings. I do not think that is moderate: it is a barrier against access to justice.
Richard Graham (Gloucester) (Con)
The hon. Gentleman raises an important point about being ambitious and asks whether things have got better. In my constituency, unemployment has fallen by 20% and youth unemployment by 45%, and the number of new apprentices starting every year is more than double what it was in 2009. Does he agree that that is significant evidence that things are better?
Mr Jim Cunningham
I seem to remember the Chancellor announcing, about 12 months ago, a bonus if people gave up their employment rights. I wonder what happened to that. It demonstrates that what this is really all about is the corrosion of people’s employment rights in this country and making life worse for them.
Mr Umunna
I will come on to that, but before that I will go through some of the things the Government have done to people’s rights in the workplace. They have increased the service requirement for claiming 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 rewards for unfair dismissal, which, as I have said in this House before, will impact in particular on those in middle-income occupations—the squeezed middle. They have also reduced the consultation period for collective redundancy and have sought to water down TUPE protections for people. I could go on.
We know that much of that was inspired by the 2011 report by the Conservative party donor and employment law adviser to the Prime Minister, Adrian Beecroft. By his own admission, in public evidence sessions in this House, Mr Beecroft said that his findings were based on conversations and not on a statistically valid sample of people—classic “off the back of a packet” stuff.
Never mind Beecroft, the best example of the Secretary of State failing to resist measures that increase insecurity in the workplace—my hon. Friend the Member for Coventry South (Mr Cunningham) has just referred to this—is the shares for rights scheme announced by the Chancellor at the Conservative party conference in 2012. The scheme provides for new employer shareholder status, whereby in return for between £2,000 and £50,000-worth of shares in their employer, the employee gives up fundamental rights at work: the right not to be unfairly dismissed, rights to statutory redundancy pay, rights to request flexible working and so on.
For all sorts of reasons, this is a bad idea, so much so that there was cross-party opposition to it, with the former Conservative employment Minister, Lord Forsyth, describing it as having
“all the trappings of something that was thought up by someone in the bath”.—[Official Report, House of Lords, 20 March 2013; Vol. 744, c. 614.]
What did the Business Secretary do about it? He not only waved through the scheme; he sponsored its passage through the House. Since then, take-up seems to be low —about 19 inquiries have been made to the Department—but what happened next? Up popped the Deputy Prime Minister at the beginning of the year—let us remember that the Business Secretary waved through the scheme and took it through Parliament—calling for the scheme’s abolition.
Let me get this right: the Deputy Prime Minister’s two Liberal Democrat colleagues—the Business Secretary and the hon. Member for East Dunbartonshire (Jo Swinson)—guided the policy through the House just 10 months ago; the Deputy Prime Minister marched his Members through the Division Lobby, along with Conservative Members, to introduce it; and now the Deputy Prime Minister wants to take credit for saying he wants to scrap this disastrous scheme, which he set up in the first place.
I know the Liberal Democrats have a reputation for this sort of thing, but even by their standards this really does take trying to have your cake and eat it to a whole new level.
Mr Umunna
I am not giving way to that gentleman.
What would we do? To relieve the squeeze on incomes, we would take action to make work pay by expanding free child care for working parents. We would freeze gas and electricity bills while we make long-term changes to the energy market. We would introduce a 10p starting rate of tax, funded by a mansion tax. The Secretary of State was in favour of that once, but seems to have taken to voting against it, as well as against our motions about it in this House. [Interruption.] Perhaps he will correct the record.
Let us not forget that my party stood up to the nay-sayers and introduced the national minimum wage. The value of the minimum wage has fallen by 5% under this Government, so we have asked Alan Buckle, the former deputy chairman at KPMG, to investigate how we can make sure that the role and powers of the Low Pay Commission are extended in order to restore that value.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
I am sure that it was not his intention, but the hon. Gentleman has given the impression that all the new jobs are either on zero-hours contracts or provide extremely low incomes. Does he take encouragement from what has happened in my constituency, where unemployment had stuck at 3.5% for 13 years, but has now dropped to 3%, meaning that those people now have security, jobs and independence?
Mr Umunna
I am happy to clarify that I was not saying that all the jobs created are as the hon. Lady has suggested.
We want to ensure that the national minimum wage is properly enforced. That is why we want fines of up to £50,000, and we would give local authorities a role in enforcement. To go back to what I said earlier, ultimately, we want more people to be in receipt of a wage on which they can live.
Jenny Chapman (Darlington) (Lab)
Is my hon. Friend aware that people who get jobs on the minimum wage through employment agencies routinely have their wages docked to cover the administration of their pay? Very low-paid workers are therefore receiving far less—up to £16 or £20 a week less—than the minimum wage.
Mr Umunna
My hon. Friend is absolutely right. I understand that the Secretary of State is investigating that outrageous practice at the moment, and we await the findings of his Department’s investigation.
We have already made it clear that we disagree with heaping job insecurity on people in work, which is why we have opposed and voted against all the measures that this Government have introduced to water down people’s rights at work.
Andrew Bridgen
On a point of order, Madam Deputy Speaker. I hate to raise a point of order, but I think that the shadow Minister may be misleading the House inadvertently. He is talking about job security, but the latest ACAS figures—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Gentleman must resume his seat. He knows that that is not a point of order, but a point of debate. We are in the middle of the debate. If the shadow Minister wishes to take an intervention, he can do so. If the hon. Gentleman wishes to attempt to make a speech later, he can do so, but that is not a point of order.
Mr Umunna
I am not sure that the hon. Member for North West Leicestershire (Andrew Bridgen) is having a very good day.
Several hon. Members have already raised the issue of zero-hours contracts, and let me explain how we would stop their exploitative use. We would prevent employers from insisting that people on zero-hours contracts are available to work even when there is no guarantee that they will be given any work. We would prohibit zero-hours contracts that require workers to work exclusively for one employer. We would prevent the misuse of zero-hours contracts. When, in practice, employees regularly work a certain number of hours a week, they are entitled to a contract that reflects the reality of their regular hours.
Huw Irranca-Davies
Will my hon. Friend speculate on why for some reason my M4 travel-to-work area, where there is some good and encouraging news on jobs, has the highest level of food bank usage in the whole of Wales and has seen a tenfold increase in payday loans, including to people in work, during the past year?
Mr Umunna
We know that there has been stagnation in wages. My hon. Friend has given the clearest evidence of the impact of that in his constituency. That relates to the points that I have made to Government Members. Of course it is a good thing that people who have not been in work are getting work. The key thing is that it must be decent work that prevents people from having to go to food banks because they are not earning enough.
Mr Donohoe
My hon. Friend is being most gracious in taking so many interventions. One group of people who have been almost forgotten are small shopkeepers, who are suffering immensely as a consequence of the state of this nation. They have not been mentioned, but they have very insecure futures. Surely we should address that, as well as the other matters that we are addressing this afternoon.
Mr Umunna
My hon. Friend is right. We are a nation of shopkeepers. That is why we want to cut business rates in 2015 and freeze them thereafter. We also want to provide more support for local communities and high streets. I am proud to have the longest continuous stretch of high street in the country in my constituency.
Guy Opperman (Hexham) (Con)
I am listening to the hon. Gentleman’s speech and there have been good parts of it. He has spoken about voting records. Can he assist the House by giving any example of when the Labour party has voted in favour of or supported the Government’s position on employment, business or welfare reform over the past four years?
Mr Umunna
In relation to business reform, if the hon. Gentleman looks at the comments that we made during the passage of the Enterprise and Regulatory Reform Act 2013—[Interruption.] The hon. Gentleman has asked me a question, so he should let me finish the answer. There are elements of the 2013 Act that we thought were commendable, such as instituting the Competition and Markets Authority and setting up the green investment bank, which we started to do in government. However, we did not entertain the proposals to water down people’s rights at work so that they would be scared out of their wits, because that would have an adverse impact not only on them and their families, but on the economy.
The hon. Gentleman also talked about social security. There are two ways in which we can reduce the social security bill. First, we can ensure that more people get back into work. I very much welcome all the examples that have been given of that. Secondly, we can ensure that people earn a wage that they can live off. They will then pay more in national insurance and we will pay out less in tax credits, which is good for the Exchequer.
