Oral Answers to Questions
Chuka Umunna Excerpts(11 years, 6 months ago)
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The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
Yes. As I said earlier, we welcome the thorough and interesting report from the Select Committee. Recommendation 16 said that alongside university admissions, schools should publish apprenticeship starts from their former pupils, and I agree. Through the new destinations measures, which were introduced this summer, we will ensure that that happens.
Mr Chuka Umunna (Streatham) (Lab)
There are more than 1,200 people claiming jobseeker’s allowance in the Secretary of State’s constituency. Under his proposed “shares for rights” scheme, employers in his constituency will be allowed to make the acceptance of job offers conditional on people agreeing to give up their basic rights at work for shares. Can the Secretary of State guarantee that JSA claimants in Twickenham will not lose their benefits for refusing the offer of a job because it is conditional on them giving up their rights for shares?
Vince Cable
In a statement in the Commons a couple of days ago, I think, the Minister in the Treasury who is responsible for taxation made it absolutely clear that the scheme was voluntary. While the hon. Gentleman hunts for the ghost of Beecroft in this proposal, I will put a simple proposition to him. If employers were seriously interested in trying to set up an arrangement that had minimum job protection for employees, why would they go to the trouble of establishing a complex employee ownership scheme when they could do that so much more easily through an agency workers agreement, which would have far lesser employment rights than this proposal?
Mr Umunna
There was no answer to my question in what we have just heard from the Secretary of State. He cannot answer it because this has not been properly thought through. He has said that the scheme has had a mixed reaction. That is a gross understatement: it has been described as “awful” by the National Center for Employee Ownership. He has said that it is not intended for most ordinary businesses. It would be interesting to know which businesses have lobbied him to introduce this nonsense. While we support strongly employee ownership, it is beyond me to think why that must be tied to giving up rights at work. Is it not the case that, just as the Secretary of State was forced to consult on proposals to fire employees at will by the Treasury, he has now been forced to do the same on this crazy proposal? This is a Secretary of State in office but without the power to say no to the Chancellor.
Vince Cable
There is no proposal to fire employees at will, as the hon. Gentleman well knows. I will repeat what I said: the scheme is entirely voluntary. He should perhaps reflect in a little bit more detail on some of the comments of both businesses and trade union stakeholders. Businesses have said that this is an interesting proposal that many are unlikely to take up. The trade unions have said, similarly, that they do not like it, but they do not expect it to have a significant impact on the labour market.
Enterprise and Regulatory Reform Bill
Chuka Umunna Excerpts(11 years, 7 months ago)
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Jo Swinson
I do recognise that there is genuine concern, particularly in respect of the new fee regime. It is important that a remission regime is in place as well; it is important to point that out. However, the amendments would provide protection for people who are behaving in a vexatious and abusive manner. No matter which side of the dispute that occurs on, we should not be encouraging it. Where a claimant is behaving unreasonably—this is at the discretion of the tribunal—it would be inappropriate for employers to be prevented from seeking a costs order if the tribunal considers that the claimant’s behaviour justifies such an order.
Mr Chuka Umunna (Streatham) (Lab)
If the Minister accepts that there are serious concerns about the introduction of fees and its impact on access to justice, why does she not look at the case management powers in the interlocutory stage of case proceedings and perhaps expand deposit powers to act as a disincentive for vexatious claimants? That would not have an impact on access to justice as her Government’s proposals are having.
Jo Swinson
A range of measures in the Bill will help to improve access to justice. Of course, the most important thing is to make sure that fewer people end up going to employment tribunals in the first place. [Interruption.] I have just discussed the measures on early conciliation, which is a much better way of resolving disputes. We also have measures on rapid resolution, which I will come on to deal with and which have been discussed in Committee. Those are the ways of ensuring that people are able to get the best resolution to their disputes. Obviously there will still be a role for employment tribunals and there will be cases that, for whatever reason, cannot be managed through those other, better options for resolving them. In imposing a fee, there will still be access to justice through the remission regime for those who are otherwise unable to afford it.
Jo Swinson
Thank you, Mr Speaker. I think it is fair of my hon. Friend the Member for Skipton and Ripon (Julian Smith) to point out that many business owners are genuinely concerned about how employment law currently works.
Mr Umunna
The Minister has indeed been incredibly generous about giving way. For the record, Mr Speaker, I think it is of assistance to have a range of experience in this House. We have lawyers and many business owners in the shadow BIS team and we speak with the benefit of professional experience.
Does the Minister not acknowledge that employers can have these conversations with employees, as long as they follow fair procedures? That is all we are asking for.
Jo Swinson
The procedures are far more likely to be used by large companies, and many business people, particularly those in small and medium-sized enterprises, fear to take them up. That was borne out by much of our consultation, both formal and informal. I do not know whether Opposition Members genuinely believe that there is no concern among business about tribunals and employment law—
Jo Swinson
Well, people watching this debate or reading it in Hansard will see that that concern among businesses exists and is not being taken seriously by the Opposition, but I shall be happy to be corrected.
Mr Umunna
The Minister knows full well that, for example, we welcomed the setting up of the Underhill review, because we acknowledge that there are issues, but it is really a question of degree. Of course we have to take into account the concerns of business, but our job as politicians is to take into account the concerns of society as a whole and to balance the different interests, and that is what she has got wrong.
Jo Swinson
I agree that the job of politicians is to balance those interests, but I disagree with the hon. Gentleman that we do not have the right balance. As hon. Members have pointed out, very different proposals emerged from some quarters, but the Government have said firmly that we will not go ahead with the no-fault dismissal plans that were put forward. That shows that we are taking a balanced approach.
Mr Umunna
Let me say first, meaning no disrespect to the Minister, with whom I have enjoyed debating during the Bill’s passage, that I find it quite extraordinary that for this—the Department’s flagship Bill—the Secretary of State is not present.
On Second Reading, the Opposition tabled a reasoned amendment stating that the Bill was a missed opportunity to provide a strategy for economic growth and that it contained inadequate measures to improve business confidence, investment and competiveness. That remains our view on Third Reading. In Committee, as a constructive Opposition, we tabled amendments designed to support business, including measures to ensure that the green investment bank can be a strong and transparent catalyst for green growth; to improve the competition framework; and better to empower shareholders in relation to directors’ remuneration. Throughout that process, we drew on our discussions with business organisations and other stakeholders, as well as the evidence given by witnesses during the evidence sessions.
At this point, I add my thanks to my hon. Friends the Members for Hartlepool (Mr Wright), for Newcastle upon Tyne Central (Chi Onwurah), and for Edinburgh South (Ian Murray) and all the Opposition Members who served on the Bill Committee for their hard work. The Committee stage was something of a marathon, given the rag-bag of often very different measures contained in the Bill, but although we have not always agreed with the Government, it was good to hear the Minister agree that Opposition Members have thoroughly scrutinised the Bill and done so in good spirit and with some humour, too—I understand that “Fifty Shades of Grey”, One Direction and the Stone Roses have all been mentioned during consideration. Despite all the good work, however, Ministers did not accept any of our amendments in Committee, or pledge to return on Report with acceptable alternatives.
In the hope that we might be able to reach agreement on Report, I wrote to the Secretary of State at the end of last month setting out our position, highlighting the parts of the Bill we agree with and those we disagree with. The Secretary of State—I shall quote, as he is not here—replied saying:
“I believe that we support the same goals of promoting growth and reducing unnecessary burdens on business and I note that you are supportive in principle of a number of measures in the Bill.”
Indeed, it is true. We support in principle a number of measures in the Bill, such as those relating to the green investment bank, improving the competition regime and extending the primary authority scheme that we established in Government. There is no doubt about that.
The Secretary of State also referred in his letter to the changes that he has since made to his original proposals contained in the Bill on copyright. I am pleased that he has listened to what we had to say on that and that in some respects he has U-turned, although I understand that several stakeholders remain concerned.
Although we think the Government should go further in their reforms relating to directors’ remuneration, in principle we do not object to what they have done so far. However, despite our best efforts, we have not been able to reach agreement on the other aspects of the Bill to which we strongly object and which the Government refuse to remove from it.
There are certain red lines that the Bill crosses that the Labour party is not prepared to cross. We want to see enterprise flourish, but in a society where people’s rights are respected. We want to see our economy grow, and I hope and expect the next quarter’s GDP figure, which will be released next week, to be a positive number after three quarters of contraction, but growth cannot be at the expense of the basic protections that people enjoy in this country. In the name of growth, part 2 of the Bill will drastically reduce people’s rights at work and part 5, along with other Government measures, takes us along the slippery slope to the abolition of the Equality and Human Rights Commission. This is wrong.
Many of the measures in part 2 find their inspiration in the report of the Prime Minister’s employment law adviser, Adrian Beecroft. By his own admission in the public evidence sessions on the Bill, Mr Beecroft said that his findings were based on conversations and not on a statistically valid sample of people. Of course, the Government are implementing many of his measures. For example, having already increased the service requirement to claim for unfair dismissal in the employment tribunal, by reducing compensatory awards for unfair dismissal the Government seek in the Bill to water down further the rights of all employees in this country, as we heard today, most of whom are not members of a trade union.
As I said on Second Reading, reducing compensatory awards for unfair dismissal in particular will impact on those in middle income occupations. They, like others in lower income occupations, are already facing the biggest squeeze on their living standards in a generation under this Government, and weakening their rights at work will only add to the worry and stress that working people are under. Mr Beecroft, I read, suggested that the Secretary of State, who is not here, is a socialist. Well, I can tell him that the Secretary of State has done his best to prove otherwise in the Bill.
Mr Graham Stuart
I am grateful to the hon. Gentleman, who is being most generous. Does he feel that the compensation currently available is exactly right or does he think it should be increased further? He must recognise that there is a balance to be struck between looking after the interests of employees and not causing employers to avoid taking people on for fear of the costs. That balance must be struck and the hon. Gentleman obviously thinks the figure should be at the upper end. Does he want to increase the current levels?
Mr Umunna
With respect, I observe for the record that the hon. Gentleman has not been present for most of the debate on the Bill today, yesterday or at any time. If he had been here earlier, he would have heard me make much the same observation as he has just made—that there is a balance to be struck. We disagree with changing the current regime in relation to the compensatory award. I would not say that any system is perfect. For example, in relation to the unfair dismissal regime and the way that it interacts with the tribunals, yes, we have entertained the Government’s Underhill review because we understand that there are some issues. I am not sure that any system would be perfect, but we disagree with what is proposed in the Bill and the way in which it will change the balance. There is obviously a disagreement on that.
With regard to part 5, which relates to the Equality and Human Rights Commission, and the new clauses relating to the Equality Act 2010, the Secretary of State on Second Reading referred to the measures relating to the commission as “legislative tidying-up.” They are nothing of the sort, as I think he knows. He likes to pose as the opposition within on so many matters but waves through the more extreme impulses of his coalition partners.
To compound matters, last week the Government tabled an amendment to the Bill providing for the repeal of the provisions in the 2010 Act relating to liability for third-party harassment of employees, which was one of Adrian Beecroft’s proposals. It was a classic example of the Secretary of State trying to face both ways at once. When questioned on Second Reading about the Government’s intentions by my hon. Friend the Member for Stretford and Urmston (Kate Green), he assured the House that he had no intention of implementing that Beecroft proposal. Then, out of the blue and at the last minute, he presents us with a new clause seeking to do just that.
Samantha Mangwana, a senior employment lawyer at the respected law firm Russell, Jones and Walker Solicitors, asked in today’s Financial Times what signal that sends out. She said
“this is not some meaningless bureaucratic red tape, but the very protections that are in place to protect staff from predatory sexual advances by third parties.”
In conclusion, the unemployment figures released today are very welcome, but more than 2.5 million people are still out of work. In my constituency more than 11 people are chasing every Jobcentre Plus vacancy. Long-term unemployment has risen and the number of young people out of work and claiming benefits for more than a year has gone up yet again, and we are still in a double-dip recession, one of only two G20 countries in that position. That situation will not be resolved by taking away people’s fundamental rights; it will be resolved by getting demand back into the economy. That is what creates jobs, and that should have been the sole focus of an enterprise Bill. It is a shame that that is not the case with this Bill. Instead, we have seen today not the focus on kick-starting the recovery and laying a platform for long-term and sustainable growth, but the final nail in the coffin of any claim the Government could make to marrying competence with compassion. That is why we will vote against the Bill tonight.
Matthew Hancock
We have had a wide-ranging debate over two days on Report and now on Third Reading. We have heard speeches by the hon. Members for Bolton West (Julie Hilling), for Hayes and Harlington (John McDonnell), for Blaydon (Mr Anderson) and for North Ayrshire and Arran (Katy Clark) that have railed against enterprise and against the Bill.
By contrast, my hon. Friends the Members for Bedford (Richard Fuller) and for Skipton and Ripon (Julian Smith) have argued passionately for enterprise, business and jobs. I cannot quite match their eloquence or the power of their arguments about the ability of the free market system to create jobs and build prosperity not only in this country but around the world. I am disappointed to find out that President Obama has said something that it will now be impossible for us to say without reference being made to his saying it—that the free enterprise system is the greatest force for progress that the world has ever seen.
Matthew Hancock
No, I will not. I have only a few minutes. [Hon. Members: “Go on.”] I will come on to the hon. Gentleman’s comments.
My hon. Friend the Member for Isle of Wight (Mr Turner) spoke passionately about his constituency and the need to remove from primary legislation restrictions on Osborne house. It is interesting that in this single Bill we are amending the Osborne Estate Act 1902, the Interpretation Act 1978, the Estate Agents Act 1979 and many more Acts, to promote enterprise.
My right hon. Friend the Member for Wokingham (Mr Redwood) talked about the green investment bank and listed the Government’s various measures to support credit. We are adding a business bank, which may well sweep up some of those other measures. He asked about policy overlap, and I point out that thus far, the funds put into the green investment bank have been for projects with a maximum size of £20 million. That shows the scope of the bank so far.
The Secretary of State is at the John Cass lecture on social mobility. Government Members are in favour of social mobility, but Opposition Members argue that the Secretary of State should not be giving a lecture on it.