Richard Fuller (Bedford) (Con)
The shadow Secretary of State is making a thoughtful speech. Many Members on this side of the House would like to see him as shadow Chancellor. Unfortunately, it seems that we will have to wait until after the next election to see that.
The motion refers to increasing wages and to the living wage. However, there is a tapering effect that means that if somebody on the minimum wage has a pay increase of 23%—the difference between the minimum wage and the living wage for people living outside London—the increase in the money in their pocket turns out to be only 1% or 2% because of the changes in benefits. If the shadow Secretary of State were in charge, how would the Government address that?
Mr Umunna
It is the aim of all Labour Members not to be in the shadows at all. We are happy to give the shadow positions to Government Members.
On the hon. Gentleman’s point about wages, it is important that we incentivise employers to pay a living wage. Imposing a living wage on employers would have an adverse impact. We intend to introduce Make Work Pay contracts, through which we will give employers a tax incentive to pay the living wage. The Exchequer will easily get back the cost of that through national insurance.
Mr Umunna
I will try to make progress, because I am conscious that I have been going on for some time.
We would clamp down on false self-employment. That is the practice by which employers classify their workers as self-employed in order to pay lower levels of national insurance. Of course, that leaves workers without the protections that are enjoyed by employees, even though most people would regard their relationship as one of employment. That is a particular issue in construction. The last Labour Government proposed that workers should automatically be deemed as employed for tax purposes if they met the criteria that most people would regard as obvious signs of being employees rather than self-employed contractors. That will be the starting point for the next Labour Government.
To conclude, we have a bigger goal. Our ambition must be to transform our labour market from one that has too high a percentage of low-wage and low-skill jobs into a high-wage, high-value and high-skill labour market. Of the 25 economies in the OECD, we rank fifth in the percentage of our labour market that is low-waged and low-skilled, and we must tackle that.
Gareth Johnson (Dartford) (Con)
Is the hon. Gentleman aware that there has been a 24% reduction in people claiming benefits in my constituency, which is not a million miles from his constituency? Most of those jobs are full-time, permanent positions, and many are for 18 to 24-year-olds. That happened only because we did not take the advice that the Labour party gave us over the past three to four years, and we stuck with our plans. Why should we start taking the hon. Gentleman’s advice now?
Mr Umunna
I think the clue is in the question. The hon. Gentleman said three to four years, but he did not mention that we had a flatlining economy during that period, or all the stress and worry that people have been subject to in the meantime. That is why we disagreed with his Government’s economic strategy.
Returning to the composition of our Labour market, as economists grapple with the ongoing productivity puzzle, a growing body of thought suggests that it is explained by the compositional change in the work force that I mentioned, and the change towards having more low-paid, low-productivity sectors than before. We must address that and do so fast.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
My hon. Friend is making an excellent argument. In 2011, employers spent £1,680 per employee on skills and training, but that has fallen to £1,590 this year. Does my hon. Friend think that has anything to do with the £54 billion fall in investment in SMEs since 2011?
Mr Umunna
I agree with all of that, and it has definitely had an impact. Ultimately, to tackle these problems we need a proper comprehensive industrial strategy that is implemented across all Departments. Some people say, “Well, the Government have an industrial strategy”, but there is no point having an industrial strategy that only the Department for Business, Innovation and Skills buys into, or in using such a strategy to support our defence sector if at the beginning of the Parliament the Ministry of Defence decides to buy product off the shelf from other countries. We must rebalance the economy in the long term, and that is still some way off. In his speech the other week, the Secretary of State acknowledged that, but we still do not export enough, and we still have geographical imbalances and relatively low levels of business investment. We will earn and grow our way out of this cost of living crisis and create more security by better balancing our economy with a proper industrial strategy. I commend the motion to the House.
Vince Cable
My impression is that the policy we have been pursuing is very much evidence-based, and the examples I have given on inspections are in precisely that category. However, my colleagues from the Department for Work and Pensions know much more about this aspect of the subject than I do, and no doubt they will respond to the right hon. Gentleman’s point.
Finally, let me deal with the one issue on which the hon. Member for Streatham spent quite a lot of time and with which he had a certain amount of fun. I refer to the “shares for rights” scheme. Of course, it is possible to develop a critique of that scheme, but what I find amusing is that at least three totally separate and conflicting arguments have been advanced against it. The first is that downtrodden workers will be stripped of their employment rights. When the scheme was being dealt with in Parliament, we tried to ensure that it would be entirely voluntary, and indeed we responded to proposals from the Opposition in order to entrench that.
Another line of criticism has nothing to do with downtrodden workers, but is all about highly paid executives carrying out a tax scam. That may be true. However, a third criticism—which we heard from Back Benchers and which is, at least currently, supported by the facts—was that neither of those things are happening, because not many people are taking up the scheme. If the Opposition are going to launch a full-frontal attack on the proposals, they should work out which of those three arguments they believe in.
Mr Umunna
The Secretary of State has argued that he has resisted some of the nastier aspects of his coalition partners’ moves to water down people’s rights at work, but we need only read the reports of what was said on both sides of the House of Lords to see what impact the “shares for rights” scheme was expected to have. That is the point I was making.
Esther McVey
I have not had sight of the report from the Department for Environment, Food and Rural Affairs, because I am a Minister in the Department for Work and Pensions, but once it has been authorised and released, the hon. Gentleman can read it.
Let us return to today’s debate. We heard a great deal of what I would describe as misinformation about the number of people in part-time work. Since the election, the number of people in full-time work has risen by 1 million; three out of four people are in full-time work, and we have stabilised the position. In the last quarter, the number of people wanting to move from part-time to full-time work fell for the first time ever, and—Opposition Members may be startled to hear this—between 2005 and 2010, the number doubled. That is the truth of Labour’s legacy.
Opposition Members talk of zero-hours contracts, but the number of zero-hours contracts is the same as it was in 2000. The 75% increase happened between 2004 and 2009. Moreover, if we want to think about getting our houses in order, we should note that the council with the worst record for zero-hours contracts is Labour-run Doncaster council, which is in the constituency of the Leader of the Opposition and also in the constituency of one of the ladies on the Opposition Front Bench.
Turning to the contributions of those on the Government Benches, my hon. Friend the Member for St Albans (Mrs Main) talked some good common sense about people getting their foot on the ladder, job progression, the fact that the number of apprenticeships has doubled in her constituency, and how this Government are helping families and young people into work. She also questioned what the hon. Member for Streatham (Mr Umunna) meant when he said, “Don’t take any old job; some jobs are different from other jobs.” There was some real job snobbery from the Opposition Front Bench.
My hon. Friend the Member for Selby and Ainsty (Nigel Adams) talked about youth unemployment being down by 25% in his constituency, and how he does not talk down the economy, but instead talks it up because that is positive and it helps people into work.
Mr Umunna
I ask the Minister to withdraw the comments she has just made. I was quite clear that of course we welcome people getting back into work. My point was—and I am sure she will agree with me—that we aspire for more than that for the people we represent. We do not just want them to get a job; we want them to get good-quality jobs which are secure and well paid. That is the point I was making. She was here. Perhaps she will clarify her comments.
Esther McVey
Well, I am glad the hon. Gentleman has decided to return to the Chamber. I explained earlier how unemployment has significantly fallen in his constituency, but he was not here to hear that. His words are on the record, and we all heard them. Should he wish to read them back tomorrow, he can do so in Hansard.
My hon. Friend the Member for Ipswich (Ben Gummer) talked with great clarity about the great recession that we were left with, how we have sorted it out and taken significant strides in building up the economy, and what we have done in terms of exports and developing manufacturing, so that now for the first time since the ’70s we export more cars than we import, and we are now exporting more outside Europe than inside Europe. All these things have happened under our stewardship.
My hon. Friend the Member for North Swindon (Justin Tomlinson) talked about how people can set up their own business, and how that is a real engine for social mobility, and how this Government are helping people through the new enterprise allowance. Under us, businesses are setting up at the rate of 2,000 a month. That is what we want—young people setting up in business, older people and women setting up in business. Those are the sorts of policies we are coming forward with.
My hon. Friend the Member for Reading West (Alok Sharma) rightly said that this motion is vague, confused, and just lacking really, rather like Labour’s policies in this entire area. He also said business confidence is up, and not just in his area but right across the country. There are reports that say so: the CBI and PricewaterhouseCoopers have said optimism is up. Do people want to take on people? Yes they do. Do people want to give people jobs? Yes they do. They feel that for the first time.