Matthew Hancock
Making it easier for people to have settlement agreements, ensuring that health and safety legislation is implemented reasonably, helping the operation of listed buildings policy and improving the operation of the Equality and Human Rights Commission will all help the free market system, which is the engine of prosperity.
The Government’s record is clear. We now know that when we arrived in office, the structural deficit was £73 billion a year. Since then, however, 1 million new jobs have been created in the private sector. I did not notice any Opposition Members welcoming that fact. There are 170,000 fewer people on benefits, and the deficit is down by a quarter.
We have introduced measures on competition, on making it easier to employ people, on a green investment bank, on improvements to the Estate Agents Act and on health and safety. Members of the House are inspired and motivated to enter politics for many different reasons, and one of the best of those is to work at creating jobs and help employers to create jobs. It looks as if the Opposition will oppose this measure, and in doing so they will show that they are anti-business, anti-enterprise and anti-jobs. They have only one option—more borrowing—whereas the coalition Government are pro-enterprise, pro-business and pro-jobs. We need jobs for people who want to make their lives better, and I commend the Bill to the House.
Question put, That the Bill be read the Third time.
Enterprise and Regulatory Reform Bill
Chuka Umunna Excerpts(11 years, 7 months ago)
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Jo Swinson
It is certainly true that a wide range of views were put forward to the consultation. Among business groups, there was a very strong view that this costs a lot of money, and I will explain why. Based on the sample, the five to six hours spent on each form at a cost of £160 equates to a cost to employers of £1.4 million a year, and it could be considerably higher because many employers may use more expensive legal advice.
Mr Chuka Umunna (Streatham) (Lab)
If the Minister’s complaint is about the quantity of questions, then why not limit the number that can be asked? We are all limited in the number of questions that we can submit at the Table Office, so why not apply similar principles to this procedure?
Jo Swinson
I have already outlined various circumstances in which there is a range of questions with many sub-sections. We are saying that it is helpful for business and employees to discuss these issues and to be able to provide information. However, this provision is placing requirements and fears on businesses, and the disproportionate costs that they are facing in complying with it represents a total cost to business of nearly £1.5 million a year. That is a significant cost that we should not take lightly.
Individuals can seek information from an employer about an alleged breach of the 2010 Act without relying on this provision; they can request that information verbally or in writing. Of course, it is in businesses’ interests to respond to reasonable requests of this kind, because the courts would still be free to draw inferences from any employer or service provider’s refusal to answer questions or from answers that seem evasive.
Jo Swinson
The EHRC was not particularly efficient in some of the work that it was doing. For example, it cost its helpline far more to deal with cases relating to working rights than other Government and external providers. We are ensuring that the money is spent better. Opposition Members seem to forget that the financial situation left to this Government was an appalling mess. It does no good for equalities in this country not to have the effective use of public money. We should all want to see that. [Interruption.] I am answering the hon. Lady. We should all want to see the effective use of public money. It is wrong to suggest that there are no ways in which the EHRC could have been improved.
Jo Swinson
We have heard from various Opposition Members that the EHRC was functioning fantastically.
There are many ways in which the EHRC could improve. We are making a variety of changes to it, but we remain committed to this organisation and to improving it. Just this morning, we had the pre-appointment scrutiny hearing for the new chair, Baroness Onora O’Neill, which is a positive step. I am optimistic about how the organisation will move forward and improve its governance, which is badly needed.
Jo Swinson
The hon. Gentleman does not need to worry about that because under existing duties in sections 8 and 9 of the 2006 Act, the EHRC still has all the requirements and focus it needs. In the consultation, a range of stakeholders spoke about the repeal of the good relations duty in section 10, and whether it was the Association of Chief Police Officers stating that a greater emphasis on its responsibilities in regulating the new public sector duty is broadly supported, or Stonewall saying that the need for the good relations function has not been sufficiently demonstrated, a wide range of stakeholders did not seem to think that there was a problem.
We are reducing the frequency with which the commission is required to publish a report on progress from every three years to every five years, and by allowing a longer time scale between reports, we believe the commission will be able to capture more meaningful change over time. We accept, however, that seismic societal changes or developments do not always happen conveniently every five years, and there is no reason why the commission cannot report more frequently if it wishes.
I know that many Opposition Members have concerns about the repeal of the good relations duty in section 10 of the 2006 Act, but we are clear that a separate mandate is not necessary. The commission’s most valuable work in this area—for example its inquiry into disability-related harassment—can be carried out under its core equality and human rights functions, which we are not amending. That view is supported by the evidence I have outlined that was provided to the Public Bill Committee by the EHRC’s general counsel and other stakeholders.
We are repealing the power associated with the good relations duty in section 19 of the 2006 Act because other organisations gather the information that that legislation permits the commission to monitor. For example, since 2011, police forces in England and Wales have been required to collect data on suspected hate crime relating to race, religion or belief, disability, sexual orientation and gender reassignment. The commission will retain the ability to review and use those data under its existing equality and human rights duties which—I repeat—we are not amending. In Scotland, where the EHRC’s human rights remit is limited, the Scottish Human Rights Commission will be able to use its powers accordingly.
On the power to make arrangements for the provision of conciliation in non-workplace discrimination disputes, as set out in section 27 of the 2006 Act, unfortunately the commission has consistently failed to deliver a well-targeted, cost-effective service. The free conciliation service funded until March 2012 by the EHRC offered poor value for taxpayers’ money. Average costs were more than £4,000 per case, compared with £600 to £850 when going through the Ministry of Justice website, “Find a civil mediation provider”.
A good and effective conciliation service should—of course—be available to those who need it, to help people resolve disputes without recourse to the courts. Good quality, accessible and effective mediation is readily available at reasonable cost throughout England, Wales and Scotland through the MOJ’s website that provides access to a full range of civil mediation council-accredited mediators at set fees, and in Scotland through the Scottish Mediation Network’s “find a mediator” website. For that reason, we are repealing the commission’s power to make provision for conciliation. The new Equality Advisory and Support Service, launched at the beginning of this month, will signpost individuals with discrimination disputes to those alternative, more cost-effective, mediation services. In evidence in Committee, the general counsel of the commission agreed that it is not
“particularly important for us to provide the service for conciliation.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 79, Q175.]
Contrary to accusations from the Opposition, these legislative measures do not represent an attack on equalities or undermine the commission’s important role. On the contrary, we believe that they will help the commission to become more effective in delivering its core functions of promoting equality of opportunity and human rights, and creating a fair environment for jobs and growth. I am therefore unable to support amendment 56, and I commend the Government amendments to the House.
Mr Umunna
I will speak first to amendment 56, which is my name and those of my right hon. and hon. Friends. We propose to remove clause 52 in its entirety. I shall then speak to Government new clauses 12, 13 and 17 and related measures on third-party harassment, discrimination questionnaires and equal pay orders.
Debbie Abrahams
It was rather telling that, in response to a question from my hon. Friend the Member for Stretford and Urmston (Kate Green), the Secretary of State said that this was just legislative tidying up. It is absolutely outrageous.
Mr Umunna
I agree that it is absolutely outrageous. Furthermore, on the issue of simplifying regulation, let me say this to Government Members: the promotion and protection of equality and human rights is not, and should not be seen as, regulation. The unrelenting pursuit of these things helps to make this the fair and decent country that Britain is to live in. It is something that we should celebrate.
What is the Government’s defence? What is their justification for pressing ahead with including clause 52 in the Bill? In Committee, the Minister’s predecessor—she did the same today—sought to rely heavily on the comments of the commission’s general counsel in the public evidence session. I have read that evidence in full, and it is true that at the end of it he said:
“The commission is not opposed to the Bill.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 80, Q180.]
As the general counsel made clear, however, it is not for him or the commission to take a position on the Bill. It is a political matter for the Government. That said, he made some interesting comments to which, I note, the Minister did not refer. He was clear that resources were being cut. He said that
“if the commission is given fewer resources, we will have fewer staff and less money to do the work that we would want to do.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 74, Q162.]—[Interruption.]
From a sedentary position, the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock), says, “Who racked up the debt?” I do not think that we can put a price on human rights and equality in this country.
On the commission’s remit, the general counsel was unequivocal. He said:
“This Bill reduces our powers and our remit… We would prefer to keep the remit we have, so we have not promoted the amendments in the Bill.”
Finally, on the repeal of the general duty in section 3 of the Equality Act 2006, he said that the section
“sets out a vision for a kind of society that I guess most people here would want to live in”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 79, Q176-79.]
and confirmed that the repeal of the duty “lowers the vision”.
Before moving on, it would be remiss of me not to turn to the Minister’s comments about the commission’s recent problems. Yes, the Joint Committee on Human Rights and the Public Accounts Committee have been very critical of the commission, and, yes, the National Audit Office has qualified its accounts, but none of these inquiries concluded that its remit should be changed in the way the Government are doing in the Bill. The most recent accounts were unqualified, and the running of the organisation has not been helped by the Government preventing it from recruiting a permanent chief executive and senior management team for more than two years. These recent problems are hopefully in the past and certainly do not justify the winding down of the commission.
The Minister, and the Secretary of State in his letter to me earlier this month, said that it was not the Government’s intention to water down, wind down or abolish the commission. Nevertheless, we know that many Government Members would like to see the back of it.
Andrew Gwynne (Denton and Reddish) (Lab)
Of course, one of the benefits of the commission is its independence from Government and Ministers. Does my hon. Friend share my concern that altering the commission’s remit will fundamentally undermine the independence of what is left of this organisation?
Mr Umunna
Absolutely, and I would say two things about what my hon. Friend has just said. First, when it comes to the comments of the general counsel, one has to consider that he is passing comment on his masters who are cutting his budget massively. To suggest that that does not weigh on his mind when he makes comments about the Bill is probably quite naive. The second thing I would say is that the independence of the organisation is paramount, and its ability to do its job will be compromised by the changes being made.
Let me point out to the Minister that what people are entitled to do when making a judgment about her party and her Government’s intentions for the commission is to look at the actions they have taken. The catalogue of things that I have just listed has meant not only that people in her own party are incredibly worried about its future, but that many of the stakeholders who work in this area are also worried about it. At the moment, the general view among many people is that we are effectively seeing the abolition of this important organisation by stealth. That is what seems to be happening.
Luciana Berger
I should share with my hon. Friend the fact that I worked for the Commission for Racial Equality before it merged into the new body. I know that there are always challenges with any organisation, but the work it did was crucial. Does he, like me, share the concern raised only a few days ago by Brendan Barber, the TUC general secretary, that what the Government are doing essentially makes a mockery of their claim that equality is at the heart of the coalition Government?
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
My hon. Friend hit the nail on the head when he talked about abolition by stealth. Anyone who has ever had cause to take an issue to the Equality and Human Rights Commission knows that going to an independent body that has rights over other bodies to take action is vital. Taking an internal route through an organisation is sometimes too slow and inadequate. Will he make a commitment about what the Labour Government will do when we are back in power in 2015?
Mr Umunna
I am proud to be associated with a party that was responsible for setting up many of the predecessor bodies of the Equality and Human Rights Commission. Let me be absolutely clear: we thoroughly support this organisation. It is incredibly important, not only in taking an anti-discrimination stance towards some of the things that unfortunately happen in our society, but in being proactive in promoting that. I have just returned from a visit to Israel, where I learned more about the situation there. I met the Israeli and Palestinian Governments, and one of the things that I felt so proud of was the fact that an equalities commission was recently created in Israel. We know that society there has major challenges in that respect, but that commission is being modelled on ours. I think that says something about the body we have in this country.
Mr John Redwood (Wokingham) (Con)
I would be grateful if the Opposition addressed the proposals that we are meant to be debating. The Government are not saying, “Just strip it all away”; they are proposing equal pay audits and other mechanisms. It would be useful to know what the Opposition think about them.
Mr Umunna
I have just addressed each point about the commission that the Minister raised in her speech. I understand the right hon. Gentleman’s impatience; I shall turn to the other points now.
Let me turn to the Government’s new clauses. Last week the Government tabled new clause 12, which provides for the repeal of the provisions in the Equality Act 2010 relating to employer’s liability for third-party harassment of employees. That, of course, was a key recommendation in the infamous report of the Prime Minister’s employment law adviser Adrian Beecroft. To find the reason for the original introduction of those measures—I am basing my remarks on my legal practice and study: I was an employment lawyer before being elected—we have to return to the mid-1990s. In 1994, there was a well-known case in which two black hotel waitresses were made to serve drinks in Manchester during a performance by the notorious late comedian Bernard Manning. They were subjected to racially and sexually abusive remarks by Manning, and they took their employers to a tribunal. They should never have been put in that situation, and they issued proceedings and won the tribunal. After that case, however, case law was uncertain—I can say that, having dealt with the case law that existed before the Equality Act 2010 came into force. Through section 40 of that Act, which the Government are partly repealing, we legislated to put protection against such third-party harassment on to a firm footing and cover all types of unlawful discrimination.
Meg Hillier
My hon. Friend is making his point very powerfully. My worry is that under the umbrella of saying that they want to get rid of regulation, the Government are affecting some of the most vulnerable workers in our society, who do not have the protection of a well-paid job and education to argue their case but rely on the law in question. Without it, they will just have to shut up and put up with the harassment that they face daily, often in domiciliary situations such as the one that he described.
Mr Umunna
My hon. Friend hits the nail on the head and identifies the Government’s real motivation. We are in the third quarter of a contraction, which we will hopefully come out of in the next quarter. We were promised many things in relation to the economy that have not turned out to be the case. In their desperation to get the economy moving, and with their complete refusal to stimulate the economy, the Government are now doing the traditional thing and looking to water down people’s rights at work as a substitute for a proper growth plan.
New clause 13 would abolish discrimination questionnaires, which employees can submit to their employers to obtain further information and make up their minds about whether to institute proceedings, or maybe to assist them in reaching a settlement with their employer. I know those questionnaires well, because I was professionally involved in drafting them on behalf of employees. I was also involved in drafting the responses on behalf of employers.