The whole motion did not really make much sense. It never really looked at what had happened under Labour’s stewardship. It never really looked at how when we talk about the tax credits bill and the benefits bill, we say it might have gone up a little bit; it will have gone up by 5% in five years, yet under Labour it had gone up by 20%. What we are doing is rebalancing the economy, bringing the spend down, and living within our means.
The hon. Member for Bridgend (Mrs Moon) talked about unemployment in her constituency. I am pleased to be able to tell her that unemployment is down 26% on this year and 23% on—
Jobs and Business
Chuka Umunna Excerpts(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Vince Cable
There is one major bank that has predominant Government ownership. That does not give the Government powers to lend, because there are significant independent shareholders and the hon. Gentleman will be familiar with the corporate governance problems that presents. We would like RBS to lend more, and Mr Hester explained this weekend that he has a significant amount of capital available.
Mr Chuka Umunna (Streatham) (Lab)
There has been speculation about the Government entering into a hasty sale of RBS. Will the right hon. Gentleman assure the House that the Government will look to ensure that the bank returns to a far healthier position before they contemplate privatising it? On his earlier comment, I agree about the problems that small businesses face in dealing with banks, but does he not accept that the economic outlook has also had an impact on the pressing demand for lending for small businesses?
Vince Cable
Yes, there is an issue with the demand for loans. It is not simply a question of aggregate demand in an economic sense. Many small companies have been discouraged from applying and we need to overcome that handicap. On the wider question, I know that the Chancellor is listening carefully to this debate. I read the contribution of the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who suggested that the key issue was value for money for the taxpayer. I agree completely.
Mr Chuka Umunna (Streatham) (Lab)
Before I start, I should just say that I understand that my hon. Friend the Member for Hartlepool (Mr Wright) and the Secretary of State for Business, Innovation and Skills, shared a birthday yesterday. I just want to wish them a belated happy birthday so as to start on a positive note before moving on to the Government’s record since the previous Queen’s Speech. It is right for us to take stock, to look at where we are now and where we were last year, before considering Her Majesty’s Gracious Speech.
When we convened to debate the speech last year, unemployment had soared beyond 2.6 million, we were in a double-dip recession, and the Government were borrowing £150 billion more than they forecast to pay for the cost of their failed economic plan. The Secretary of State’s answer to that state of affairs was to bring forward an enterprise Bill that started with some sensible measures, but ended up becoming a Christmas tree of a Bill. It contained measures to water down the statutory remit of the Equality and Human Rights Commission, to trample over people’s rights at work, to overturn health and safety protections that have existed for more than 100 years, and to abolish—this came rather late in the Bill’s progress—the Agricultural Wages Board that protects agricultural workers. That was all done in the name of growth, without a scintilla of evidence to show how doing so would create jobs and boost enterprise.
The right hon. Gentleman then went on to co-sponsor the Growth and Infrastructure Bill. That did not even feature in last year’s Queen’s Speech, but sought, among other things, to establish a shares for rights scheme where, in return for being given shares in their employer’s company, employees would be required to sacrifice their rights at work. That was described by the Government’s own side as having all the hallmarks of being thought up by somebody in the bath. Again, no evidence was produced to show that the measure would produce growth.
There is an irony in all this. Last year, the Business Secretary had gone around saying that he did not think much of the Prime Minister’s employment law adviser, the Conservative donor Adrian Beecroft, and his proposals to run a coach and horses through people’s rights at work, which, by Mr Beecroft’s own admission, had no evidence base whatever. There is clearly a thin line between love and hate, because the Secretary of State did Mr Beecroft proud in the last parliamentary Session. That is not to say that his coalition partners should be absolved of the blame—they were all in it together, to coin a phrase. Notwithstanding the fact that what they were doing was wrong in principle, I fail to understand the politics of it. Let us take the Conservative party, a party that has not won a general election since 1992. We are told that it has a strategy of gaining 40 seats and retaining 40 of their most marginal seats at the next general election, yet 70% of those 40 seats it wishes to retain have significant numbers of agricultural workers. In fact, 10 of the constituencies most adversely affected by the abolition of the Agricultural Wages Board are Conservative marginals, including Lancaster and Fleetwood, Weaver Vale, Hastings and Rye, Sherwood, and Morecambe and Lunesdale. At the general election, we will remind every single voter in those seats of the Conservative party’s betrayal of them.
What has happened to the economy since the Government’s first two Queen’s Speeches? The Secretary of State made various international comparisons in his contribution. Since October 2010, the UK economy has grown by just 1.1% compared with the 6% forecast made by the Office for Budget Responsibility, and 3% growth in Germany and 4.3% growth in the US during the same period. Unemployment is stuck around the 2.5 million mark. A large number of those in work are working part time when they want full-time work, and people have faced an average pay cut of £1,700. Let us not forget that that was all being done in the name of reducing borrowing. We now have a situation where the Government are borrowing £245 billion more than they planned—the equivalent of the health and education budgets combined, and then some.
The Secretary of State is an economist. The reason why this strategy is failing was put very well to me, when I sat on the Treasury Committee, by a former member of the Monetary Policy Committee, Adam Posen. He highlighted the problem of the Government’s strategy. What they were attempting to embark on was an experiment. It was the most extreme consolidation embarked on by any Government in the western world at this point in a country’s recovery from the economic heart attack to which the Secretary of State referred. That is why their policy has failed.
Gordon Birtwistle (Burnley) (LD)
The hon. Gentleman says that the German and US economies have done well and have not faded like our economy. Does he accept that those two countries supported their manufacturing sector while the Labour party, when it was in charge, ran our manufacturing sector down from 22% to 9% of GDP?
Mr Umunna
I certainly accept that we want to grow our manufacturing sector, but the Secretary of State has conceded that, for example, the things we did in the automotive industry by setting up the Automotive Council have helped to increase the output of that sector. So I do not agree that we did nothing to boost manufacturing in this country.
My right hon. Friend the shadow Work and Pensions Secretary will talk later about the failure of the Government’s schemes to get the unemployed back to work.
Mr Umunna
I remind the Prime Minister’s Parliamentary Private Secretary that his boss is borrowing £245 billion more than planned. The only part of our five-point plan to get the economy growing again that would incur extra borrowing is the VAT cut, which would cost £12 billion in the short term. We advocate a VAT cut because it is the fastest way to give an injection to an economy that, frankly, has flatlined over the past three years. We have seen it work previously. During the economic downturn when we were in office, we introduced a VAT cut that we know—Institute for Fiscal Studies numbers have provided supporting evidence—helped to boost growth in the economy. That is what we need now. Of course, boosting growth would increase corporation tax receipts and income tax receipts—as more people enter work—and reduce the benefits bill.
Mr Umunna
I will make more progress.
Ultimately, for employment schemes to work, there need to be jobs for people to go into, created by businesses, and for that we need to create the conditions for businesses to expand and for wealth to be created. We need to create an environment in which businesses can grow the top line. On many occasions, the Business Secretary has pointed to how our economy is structured, which he says stands in the way of progress. I agree that we need to restructure our economy, to increase our exports and to diversify the sectors contributing to GDP—there is consensus on that—but I must say to him that blaming the Government’s predecessors starts to wear thin after three Queen’s Speeches and after three years in government. It is time that he and his colleagues took responsibility for their actions.
I have always thought that to achieve both rising and shared prosperity, we need to rethink the relationship between the Government and markets and to be far more discerning about the kind of capitalism we want in this country. We need to set aside the neo-liberal dogma propagated by some Government Members that markets are automatically efficient and best left alone. There is a lot that active Government can do to improve the healthy functioning of markets. Importantly—this is a key point—markets cannot set a strategic direction for our economy; they cannot set a direction for how we will compete and pay our way in the world—Governments working in partnership with business can do that.
Making that a reality requires a modern industrial strategy—the kind of strategies that our competitors are prosecuting with good effect—and an agenda in which the role of the Government is not to step back, but to step up; to work with businesses to create better outcomes at home; to ensure that we can pay our way in the world; and to ensure that growth is more broadly based across sectors and geographically across regions as well. We must also empower consumers as drivers in making markets work more efficiently, not only for themselves but for producers. That helps to provide the foundations for UK businesses to succeed in other markets.
Meg Hillier
Does my hon. Friend agree that the Government’s approach to funding for lending has been the polar opposite of what he has just described, and has in fact fuelled the housing market rather than helped businesses such as mine in Shoreditch? It has done nothing to deal with day-to-day finances and only touched potential loans, rather than things such as overdrafts. What would his approach be were he in the Secretary of State’s position?
Mr Umunna
My hon. Friend is right to identify some of the risks with the funding for lending scheme. The problem is that it has reduced the cost of borrowing for existing business borrowers without increasing access to finance for those other successful, profitable businesses. The other problem—this is why we advocate setting up a regional banking network, to which I shall turn in a minute—is that the scheme sees as its delivery mechanism the very high street banks that have been the problem. In fact, the transmission mechanism for many of the schemes that the Government have introduced since they came to office has been the high street banks, which have been the problem.
I will continue to discuss industrial strategy in more detail before touching more briefly, due to time constraints, on consumer issues. I do not think that the Business Secretary would disagree that in opposition he did not really share our view of the need for an active industrial strategy or even of the need for a Department, which he now runs, to be its champion—he argued for his own Department to be abolished at the time. After two years in government, however, he appears to have come round to our way of thinking, and we saw his embryonic industrial strategy published last September.
An industrial strategy consists of different elements. I have welcomed some of the sector-specific interventions that the Business Secretary has announced since the Queen’s Speech—in aerospace and with the ongoing interventions and assistance in automotive—and we will scrutinise the Bills in the Queen’s Speech closely to ensure that they support those key sectors. Another such sector is our creative industries, which were disappointed not to see a communications Bill in the programme for this Session. The point is that so much of what we have seen coming from his Department or the Treasury has been rather “piecemeal”—to use the Secretary of State’s own language—and does not meet the scale of the task at hand. As ever with this Government, if we speak to any business organisation, we hear that the problem is one of delivery.
I will focus on a few key areas and the extent to which the Queen’s Speech moves things forward. I will start where the Business Secretary finished. Of course, we must reform our banking sector, not only so our banks are made safe but primarily so that the financial services sector better serves the real economy. We have said, and he referred to this, that we should have better regulated the banks during our time in office. We did not, however, and that is a source of regret. Listening to the Secretary of State lecture us on that, I should say to him that mea culpa in that respect is due across the political spectrum. The tripartite regulatory regime that we put in place in the Financial Services and Markets Act 2000 enjoyed widespread support. In the House on Second Reading of the Financial Services and Markets Bill, the Business Secretary said:
“I want to express broad support for the Bill, whose philosophy and whose architecture of financial regulation reflect a broad consensus. I appreciate the extent to which there has been broad and extensive consultation with practitioners and with Parliament, and the fact that the Government have responded to very many of the anxieties that have been expressed.”—[Official Report, 28 June 1999; Vol. 334, c. 55.]
He went on to say:
“Like the Conservative Opposition, we shall approach the issues constructively. There is no reason to hold back the Bill.”—[Official Report, 28 June 1999; Vol. 334, c. 58.]
Kevin Brennan (Cardiff West) (Lab)
Is my hon. Friend not being somewhat unfair on the Business Secretary? After all, how can he reasonably expect consistency from a Liberal Democrat?
Mr Kevan Jones
Do we not also need a bit of consistency from the Conservative part of the coalition, which not only supported that Bill but in some cases, as with the Chancellor, wanted to go further with deregulation of the banking system?
Mr Umunna
My hon. Friend is absolutely right, and I was just about to come on to that. The Business Secretary, soon after making that statement in favour of our regulatory framework, said:
“Like the Conservative Opposition, we shall approach the issues constructively. There is no reason to hold back the Bill.”—[Official Report, 28 June 1999; Vol. 334, c. 58.]
My hon. Friend the Member for North Durham (Mr Jones) is absolutely right: neither the Conservative party nor the Liberal Democrats voted against that Bill in opposition, and yet we have had no expression of regret from them for supporting the regulatory framework that we put in place. It is about time that we heard some mea culpa from Government Members.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Just so that the record is absolutely straight, the hon. Gentleman might like to remind us who were in government when the economy went over the edge of a cliff. Would he now—[Interruption.] The shadow welfare Secretary should just calm down. I think the hon. Member for Streatham (Mr Umunna) is capable of dealing with this himself; he does not need the shadow welfare Secretary’s assistance. Let me ask the hon. Gentleman a simple question, which my right hon. Friend the Business Secretary posed to him at the beginning. On the basis of humility, will he now get to the Dispatch Box and say to the British people that the Labour party is deeply sorry for the shambolic mess in which it left the economy?
Mr Umunna
With the greatest respect to the welfare Secretary, let me say two things. First, I have said that we have expressed regret in terms of the way in which we regulated the banking sector. However, let me also remind him that in the last two quarters of our term in office, we saw growth of 1.1%. During his time—[Interruption.] He should let me finish my sentence. If he does that, I might answer his question—I presume he wants to hear it. Did we leave him with a double-dip recession? No. Did we leave him with 2.5 million people out of work? No; so I will take no lectures from this welfare Secretary about the management of the economy.
After that excitement, let me return to banking. Reform is obviously needed, in particular to ensure that the sector provides finance to the profitable and successful small businesses that want to expand and take on more employees, but cannot access the finance that they need. That is crucial, because so many of those businesses are the ones we look to to create jobs. We know that under this Government lending to businesses is falling month on month, including a fall of £4.8 billion in the three months to February, according to the latest Bank of England figures. We know too—my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) mentioned this—that the Government’s schemes, from Project Merlin to the national loan guarantee scheme and, now, funding for lending, have simply failed to get credit to those businesses.
Every other country in the G8 has a state-backed investment institution to tackle the problem and ensure that their small businesses can access the finance they need. That is why we have argued since early in this Parliament for the establishment of a proper British investment bank and a network of regional banks, based on the German Sparkasse model, to work alongside a British investment bank to transmit those schemes to small businesses. Those are two sensible ideas that would bring us into line with our international competitors. Indeed, I am pleased to hear that the Business Secretary agrees that it is a good thing to re-establish regional banking in this country.
We would have introduced a Bill in the Queen’s Speech to establish those bodies, yet the Government have failed to do so. Instead, what have we got? Last year, rather late in the game, the Business Secretary announced, to much fanfare at his party’s conference, that he was establishing his small business bank. The British Chambers of Commerce and the Federation of Small Businesses have said that he must get on with setting it up. Last year he came to the House and told us that his bank
“has already been established, and it will be up and running next year.”—[Official Report, 20 December 2012; Vol. 555, c. 988.]
So where is this bank? The IMF is currently in town inspecting the wreckage of the Government’s failed economic plan. I know how keen the Chancellor is to rely on its pronouncements, so I went on its website to discern how it defines what a bank does. The IMF says that the primary role of a bank is to
“take…deposits…from those with money, pool them, and lend them to those who need funds.”
I suspect that most Members would expect such a bank to be established on a stand-alone basis, with its own building like any other bank—I remember all the questions put to the Business Secretary about the location of the green investment bank, for example. However, what do we find buried in the back of one of his press releases, issued just before the Easter recess? We are told that his business bank
“is expected to become a fully operational new institution in the Autumn of 2014,”
but before then any references to his business bank
“refer to the team within BIS responsible for the development and operation of its policy and programmes before it becomes a fully operational new institution.”
Mr Umunna
I will give way to the Secretary of State shortly, so that he can explain this to us.
What we have is a floor of people—mostly made up of the Business Secretary’s civil servants—in his Department in No. 1 Victoria street that is dressed up as a bank. It is in no way, shape or form what most people would understand to be a bank, and it will be up and running not this year, as he said to the House in December, but at the end of next year at the earliest.
Vince Cable
Instead of looking for information in IMF reports, perhaps the shadow Business Secretary should look at some of the business before the House. I do not know whether he is aware that we made a written ministerial statement a few weeks ago explaining exactly where we were with the business bank. At the moment it is marketing its first tranche of funding. We have a substantial team in BIS of people with banking experience recruited from the private sector. He is welcome to come in and talk to them. I think he will find that there is a substantial acknowledgement in the small business community that what we are doing is exactly right and on target. If he wants to question our delivery more generally, he should perhaps read what I said in Edinburgh yesterday about the substantial progress we are making with the other bank, the green investment bank.