From the employees’ point of view, there is no doubt that those questionnaires help them access evidence at an early stage, which is incredibly important so that, as I said, they can determine whether to litigate or precipitate a settlement. They will now be all the more important because of the large fees that the Government are levying on people who wish to institute claims in an employment tribunal.
Turning to the employers’ point of view, the Government’s own Equalities Office carried out research on the questionnaires and found that only 2% of private sector employers had had to complete one in the past three years, and that most of those who had done so agreed that responding to them had been straightforward. We do not need to abolish the questionnaires, and I do not accept the reasons for doing so that have been put forward by the Minister. I say that not only from a political point of view but in the light of my professional experience of working for a number of years on these matters.
Mr Umunna
I want to make some progress; I have given way a few times now.
I welcome the addition of new clause 17 to the Bill. It will enable tribunals to recommend that an employer who loses an equal pay or sex discrimination case be required to carry out an equal pay audit. I simply want to raise one question about the scope of the measure. Is my understanding correct that it will apply to private sector employers only? Perhaps the Minister will expand on that point.
Jack Dromey
My hon. Friend is making a powerful case. Procedurally, a number of barriers are being put in the way of people seeking justice and the enforcement of their rights. Does he share my view that closing the regional offices and reducing the commission to a rump of its former self will mean that those who are powerless, when challenging those with power who are denying them equality and equal treatment, will no longer have an Equality and Human Rights Commission that is fully behind them?
Mr Umunna
I completely agree with my hon. Friend.
I have absolutely no doubt that if the Minister were in opposition, she would be making many of the points that I am now making. She would be jumping up and down and objecting in the strongest terms to what the Government are now doing. I have referred to the assurance that was given, then broken, by the Secretary of State, which the Minister does not seem to recollect. May I also remind her of something that she said to the Deputy Prime Minister in this House? She said:
“Will the Deputy Prime Minister reassure my constituents that the Government will resist any siren calls to water down the Equality Act as part of the red tape challenge?”
The Deputy Prime Minister replied:
“I can certainly confirm that, as far as I am concerned, there will be no move to dilute incredibly important protections to enshrine and bolster equality in this country under the guise of dealing with unnecessary or intrusive regulation.”—[Official Report, 24 May 2011; Vol. 528, c. 770.]
Well, if that is not a broken promise, I do not know what is.
Jack Dromey
My hon. Friend has repeated back to the Minister something that she said on a previous occasion. Does he agree that she is conspicuous in her silence in now refusing to stand up and defend what she said at that time?
Mr Umunna
Quite right. One argument that has been consistently advanced by Liberal Democrat Ministers, as well as at the Liberal Democrat conference the other day, is that the Liberal Democrats are a check on the worst excesses of their coalition partners. I believe, however, that people will look at their actions. Their words do not marry up to what they are doing in Government. The Secretary of State said at his party conference that if Britain wanted
“competence with compassion, fairness with freedom and more equality…that government must have Liberal Democrats at its heart.”
The measures in the Bill really do call that claim into question.
John McDonnell
I shall speak to amendment 56. Far be it for me to correct my hon. Friend the Member for Streatham (Mr Umunna), but I think the amendment is in my name. I say that only to give notice formally that I intend to move the amendment and divide the House on it. It is in my name only because of my speed of pace in getting to the Vote Office—that is all.
This is not one of those parliamentary knockabout debates, but a fundamentally important one. I have been a Member since 1997 and I have noted that in every debate on equalities during that period, what emerged was a near consensus about the approach towards, and the commitment to, the legislative framework. When we debated the Equality Act 2006, near consensus was achieved in this House about the legislative framework that was being put in place. I thought that that was one of those occasions on which the House rose to its full height, and it was held in esteem for reaching that consensus.
To be frank, there is an element of tragedy to what is happening. We are going dramatically backwards here. The Minister listed a range of reforms that the Government had introduced, most of which I believe the Opposition supported. I welcome them, but the difference between those reforms and the one we are considering is that there was consensus about most of them, both in this House and outside it.
As my hon. Friend the Member for Streatham has said, a vast range of organisations have expressed concern. I received a briefing from the Equality and Diversity Forum—I hope that other Members have received it, too—which basically urged the Government to think again and provided a detailed brief, setting out point by point its arguments for opposing the Government’s proposals. Some of these organisations deserve listening to. They include Age UK, the British Institute of Human Rights, the Children’s Rights Alliance for England, Citizens Advice, Disability Rights UK, the Discrimination Law Association, End Violence Against Women—the list just goes on and on—the Fawcett Society, Friends, Families and Travellers, Justice, the Law Centres Federation, Mind, the National AIDS Trust, Race on the Agenda, the Refugee Council, the Royal National Institute of Blind People, the Runnymede Trust, Scope, the TUC and the Women’s Resource Centre—and there are many more. As my hon. Friend said, tomorrow there will be a further letter from organisations that supported this House for almost a generation as we devised the legislation and the legislative foundation of our equalities law. This Government are now breaking that consensus.
To be frank, there were concerns that there would be a Conservative party attack on equalities after the election. We were hoping that that would not be the case. I argued that many of the legislative debates we had had over the last generation would be put to bed and would not be reopened. Many feared such an attack, but most of us hoped when the coalition was born that the Lib Dems would head it off. I know that there are those who have tried to do so. We have heard today of letters coming in from different Lib Dem groups, urging the Government to think again. Unfortunately, they have failed. As a result of that failure to convince the Government to think again, we are faced with the most significant step backwards on equalities that we have seen in the last 20 years.
John McDonnell
Let me assure the hon. Member for Skipton and Ripon (Julian Smith) that I would never call him a liar. What I am trying to say is this. The organisation has previously made it very clear that the House will be the determinant of the Bill. I believe that John Wadham has been a good and effective civil servant over the years, and that he will implement whatever comes out of the House as effectively as possible, but I also believe that he and his colleagues are simply trying to survive in whatever way they can, and will speak accordingly.
Mr Umunna
As I said earlier—and as my hon. Friend will know, because he has read what John said—John did say that he was not opposed to the Bill. However, I have just given chapter and verse on all the problems that he has raised in relation to it. He is, of course, an existing employee of the commission, so it is very difficult for him. Why should we not consider, for example, what the commission’s former director of human rights and director of disability rights said in July about what the Government are doing? He said:
“By repealing section 3 of the Equality Act 2006, the Commission will cease to be an agent of social change harnessing the law and its powers to address entrenched inequalities.”
John McDonnell
We will come on to the individual elements, but it is clear from the representations that have been received that there is sufficient concern. Let me put it no more strongly than that. For any Government whose members have arrived at consensus on a contentious issue to come along and break that consensus warrants much deeper consideration than is being given by the Government. The messages from the organisation itself, which is seeking to survive in whatever form it can, have been clear enough to most of us to suggest that it has an underlying concern that it will be unable to fulfil the role we have expected of it up until now.
John McDonnell
Exactly. Part of the role of a trade union representative is to ask the individual, “Do you really want to put yourself through this when there is so little chance of success bearing in mind what information has come back?”
Mr Umunna
What I find so reprehensible about what the Government are doing to these protections in this Bill—the same applies to the points that we will be discussing tomorrow in relation to employment law—is that in many respects the people for whom these protections are so important are those who are not represented by a trade union because they provide backstop protections for them in the event that they cannot get assistance elsewhere.
John McDonnell
Exactly. Amazingly, the questionnaire process has been operating effectively since 1975, and in the consultation, 83% opposed this proposal. Most people just want to get on with the practicalities of conciliation, not resort to law because of its expense and risk, and the questionnaires enable us to do that. The Discrimination Law Association offered example after example of the questionnaire’s effectiveness, but they seem to have been completely dismissed by the Government.
New clause 12 relates to third-party harassment which my hon. Friend the Member for Streatham eloquently addressed. I do not think that scrapping the duty set out in the legislation will in any way clarify matters. In fact, I think that it will cause more confusion. At least when cases are brought up with employers, even informally, representatives can point to the legislation and the duty and it is then clear what the employers have to do. Example after example has been pointed out, but I will give one that was raised with us some years ago. Black firefighters arriving at a scene were being discriminated against and targeted, so their employers had to put in place additional protections. Another example was of discrimination taking place in jobcentres. With regard to the consultation, if the Government were listening to people they would hear that 71% are opposed to these proposals.
Reference has been made to other cuts that have been made to the commission. The Minister raised the issue of the helpline, which has now been transferred to the Government Equalities Office. It only takes referrals from other organisations and does not advertise its services, so I think that the Government are effectively hoping that it will simply wither on the vine and there will no longer be a service for people.
I am also concerned—the Minister has not mentioned this—that a new framework document is now being discussed with the commission that, I think, threatens to limit its future freedom of operation. There is to be a further budget review, as I have said. If the Government are planning to abolish the commission, I would rather they came clean about it and were up front, rather than killing it off by stealth, by cuts and by undermining its legal powers. That would be more honest.
It is not the case that equalities are no longer relevant; discrimination is taking place in our society. We extol the virtues of British society but the reality is that, as everywhere else, discrimination takes place daily and has to be confronted, and we need an effective organisation to do that. If we want an effective organisation, it has to have legal powers that are set out clearly in law. This legislation will undermine those powers and make them less clear than ever before.
I think that this flies in the face of everything this House has worked for over the past generation and the joint work that has been done across parties to promote equality and give effective powers to a body and underpin them in legislation. That is now being thrown to the wind, and for what? I think that it is the result of a combination of ideology and the desire to make savings that, frankly, I do not think will be realised. The proposals will most probably cost more than they actually save. I urge the Government to think again. I urge the Liberal Democrat partners in the coalition to return to their first principles and to what they said a number of years ago. If the Government do not amend the Bill, I hope that the other House will take a role in this and stand up for equality in our society once again.
Kate Green
The hon. Gentleman should realise that we are talking about the good relations duty, not the general duty, which is a duty to promote equality and reduce discrimination. However, we have heard some examples this afternoon of how it has been used. It was used, for example, to create the Let’s Kick Racism Out of Football campaign, and it has been used recently to underpin what I think all Members would recognise as an important report published by the EHRC last year, “Hidden in plain sight”, which addressed the issue of disability hate crime. I am not saying that there is no more work to be done; I am saying that the removal of the good relations duty does not inspire confidence that the commission will have its eye on the ball of doing more work. It is important that we do not lose sight of the progress that we still need to make.
Mr Umunna
My hon. Friend is absolutely right. We need a commission not only to act as an anti-discrimination vehicle that identifies discrimination and deals with it when it happens, but proactively to prevent such things from coming up in the first place. The section 3 duty makes it clear that the organisation has those twin purposes.
Kate Green
My hon. Friend is right. Opposition Members are wary of the commission being reduced to a mere regulator between two parties, rather than seen as an agent of social change. There is a real opportunity for a highly regarded, well-resourced public body, with the right remit, to shape and influence public attitudes. The Government’s proposals will put that work and ambition at risk.
Kate Green
The Minister is indicating that it has moved. We are concerned that the balance of power and influence in determining strategy has shifted from an independent commission to an internal Government body. In the context of the international A-grade status, that is a cause of concern.
Mr Umunna
That is exactly what Neil Crowther, the former director of human rights and director of disability rights at the commission to whom I referred earlier, has said. He stated that as a result of what the Government are doing,
“where now the EHRC is empowered to determine measures of Britain’s progress towards equality and human rights and the outcomes towards which it will focus its resources, in future government will do so.”
Kate Green
Exactly; I think that all Members will be concerned about that.
Mr John Wadham, who has been much quoted in this debate in support of the Government’s position—although that support was not the position that the EHRC took in its first public submission on these matters—has identified the concern over the independence of the commission. He suggested that if the measures proposed by the Government were to come in, he would like to see a compensating measure that would see the commission report to Parliament. Of that compensating measure, today there is no sign.
I will move on to two of the Government new clauses that relate to employment rights. The first relates to third-party harassment, which has been mentioned by my hon. Friends. The Minister said that the relevant provisions in the Equality Act 2010 were not necessary because employees have other forms of redress. However, the fact that there is a specific legislative provision to cover third-party harassment highlights the possibility for employees to have redress. They might be unaware that their employer has such a liability and obligation to them. In smaller and un-unionised workplaces, it is particularly difficult for employees to understand that they may be entitled to redress.
It is also important for employers to recognise the good practice of many exemplary employers in focusing on their responsibility for their staff’s welfare. I was struck, as were some of my hon. Friends, by some of the employers who strongly endorsed the provisions of the 2010 Act and said that they were an important tool in protecting and reinforcing the rights of their employees. They were concerned that other employers might not follow the same good practice and they regretted the change.
Jo Swinson
I take the hon. Gentleman’s point that there has not been a consensual debate today, although I do not think it would be accurate to say that there is a consensus on, for instance, the Government’s measures to tackle discrimination in the trans community or our proposals on equal marriage. I can say that as a constituency MP, and my mailbag, and no doubt those of others, would attest to it. The Government have a positive record, including on measures that the previous Government did not address.
On the reasons for new clause 12, the shadow Secretary of State gave a version of events that differed from mine in referring to the case in 1994. For the record, according to the GEO’s lawyers, the reasoning and rationale for bringing forward that provision is as I set out in my opening remarks. It is also worth pointing out that even though the 1994 case to which he referred happened before that provision was in place, those individuals rightly won their case. Ultimately, the important change is the change in definition, which took place as a result of the case, which I mentioned, in 2007.
Jo Swinson
It is certainly the case that there is wide agreement that improved governance and management are necessary. Much of that has been happening, which is definitely to be welcomed. However, this comes back to whether we should have a legal duty—something that is tightly drawn and focused—or something that is more akin to a mission statement or vision statement. The purpose of a legal duty is about something being manageable and achievable, and although the duty that the shadow Secretary of State read out described what we would all want to achieve, it would be ambitious for a Government, with all the resources available to them, to say that they would achieve them, let alone for a solitary organisation to try to achieve such a wide range of ends, albeit good ones.