Mr Umunna
With the greatest of respect to the Secretary of State, he said that the body he was establishing was a bank and that it would be up and running this year. It is in no way, shape or form a bank as most people would understand it and it will be up and running not this year but next year. As for his green investment bank, it will not be able to borrow any substantial moneys until it meets his fiscal mandate. Also, I presume that legislation will be required to set up his new small business bank, as was the case with the green investment bank, yet there was no sign of that in the Queen’s Speech.
Vince Cable
As the hon. Gentleman may at some future stage in history occupy this role—he is obviously preparing for it—let me clarify one thing. Is he at all familiar with state aid rules? If so, he will know that under the rules of the European Union, it is necessary to obtain approval before a bank can operate fully in the competitive market of the European Union. That is why 2014 has been cited—because we respect those rules. None the less, we are using the resource we have in the short term to provide support for business. That is what we are doing.
Mr Umunna
The Secretary of State says that it is not required. We will see. I fail to understand why legislation was needed for the green investment bank but not for his small business bank, but let us see. [Interruption.] Let me tell the welfare Secretary that I would love to have a general election, because then I might be able to occupy the Business Secretary’s post more quickly than he perhaps foresees. What we hear from most small businesses is that what the Government have done to increase access to finance and resolve the issues of the banking sector for the real economy has proved to be a let down.
Let me turn to skills and training. Weakness in specific intermediate or vocational skills is a business concern and a source of competitive disadvantage for the UK compared with our neighbours. With almost 1 million young people out of work—my hon. Friend the Member for Croydon North (Mr Reed) referred to this—we must ensure that we have system that delivers people with the education and skills that our businesses need if they are to move into work. We could start by increasing the number of apprenticeships, but crucially boosting their quality too. We have heard the Secretary of State, like other Ministers, boasting about creating more than 1 million apprenticeships, but the number of 16 to 18-year-olds starting an apprenticeship in the first half of this academic year dropped by 12%. Indeed, two thirds of large companies in this country do not offer apprenticeships. We urgently need to improve on that and also protect the quality of apprenticeships, which is precisely the point made by Doug Richard and Jason Holt, whom the Secretary of State commissioned to do reports on apprenticeships.
The Queen’s Speech made a vague reference to a desire to ensure that it becomes typical for those leaving school to start a traineeship or an apprenticeship, but where was the jobs Bill we wanted that would have required large firms getting sizeable Government contracts to have active apprenticeships scheme, ensuring opportunities to work for the next generation? There was no such Bill. I still fail to understand why this Government will not proceed with that simple measure. Ministers released details of their plan for traineeships yesterday, which is a six-month programme of training and work experience to aid young people towards apprenticeships or employment. We will have to study the detail closely, but I note that they expect colleges to have the scheme up and running by August. That will be a challenge, given the very short notice.
On procurement, which should of course be used as part of an industrial strategy, the Government’s Bombardier decision earlier in this Parliament demonstrated their failure to account for the impact of procurement decisions on jobs and growth and on the strategic development of industrial capacity. We know that the story is the same with defence. The Government’s defence industrial strategy has been abandoned in favour of buying off the shelf from overseas. In making procurement decisions, we would take account of the impact on jobs when deciding to whom to award contracts. The French, the Dutch and the German Governments do that within EU law—the Business Secretary referred to it—and so would we. If this Government were serious about backing British industry, we would perhaps see them taking similar measures. Again, however, there was nothing about this in the Queen’s Speech.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
On the question of jobs and skills, training and apprenticeships, does my hon. Friend agree that black and minority ethnic young people in our great cities have been disproportionally hit by this economic crash, making it important that any strategy around jobs, skills and apprenticeships and even access to funds for entrepreneurship has within it structures and strategies to help those BME young people?
Mr Umunna
I completely agree with my hon. Friend. Some things I support, such as the start-up loan scheme, could be of real benefit to our different diverse communities, particularly to young people and young entrepreneurs seeking to set up businesses. The problem up to now—I appreciate that James Caan is doing fantastic work on this—is that there has not been enough awareness of it. I have offered to help him raise such awareness in our different diverse communities.
Gordon Birtwistle
Does the hon. Gentleman agree that the destruction or non-acceptance of careers advice in schools—by both the previous Government and, I have to say, the present Government—is not helping young people to get into apprenticeships or further education? Does he agree that if we got professional careers advice back in our schools, more young people would be interested in doing apprenticeships rather than going to university to study subjects that in some cases will not lead to any job?
Mr Umunna
That is an extraordinary intervention from the hon. Gentleman, given the huge cuts that this Government have made to information, advice and guidance, including to careers advice. I remind the hon. Gentleman that it is his Government—and he voted for it—who have cut and destroyed Connexions. I know from experience in Lambeth in my constituency that Connexions made a massive difference.
Let me move on to infrastructure. Good infrastructure, of course, is at the heart of an industrial strategy and crucial to creating the right business climate. That is why we asked the chairman of the Olympic Delivery Authority, Sir John Armitt, to crack this issue for us.
In the Queen’s Speech, after three years of dither and delay, we have finally seen some movement on transport infrastructure in the form of the HS2 Bill. I think I speak for many business people when I say that people would like to see this Government move on aviation, too. The Government should bring forward the date for Sir Howard Davies’ review of aviation and ensure that his report is produced before the general election. We need no more dither and delay on that issue either.
Mr Umunna
I want to make a bit more progress.
With our economy flatlining, this country is crying out for investment in infrastructure to create jobs, boost confidence and strengthen our productivity and competitiveness. Both the CBI and EEF have criticised the Government for their failure to get on and deliver on infrastructure. They are right to do so. The last infrastructure pipeline update given by the Treasury showed that of their 576 projects, fewer than 5% of them were completed or operational. If they got on with delivery of those projects, we might see a pick up in construction, which fell by 2.5% in the last quarter and by 5.9% compared with last year. While the Business Secretary was on his feet, the Office for National Statistics published its latest construction output statistics, showing that all new construction work is 3.2% down on the last quarter. Why was there not more, then, in the Queen’s Speech to bring forward spending on infrastructure?
Mr Gyimah
Going back to supporting businesses, specifically in the context of small communities, will the hon. Gentleman give me a sense of whether he will support the National Insurance Contributions Bill, which would, after all, reduce the national insurance bill for every business by up to £2,000? It will affect business communities not just in the BME areas, but throughout the country.
Mr Umunna
It is funny that the hon. Gentleman should bring that up, as I was just coming on to it.
Finally, on tax and other incentives for business, we have been arguing for months for a national insurance break for micro-businesses taking on extra workers. The full scale of the failure of the Government’s initial national insurance holiday scheme was laid out for all to see by the accountants UHY Hacker Young last week when they disclosed that the scheme, which the Chancellor said would benefit over 400,000 small businesses, reached a new low in December last year, attracting only 400 applications. I thus say to the hon. Gentleman that I really hope that the National Insurance Contributions Bill in this year’s Queen’s Speech, which introduces the employment allowance—no doubt there is more detail in the paper the hon. Gentleman has with him—will prove far more successful than the Government’s scheme to date. [Interruption.] I am asked whether I support it, but I have just said that I hope the scheme proves to be far more successful than the lamentable failure of the Government’s scheme to date.
Before I finish, I want to deal with the Government’s consumer rights Bill. As I said, empowering the consumer is an important part of ensuring healthy and efficient functioning markets. The Government have included a consumer rights Bill in the Queen’s Speech. We are told that it consolidates consumer rights legislation in one place, bringing together eight pieces of legislation and covering goods, services, digital content and unfair contract terms. I agree that consumers need more clarity on their rights, but from what we have seen so far, the Government’s proposals appear to fall short of the action that we have called for to help families, to ensure a fair deal on energy prices and to tackle high rail fares, for example.
I think that the Government’s changes in this area have been muddled, as we have seen this week. First, the Government were going to abolish Consumer Focus, but now we learn that they are going to keep it in a slightly watered down form, and it will now be called Consumer Futures. It seems that it will be doing a similar job, but who knows what landscape we will be left with.