Mr Umunna
I am grateful to the Minister for giving way to me again. We are not the only ones who have raised concerns about what she is doing to the commission in this Bill; they include members of her party, as I have said. Councillor Lester Holloway, the head of the BAME Councillors Association, has said:
“A combination of biting budget cuts and the stripping away of many of its powers threatens to turn the commission into little more than a glorified equalities thinktank.”
The head of the Ethnic Minority Liberal Democrats has said:
“I have heard the argument that if it wasn’t for the Lib Dems the Conservatives might have abolished the EHRC altogether by now. However that argument is unlikely to cut much ice”—
Madam Deputy Speaker
Order. Mr Umunna, when I say, “Order”, you sit down. I also need to remind you that interventions are supposed to be brief. I appreciate that you were using a quotation, but using several quotations is not in order.
Jo Swinson
I can say from the Dispatch Box that there is no such threat to close the organisation. The EHRC is an important part of our equalities infrastructure and the Government are committed to ensuring that it is maintained—
Jo Swinson
The shadow Secretary of State might wish to let me respond to the point raised by the hon. Member for Hayes and Harlington; then I will see whether I have an opportunity to hear from him.
The hon. Member for Hayes and Harlington mentioned the percentage of cuts and bandied about a figure of 62%. It is important to bear in mind that removing functions such as the conciliation service, which are now being provided elsewhere, will clearly result in a reduction in the number of individuals required. That service is no longer being provided by the EHRC. When we take into account the functions that have been transferred, the cuts that the EHRC is dealing with are broadly in line with other public sector cuts. Yes, it would be lovely to be in a situation in which we did not have to make any cuts but, unfortunately, the nature of the economic circumstances that we were left with in 2010 means that that is not possible.
Mr Umunna
I think it is fair to say that we remain deeply concerned about this matter. Will the Minister give us a guarantee now that, for the remainder of this Parliament, there will be no move to make any further changes to the statutory remit or footing of the Equality and Human Rights Commission?
Jo Swinson
The shadow Secretary of State does not surprise me greatly when he says that he is not convinced by our arguments today. This was never going to be the most consensual of debates. He is now asking me to look into a crystal ball, but I am clearly not going to make any predictions for the future. I will, however, say that the EHRC is a vital body that is hugely important to our equalities protection. We are conducting a zero-based review to ensure that it can undertake its functions in a more focused way, and that is what we will continue to do.
The hon. Member for Stretford and Urmston mentioned the potential risk to the A-rated status of the EHRC as a human rights body. We are in discussions with the international co-ordinating committee on this, and we want to address any concerns that it might have. We are determined to ensure that we have an A-rated and highly respected human rights body. The hon. Lady also asked about the framework document and suggested that it could undermine the independence of the institution. In fact, it has been agreed on between the commission and the Government, and it sets out specifically that the commission must be
“free to exercise its statutory functions free from ministerial interference or undue influence.”
Oral Answers to Questions
Chuka Umunna Excerpts(11 years, 8 months ago)
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The Minister for Universities and Science (Mr David Willetts)
My hon. Friend is absolutely right about the strength of the cyber-cluster in Malvern. Yesterday evening we held a major conference at the Foreign Office, at which I and colleagues briefed representatives of FTSE 100 companies on the threat to cyber-security, the practical steps that they could take to ensure it and the strength of the British cyber-security industry.
Mr Chuka Umunna (Streatham) (Lab)
May I first welcome the Secretary of State’s new team of minders to their positions on the Front Bench? I note that he is so irrepressible that he needs not one but three minders to keep him in check. His new minder of state, the hon. Member for Sevenoaks (Michael Fallon), told the Financial Times yesterday that he would
“make sure business feels it has a senior champion in the department.”
Does the Secretary of State not feel that he himself has been a sufficient champion of business across Government of late?
Vince Cable
I certainly regard myself as a champion of business, and the success that we have had in private sector job creation and in some of our main strategic industries, such as the car and aerospace industries, with both of which I have worked closely, is evidence of that. I very much look forward to working with my colleague, and we have exactly the same aspirations for British business.
Mr Umunna
The fact is that business simply does not believe that the Government are doing enough. Last month, the head of the British Chambers of Commerce said that he would give key politicians—presumably the Secretary of State is one of them—three out of 10 for delivery. A couple of weeks before, members of the Institute of Directors went further, stating that Government policies to support business were ineffective in every single area, and who can blame them? The Government have failed to deliver on their infrastructure plan, they have failed to get finance to businesses that need it, and they have failed to meet the delivery targets in their 2011 plan for growth. The Government are ridden with indecision. Three marks out of 10 was generous. How many marks would the Business Secretary give the Government given their litany of failure?
Vince Cable
Whenever I talk to business groups—which I do frequently—they unreservedly support the Government’s emphasis on financial stability That is something that the Labour party takes lightly, although we have emphasised it. There is a major agenda to revive the British economy, but in his question the hon. Gentleman made no reference to this morning’s housing statement. At the moment, construction is the most difficult sector in the British economy, because of the collapse that took place in the wake of the boom that his party created when in office. This morning, the Government have proposed a series of businesslike initiatives to free up sites for private development, to put substantial guarantees and resources behind social housing, and to revive a sector that was destroyed in the false bubble created by the hon. Gentleman’s Government.
Oral Answers to Questions
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Mr Willetts
My hon. Friend is absolutely right. Indeed, I will be visiting Norwich research park later today and will be able to announce £250 million of research funding going into life sciences across the country. Alongside the commitment to human health that we have already made, this will be a commitment to research in animal health, plant breeding and the agricultural industries of the future.
Mr Chuka Umunna (Streatham) (Lab)
This Government inherited an economy that was growing, with unemployment falling and a recovery settling in. The revised GDP estimate for the first quarter of this year, far from being revised up, as some expected, has just been revised down. With the country in a double-dip recession created by this Government, 50 businesses going under every single day, and over 2.6 million people out of work, this shambolic Government have been squabbling over a report produced by a millionaire Tory donor that suggests that all would be well were it not for people’s rights at work. Why on earth are they going along with this nonsense instead of, for example, implementing the active industrial strategy that we need?
Mr Willetts
Let us be clear: this coalition Government also inherited an economy that had been hit by a major financial crisis because of Labour’s failure to regulate financial services, and unsustainable levels of Government borrowing which the head of the International Monetary Fund said earlier this week caused her to shiver when she thought what would have happened if they had not been tackled. We are committed, rightly, to reducing the burden of red tape and regulation on the economy, and alongside that we are constructively investing in and supporting the industries of the future.
Mr Umunna
This is a no-growth Government with their head in the sand. They blame businesses, they blame the people who work in them, and now they blame the eurozone, when countries such as Germany and France are not in recession and we are. They said that they would increase lending to small businesses, but there has been a net contraction in lending to small businesses in every single month of this Government. They said that they would support different industries, from defence to renewables, but they have failed to do so. They boasted that their regional growth fund would create more than half a million jobs, but the National Audit Office tells us that it has created less than a tenth of that. We have always known that Tory-led Governments are heartless. Do today’s figures not demonstrate that they are hopeless too?