As part of our policy review, which was led by consumer champion, Ed Mayo last year, we have been planning to bolster collective action and to empower consumers so that they can club together more easily to seek redress. As the consumer rights Bill makes progress, we will press Ministers for a strong, accessible collective redress mechanism—one that mirrors the Portuguese and Australian models, which remove the legal excesses. It will not be a US-style class action, where litigation is dominant. We will address the matter in more detail when the Bill begins its passage through the House.
So there we have it: after three wasted years, we have yet another wasted chance to bring change to this country—change that it desperately needs.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I listened with interest to what my hon. Friend said about the consumer rights Bill, to which I hope to contribute. Does he agree that this might provide a fantastic opportunity to address the disgraceful practices of the secondary ticketing market, which has now become industrialised ticket touting? Does he agree that we have a great opportunity to put fans first?
Mr Umunna
I completely agree with my hon. Friend, who has done fantastic work in this area. We will scrutinise the Bill closely and if it does not contain provisions to address secondary ticketing, we will table amendments to bring about much-needed change on this issue, which my hon. Friend has championed for a long time.
Despite the difficult economic climate, I do not doubt for one moment our businesses’ ability to overcome the hurdles in front of us. I see dynamism and innovation as I go around the country meeting so many of our entrepreneurs, which I have found to be an inspiration. I wish only that we had a Government equal to the task of helping those entrepreneurs to go on and thrive. It is clear from the Queen’s Speech that this Government are out of steam, and that until we have a general election and the chance of a Labour Government, we shall not see the kind of government that I think our businesses want and need.
Stephen Metcalfe
Shall I answer the hon. Gentleman’s first point before I take a second intervention?
The hon. Gentleman’s other point was about our explaining to people when we came to power the inheritance we were left and the measures we had to take to tackle it. I was slightly confused earlier this morning when listening to the hon. Member for Streatham (Mr Umunna) who said that the only additional borrowing that Labour had mentioned was the VAT cut, which would add an additional £12 billion to the overall borrowing we have identified. I assume that means that he would stick to every spending plan we have in place. Our spending plans have resulted in spending reductions across Departments, every single one of which have been opposed by the Opposition. I am slightly confused about their current line. Do they agree with the cuts and just want to borrow an additional £12 billion to cut VAT, or are they saying that they do not agree with the cuts, that they will backtrack on all that and that they will raise additional taxation?
Mr Umunna
As the hon. Gentleman has asked the question, the first thing to say about our five-point plan for growth and jobs is that it is a plan to stimulate the economy now. The ridiculous argument made by Government Members is that if we are voting against things, that has nothing to do with their choices and decisions. It is important to remind him of that. I think that people resent his Government giving people who earn millions of pounds a huge tax cut while ordinary people in his constituency suffer because of what his Government are doing. It is about the choices one makes.
Stephen Metcalfe
People in my constituency are suffering because of the toxic economic inheritance we acquired when we came into government. [Interruption.] I am sorry; it is simple. If we had not inherited the largest deficit in the developed world and a huge debt, we would not need to make the decisions that we are making now. We never hear a credible alternative from the Labour party; we just hear opposition.
Mr Steve Reed (Croydon North) (Lab)
I am delighted to follow that passionate and insightful speech from my hon. Friend the Member for Burnley—for Bolton West (Julie Hilling). [Interruption.] I am still learning the constituencies!
As a relatively new MP, I found it a privilege to be present at the Queen’s Speech for the first time. There was a sense of occasion and history; the sight of Her Majesty on the throne; Black Rod hammering on the door of the Chamber—so much to see everywhere except, unfortunately, in the Queen’s Speech itself, which was remarkably light on content. Outside in the real world there is a financial crisis. People cannot find work, living standards and incomes are being squeezed, and vital public services are being cut to the bone. Long-term youth unemployment in Croydon North, which I represent, is at a record level and continues to rise. That destroys people’s futures and crushes their life chances. How disappointing to hear a Queen’s Speech that fails to meet the challenge for jobs and growth or find new ways to provide the services and support that people need.
As a Labour and Co-operative Member of Parliament I want to focus my contribution on co-operatives. There was little support in the Queen’s Speech for the co-operative economy, but that sector is a significant and growing part of the overall UK economy, and is worth more than £35 billion. It is owned by nearly 13 million adults in the UK and has grown by nearly 20% since the start of the credit crunch, while the rest of the economy has shrunk. Start-up co-operative businesses have a 50% greater chance of surviving past three years than other businesses. That means jobs and growth, which is what we are looking for.
In the words of the managing director of the International Monetary Fund, growth versus austerity is a
“false debate…Countries can choose a strategy that is good for today and good for tomorrow.”
Countries can make that choice, and co-operatives are part of it. Unfortunately, however, our Government have chosen not to do that, despite all the evidence that their current economic policy is not working.
Co-operatives and the principles of co-operation have more to offer than just economic resilience. Co-operation offers an approach that we can use to transform public services so that we can do better for less. Co-operative housing offers a means for first-time buyers to get a foot on the housing ladder, as well as a safe way for people on lower or fixed incomes to build up a share of equity in their home. Energy co-ops offer a way to generate energy more sustainably, while lowering prices for hard-pressed households and helping to break the stranglehold of big energy corporations.
Labour-led co-operative councils, such as Oldham, show how more co-operative approaches to tackling unemployment can get people back to work. Instead of forcing unemployed people on to prescriptive DWP programmes that rarely lead to jobs, such councils are sitting down with unemployed people and asking what support they need within the financial envelope available. Instead of endless courses on how to write a CV, people can choose training in a profession such as plumbing, be given a bag of tools, and go out and find work. That gets them off benefits and allows them to make a positive contribution to the community of which they are part.
In Lambeth—another co-operative council—the local authority is tackling violent youth gang crime by sharing its power with the community through a new youth services trust—the Young Lambeth co-operative. Instead of putting vulnerable young people on courses and programmes that do not cut offending by anywhere near enough, it is helping communities choose the support their young people need. That is proving far more effective at getting young people out of gangs and away from crime, and steering their lives back on track.
Mr Reed
I know how passionately my hon. Friend supports empowering communities to tackle the problems they face, such as violent youth crime. Like him, I have noticed the absence of such a Bill, which is a huge disappointment, because that agenda offers huge opportunities for the Government and people to reconnect to start to deal with the problems that disfigure some of our communities. The problem is not just violent youth crime. I hope he agrees that the examples I have outlined deliver better outcomes for citizens, and that those measures will save money, which we are desperate to do when resources are so constrained.
Co-operation means handing power to the people who use public services so that their insights help to make those services more efficient and effective. It hands back to people control of their lives, so that they can break free from dependency on others’ decisions. The Queen’s Speech does nothing to promote such models more widely. Co-operation offers a vision for greater economic security, more resilient communities and more effective public services, but, instead of a vision that meets the challenge of our times, the Queen’s Speech is one that my nan would have described as all mouth and no trousers. There is plenty of glitz and glamour, but no answers to the questions our country faces.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
It is a great pleasure to conclude this debate on the Gracious Speech. I congratulate hon. Members on both sides of the House and will deal quickly with some of the points they made.
My hon. Friend the Member for Tamworth (Christopher Pincher) made a good speech in which he supported the changes in the Deregulation Bill. I agree with him that it will be excellent for small businesses. As my right hon. Friend the Secretary of State for Business, Innovation and Skills stressed in his opening remarks, our record on small business creation is very good.
I have known the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) for some time and am glad to see him back in his place. He was a very good Minister and talks a lot of common sense. His comments about the overseas aid budget were well made and are well taken. I know that there is some disappointment that we have not legislated on that, but the Government’s record of reaching the 0.7% obligation and sticking to it is second to none. It has been said at the United Nations that we have given a lead to the rest of the world. I am pleased that he supported that. I recognise his concerns about youth unemployment and will return to them in a second.
My hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) reminded us of the record deficit that Labour left us with and made the strong point that everything stems from that. Labour’s spending, borrowing and taxing left us with a bust economy. As a man who has set up and run his own small business—it is not so small now, but it is certainly a good business—he knows everything about small businesses.
I congratulate my hon. Friend the Member for Burnley (Gordon Birtwistle) on his comments about manufacturing industry. He has been very good at supporting manufacturing in Parliament and beyond. He made the very good point that the last Government ran manufacturing down. Under the tenure of my right hon. Friend the Secretary of State for Business, Innovation and Skills, we are doing our level best to rebalance the economy after manufacturing was destroyed by the Labour party.
The hon. Member for Preston (Mark Hendrick) said that international factors caused the 2008 slump and that he was pro our membership of the EU. I had assumed that everybody was pro that. It is all well and good for him to say that everything was somebody else’s problem before 2010 and that now everything is our problem, but that means that Labour, somehow, bears no responsibility for anything.
When I asked the shadow Secretary of State for Business, Innovation and Skills whether he would like to apologise for the economic shambles that Labour left, he did a delicate dance around the words, “I am sorry.” He can say that now if he wants to intervene. I know that sorry is a hard word, but perhaps he would like to lead for once for the Government and say—[Interruption.] They were in government. He should lead for them and say that he is sorry for the shambles and the mess that they left. I am ready to give way if he would like to say sorry for the mess that the Labour Government left.
Mr Umunna
I am happy to remind the Secretary of State that we bequeathed a situation in which unemployment was falling, growth was rising, and stability had set in. As I said earlier, we expressed regret for not better regulating the banking system, and I look forward to hearing his apology in that respect as well.
Mr Duncan Smith
I think it is shameful that an individual who represents a party that when in government ran up the biggest deficit and, as my right hon. Friend the Business Secretary said, created the biggest bust since the first world war, cannot genuinely say to the British people, “I am sorry. We got it wrong.” They did get it wrong and will bear the consequences of that all the way to, and including, the next election.
Oral Answers to Questions
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Chris Grayling
The hon. Gentleman has to remember the financial mess his Government left behind. If we do not sort out the deficit and create a stable economic environment in this country, there will not be secure jobs in the future. That is and will remain our No. 1 priority.
Mr Chuka Umunna (Streatham) (Lab)
On Thursday, I visited my borough’s alcohol and drugs service and spoke to service users and providers. One of the biggest problems found by people who have a history of misuse is moving from treatment into work. I hope that the Work programme will address that, particularly given the issues that I have been told that they have with Jobcentre Plus. We are told that the pricing system in the new programme will reward providers who help those who are hardest to reach. Will that pricing structure account for those with a history of alcohol and drug misuse?
Chris Grayling
The simple answer to that question is yes, it will. The hon. Gentleman makes a very important point and I want to refer to one other dimension of the issue. A key point is giving those people opportunities to volunteer while claiming benefit. Volunteering can be an extremely important part of the pathway from a long-term problem into work. We have changed the guidance for Jobcentre Plus and will proactively promote volunteering opportunities to those who face those challenges in the hope that we will help them take that extra step on the way.
Welfare Reform
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Mr Duncan Smith
I am always happy to seek to inform people so that higher authorities may be informed in their turn.
Mr Chuka Umunna (Streatham) (Lab)
I have not had a chance to read the White Paper this morning, but my understanding is that the universal credit will be introduced from October 2013. The Secretary of State mentioned IT issues, and HMRC’s business plan says that the update of the PAYE system, which will be integral to the transition to the universal credit, will not be complete until April 2014. How will the Department reconcile the date for the introduction of the universal credit with the delayed completion of the update of the PAYE system the year after?
Mr Duncan Smith
I am grateful for that question because it allows me to get rid of a slight misunderstanding. HMRC’s programme is about upgrading the whole of the PAYE system. What we are dealing with comes before that and we do not need all that. We need two important things. As employers collect and collate the information about circumstances anyway, they will download it to the Department each month, instead of waiting until the end of the year. We need two data streams, one sending data through, the other sending data across. That needs a software programme, but it is well below what is being done to PAYE. We will be able to do that on a real-time basis and it will happen before the PAYE changes.
Housing Benefit
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James Wharton
The hon. Lady is quite right. That is why nobody on either side of the House would ever propose to do away with it. It is an important part of the welfare state in this country, but that does not mean that spending on housing benefit should be allowed to escalate out of control indefinitely. That is why the Government are introducing measures to bring it under control and to ensure that people are properly incentivised to find work, to earn and to contribute successfully to our economy. The hon. Lady is right to say that housing benefit is important, however; that is why it is being reformed in a way that will secure its sustainable future.
James Wharton
I will not give way again.
In the context of the understanding of fairness, let us look at what the Government are doing. We have heard talk about the cap, and it is abundantly obvious that it is not fair for a family or an individual to be able to claim more in housing benefit than an average family takes home in earnings in any given week, month or year. If we set the cap at £20,000 a year, that will still be a very high level. That is the equivalent of earning just over £26,000 a year, as that is what someone would need to earn to have the income to pay that amount of rent without claiming housing benefit support. That is more than the average wage of my constituents, and more than the average wage in the north-east generally. It is also more than the average wage in many of the constituencies of Members on both sides of the House. We cannot expect people who work hard but do not earn large sums of money to pay tax to subsidise individuals and families who are unable to work, for whatever reason, to live in homes that those taxpayers themselves could not afford.
This is an important issue, but there are many other measures involved. The shadow Secretary of State asked whether it was fair to use the 30th percentile to set the level at which housing benefit would be paid in any given area. The Department’s research has shown that, in any given area, just over 30% of properties would be available within that price band, and I suggest that that makes it abundantly obvious that this is not an unreasonable step. Given the difficult financial situation in which we find ourselves, this is a way of finding some of the necessary savings while ensuring that those who need help will still get it. It will ensure that support will be there for those who will benefit from it most, while not unfairly disadvantaging the people who work hard to pay their taxes to enable this to happen. It is important to look at these points in the round, and in the context of the world in which we live today.
Many Opposition Members are not keen to talk about discretionary housing payments because, for many of those who hit particular hardship, such payments will increase. This will help individuals who are in danger of losing their homes, who fall through the gaps between policies or who find themselves in difficulty through no fault of their own. The Government are increasing the provision to £140 million over five years to ensure that, when people are in particular need or when their circumstances are particularly difficult, help is there to ensure that they can stay in their homes and communities. People should not be made homeless by the steps that are being taken, and the Government are taking steps to ensure that that does not happen.
Another measure that Opposition Members often overlook relates to overnight carers. At the moment, the fact that someone has an overnight carer, because they have a disability or for any other reason, is not accounted for when calculating the amount of housing benefit they receive. The Government will change that, and 15,000 people who currently have overnight carers but are not entitled to have the need to provide accommodation for them taken into account in their housing benefit allowance will be better off as a direct result. Their needs will specifically be catered for in a way that, disgracefully, has not been the case for many years.
Lots of changes are taking place in housing benefit, as well as right across the Department for Work and Pensions and other Departments. Opposition Members are right to raise concerns, when they have them, and to call for a debate when that is appropriate. When I look at the motion today, however, I find it most striking that they have suggested no alternatives. This is not an Opposition who are here to put forward alternative proposals or an alternative plan to deal with some of the problems we face. It is an Opposition who are opposing for opposition’s sake.
Mr Umunna
The hon. Lady talked about fairness, and she has mentioned the jobless. What does she think of the proposal to reduce housing benefit by 10% for JSA claimants who have been out of work for more than 12 months and have been doing absolutely everything they can to get work? I come across many people in that position in my constituency, and this measure is unduly punitive, in my view. What does she think?
Jackie Doyle-Price
The hon. Gentleman will be aware that the Government are increasing the discretionary allowances that can be used to tackle exactly that problem. My concern is for the people in part-time work who find that increasing their hours is punitive, because their housing benefits will be clawed back.
This measure is not an attack on the vulnerable, nor is it based on an assumption that all benefits claimants are workshy. It is my firm belief that most people do not want to be reliant on state benefits—that they want the pride and self-respect that come with providing for themselves and for their families. However, we have allowed a benefits system to emerge that sucks the self-reliance out of them by preventing work from paying. It is all too easy for self-respecting people to find themselves trapped in worklessness because the amount of support they get from the taxpayer exceeds what they could expect to earn. If we are going to get our economy back on track, that has to change.
Members in all parts of the House will have received many representations on this issue and its impact on vulnerable people. The National Housing Federation claims that those who rely on housing benefit to cover part of their housing costs will be forced to move away from higher-rent areas, and may as a result have to commute and have difficulty finding family care. Well, that is the day-to-day reality for many of my constituents. I consider it unfair that my constituents are having to pay higher taxes for people to live in places where they would like to live but cannot afford to.
Mr Chuka Umunna (Streatham) (Lab)
Follow that indeed.
I want to pick up on some comments made by the hon. Member for Wolverhampton South West (Paul Uppal) and my hon. Friend the Member for City of Durham (Roberta Blackman-Woods). They referred to the tenor of the national debate on this issue, which I have found deeply worrying, and how our newspapers in particular show unemployed people being divided from employed people, benefit recipients being divided from those who are not claiming benefits.
We saw that division of rich and poor at the weekend with the headlines in some newspapers reflecting announcements from the Department for Work and Pensions. The Mail on Sunday said “New IDS blitz on the workshy”; the News of the World said “Work gangs for shirkers”; and The Sunday Telegraph said “Workshy will have to take unpaid jobs”.
Mr Umunna
I want to make some progress, but I may give way later.
Today, we read that the Department has released figures showing that every family will have to pay more than £1,500 a year in taxes to fund the housing benefit system. As ever, it seems that a particular section of society has become a target. Has the Treasury released figures to show how much each family in this country loses as a result of tax evasion and avoidance by wealthy individuals and companies? It is extremely important that we do not allow the tactic of divide and rule to succeed.
This is particularly pertinent to my community. The constituency that I represent is diverse not only ethnically but in regard to the socio-economic demographic of the people who live there. I spoke to one of my constituents about these issues last weekend. He and his wife live in one of the more leafy parts of Clapham common, an area known as Abbeville village, and he works for a private equity company. He is undoubtedly in the top 1% of earners. I asked him what he thought about the Government’s changes to the housing benefits regime. Given that they will not have a direct impact on him, I was surprised to find that he had strong views about them, and that he was horrified at their likely impact on his community. One of the reasons that he likes living in my constituency is the diverse nature of the streets and the different parts of the area. He said that he did not want to live in a street where all the people were like him. He liked the fact that there were different people living there.
I mention this because it is important to understand that these changes will be an issue not only for people claiming housing benefit but for the community as a whole. Given the impact that the changes will have on my constituents, I do not feel that I am whipping up hysteria or unduly disturbing my community. I am simply looking at the facts. There are 5,470 households in Lambeth that will face huge cuts in housing benefit next year. For example, 1,520 households in two-bed properties in Lambeth will see the contribution to their rent reduced by an average of £25 a week. That is £1,300 a year, and those people simply cannot afford it. The changes will undoubtedly cause an increase in poverty in my constituency. Shelter is predicting that they will affect many of the claimants who live just above the poverty line, and they will undoubtedly lead to deep anxiety and stress among people who are already struggling to get by.
Bob Russell
Does the hon. Gentleman agree that an unintended consequence of the measures will be that, if people have to spend more of their income on rent, they will have less to spend in local shops and on local services?
Mr Umunna
Absolutely; I would not disagree with the hon. Gentleman.
I have outlined some of the effects on my community that we are able to discern, but there will be others that it is difficult to quantify at the moment. We are going to be faced with people moving from inner London to our part of Lambeth, seeking private rented accommodation.
Pete Wishart (Perth and North Perthshire) (SNP)
We know that this is what the Tories do: they attack the poor and the vulnerable. But what about Labour? I could not make out from what the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) said whether Labour was for or against the cap. Does the hon. Gentleman know?
Mr Umunna
If the hon. Gentleman reads the motion, he will see no denial of the need for some degree of housing benefit reform. No doubt my right hon. Friend the Member for Don Valley (Caroline Flint) will give further details in her speech, in addition to the many details that my right hon. Friend the Member for Paisley and Renfrewshire South gave the House earlier.
I was talking about the effects of the measures that we are not yet able to discern. We have 22,000 people on social housing waiting lists in Lambeth, but we have no idea of the number who will seek social private rented housing in our area as a result of the changes. I mention that figure to demonstrate that we are already under huge pressure.
There has been a lot of talk about introducing these measures to reduce the benefits bill, but we are told that rents will inevitably fall as well. London Councils, a cross-party organisation, has carried out a survey of landlords in London. I make no apology for talking about London, by the way; it is my area, and it is where my constituency is based. The survey found that 60% of landlords letting properties to housing benefit tenants in London said that they would not reduce their rents, even by a small amount, to accommodate the changes, and Shelter has found that 43% of such landlords will simply scale back their operations in this sector.
I want to finish by mentioning a matter that I have already raised with the Chancellor of the Exchequer—the proposal to reduce by 10% the housing benefit of jobseeker’s allowance recipients who have been receiving JSA for more than 12 months. I challenged the Chancellor about this at a Treasury Committee hearing in July and asked him to provide me with evidence that that measure would produce increased work incentives, given that he said that that was why he was introducing it. Funnily enough, he quoted the Institute for Fiscal Studies back at me. It is funny how the coalition Government choose to ignore the IFS when it tells them things they do not want to hear, only to quote it back at me when they find it helpful.
The Chancellor quoted an IFS report that found that
“welfare benefits can have substantial effects on the work behaviour of unskilled and even for men with high school education”.
Be that as it may, I do not see how there can be an incentive for people to work when there are no jobs for them to go into. In the past few weeks, information from the Chartered Institute of Personnel and Development has shown that 1.6 million people are going to be out of work as a result of the measures being introduced by the Government. We already know that there are five people chasing every vacancy in the economy, and research shows that that figure is not going to fall.
Will the Minister tell us why the Government are seeking to punish people who are doing everything they can to find work? I have asked this question in the Chamber before, but I have not received a reply. There are many people in my constituency who have been on JSA for more than a year—the number generally hovers between 700 and 800—and who are struggling to find work. Why are the Government punishing them when they are already down on their luck? We must resist the divisions that the headlines are seeking to create in our communities. This is an issue for everyone, whether they are on housing benefit or not, and I plead with the Government to reconsider the measure on JSA recipients. As I have said, they are already down on their luck. Why kick them when they are down?
Work and Pensions (CSR)
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Mary Macleod
We need to find people sustainable, long-term employment that they can do in future and will support them. We can work with businesses in our local areas. I will be encouraging all the businesses in my constituency to give more people the work experience that will help them to gain future employment. All Members can do that in their constituencies.
Mr Chuka Umunna (Streatham) (Lab)
Does the hon. Lady accept that the future jobs fund has been successful in placing young people in permanent work? Only last week, I spoke to several employers and young people in my constituency, and due to being on placements through the future jobs fund, those young people now have permanent work.
Mary Macleod
There will be examples of people gaining experience and managing to find work, but the problem is that there have been so many different schemes, not one coherent strategic approach to getting those people into long-term and sustainable work. People have not had the individual support to make that happen, which the Work programme will allow.
Work experience is a win-win situation for all concerned; the company gets support from individuals for their business and the individuals gain vital work skills. One barrier that has stood in the way of that in the past is that people feared losing their jobseeker’s allowance if they undertook any volunteering work. I received a letter from a constituent on that. I am pleased that that issue has been addressed and that unemployed people are now encouraged to take on work experience voluntarily, without fear of losing their jobseeker’s allowance—as long as they are still actively available for and seeking employment at the same time. Therefore, a part-time work experience assignment will not prevent them from continuing to claim benefits in the short term, but may, I hope, help them not claim them in the longer term by finding suitable long-term work.
As MPs, we can all persuade businesses and individuals in our communities to create and develop mentoring schemes to support those people who have been long-term unemployed to get back into work. I hope that we can create something good and sustainable with a mentoring scheme in my constituency.
In summary, I believe that the Government have taken bold and radical steps in addressing welfare reforms that were long overdue. We will replace a confusing array of support programmes with the Work programme, which will provide personalised support to get people back to work. The priority will be to ensure that the Work programme is delivered in a way that encourages the active involvement of strategic companies and third sector organisations, without introducing red tape and bureaucracy. Beyond the Work programme, we can encourage the building of vital skills by providing more opportunities for people to volunteer in workplaces to gain vital experience to get back into work. I look forward to working with businesses in my constituency to do just that, and to get more people from welfare into work, so that we change their lives for the better and they can go on to create a strong and sustainable future for themselves and their families.