Mr Willetts
That pre-prepared speech had nothing to do with the reality of the industrial strategy being pursued by this coalition, which is delivering big increases in exports to the big markets of the future. Exports to China are up 18%, exports to India are up 29% and exports to Brazil are up 11%. Employment is up, inflation is down and public borrowing is down. [Interruption.]
Oral Answers to Questions
Chuka Umunna Excerpts(12 years, 5 months ago)
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Mr Prisk
As I said at the beginning, the new export strategy enables us to double the number of companies that we reach and support. In addition, five new finance products have been put on to the market. We have commitments of £242 million for those products, so there is a positive layer of action, and we can make real progress in the years to come.
Mr Chuka Umunna (Streatham) (Lab)
At a previous Question Time, the Business Secretary was right to say that, historically, SMEs have not been as involved in exporting as larger companies. With that in mind, earlier this year he launched the export enterprise finance guarantee scheme, a programme run out of his Department, and we were told that that would help lots of SMEs to access export finance. Will the Secretary of State tell us how many companies have been helped by the scheme since it was announced with a great fanfare 10 months ago?
Mr Prisk
Sadly, the hon. Gentleman will have to make do with the Minister of State rather than the Secretary of State. We have been able to deliver some £242 million across the five products, and we have also been able to ensure that with the pilot, the export enterprise finance guarantee scheme, in which there have been a number of changes, we have been able to deliver some £2 million. It is important to bear in mind the fact that the export enterprise finance guarantee scheme is a pilot; the other four are actually full products.
Mr Umunna
The answer to my question is that just four companies have benefited from that export scheme. That is another example of the failure of the Minister’s Department to improve access to finance for small businesses. Of course access to finance in general helps SMEs to grow and expand into different export markets, and we were told that Project Merlin would ease credit conditions for small businesses—but net lending to businesses by banks has contracted in nine of the past 12 months under this Government. Merlin failed, so they are now giving credit easing a try, but the effectiveness of credit easing is dependent on whether the banks choose to participate. What guarantees can the Minister give us that they will participate in the scheme and increase net lending to businesses as a result?
Mr Prisk
In the first three quarters, the numbers on net lending stand at £66 million. [Interruption.] What I am trying to say to the hon. Gentleman is that we are committed, through Merlin, to ensuring that lending this year is greater than last year. He needs to be careful in this area, because, as he knows, such schemes are subject to demand. [Interruption.] He asked about credit easing, and I will come to that point. I say to the hon. Gentleman that the £20 billion that the Chancellor has put forward is substantially important and will bring about an important increase. What the Opposition need to remember is that we are actually delivering an increase in lending this year over last year. They did not deliver that. We are, and that is the difference.
Economic Growth and Employment
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Mr Chuka Umunna (Streatham) (Lab)
I beg to move,
That this House notes with concern that UK economic growth is flatlining and was choked off well before the recent Eurozone crisis, that youth unemployment is now more than one million and that Government borrowing is therefore expected to be £46 billion higher than forecast over the Parliament; further notes with regret that the Government has failed to deliver a credible growth plan, is undermining critical industries in which the UK must compete, is failing to use strategically procurement and other tools to drive growth and innovation, and is holding back regional growth with its flagship projects mired in inertia and with most business still waiting for Regional Growth Fund money seven months after the recipients were announced; therefore calls on the Government to deliver a growth plan that provides an immediate boost to the economy to increase demand and growth, including a £2 billion tax on bank bonuses to fund 100,000 jobs for young people and build 25,000 more affordable homes; and further calls on the Government to bring forward long-term investment projects to get people back to work, to reverse the damaging VAT rise of January 2011 for a temporary period giving families a £450 boost and providing immediate help for the UK’s high streets, to provide a one-year cut in VAT to five per cent. on home improvements, repairs and maintenance to help home owners and small businesses, and to provide a one-year national insurance tax break for small firms to help them grow and create jobs.
In his Conservative party conference speech last October, the Chancellor said he would stick to his plan to cut faster than any other Chancellor in our history, regardless of the consequences, because, he said, it was necessary to put our economy on a sound footing. With reference to the Business Secretary he said:
“Together, Vince and I have started to open Britain for business.”
A year later, what do we find? The economy has grown by just 0.5% in the past 12 months. This compares with growth of 1.5% in the US over the same period and is significantly down from the 2.6% growth in the previous 12 months, thanks to the measures taken by the Labour Government. Have the Chancellor and the Business Secretary opened Britain for business? The figures tell a different story. The number of UK enterprises fell by 20,000 in the year to March 2011, with decreases in business numbers in every region except London and Scotland, and business confidence nose-dived following the announcement of the Chancellor’s spending review.
What effect is this having on the people of this country? More than 2.6 million people are out of work, the highest rate in 17 years. More than 1 million young people are now out of work, the highest since comparable records began in 1992. Let me be clear: these are not our statistics. They are those of the Office for National Statistics. They are the facts.
How have the Government responded to the facts? Last week, when we learned of the youth unemployment figures, the Prime Minister and the Chancellor were nowhere to be seen. Instead, the Minister with responsibility for employment took to the airwaves. He told us that the 1 million figure for youth unemployment was “a distraction.” The 1 million figure for youth unemployment is not a distraction. It is a disgrace. What a tragic waste of talent. He not only described the figure of 1 million as a distraction, but attempted to blame it on the eurozone crisis. Does he really think that the British people will fall for that?
In fairness to the Business Secretary, when the figures came out his unofficial spokesperson, the noble Lord Oakeshott, told The Guardian:
“It’s ridiculous to blame this rise in unemployment on the crisis in the eurozone. All economists know it’s a lagging indicator, so this is the result of what has been happening in our economy over the past year”.
I could not put it better myself. Despite that view, the Business Secretary remains resolutely wedded to the Government’s economic strategy, however disastrous it is turning out to be. He does so in the name of deficit reduction, yet the independent forecasts published last week show that the Government are projected to borrow, on average, more in each remaining year of this Parliament than we would have done under our more balanced deficit reduction plan. Those are neither the Opposition’s figures, nor those published by the Office for National Statistics; the summary of independent forecasts was published last week by the Government themselves. Of course, the Office for Budget Responsibility has already forecast borrowing to be £46 billion higher than previously thought. The evidence is clear: the Government’s strategy is not working because reducing borrowing requires growth, which they choked off by cutting spending and raising taxes too far and too fast, and long before the eurozone crisis.
Richard Fuller (Bedford) (Con)
I welcome the hon. Gentleman to his place on the Front Bench, which gives the Opposition the opportunity for a fresh start in putting forward their policies. He noted that according to later assessments the deficit will be higher than originally estimated, but does he accept that the key thing the Government got right was to set the tone for interest rates so that this country’s businesses can benefit from much lower interest rates than those in other countries, and would not the policies that his party proposes put that at risk?
Mr Umunna
With the greatest respect to the hon. Gentleman, the reason the Monetary Policy Committee has set our interest rates so low is that we are struggling to find growth in this country. Without growth, we will be unable to reduce our borrowing. Our not being in the eurozone is another reason we are able to adopt lower interest rates.
Charlie Elphicke (Dover) (Con)
I, too, congratulate the hon. Gentleman on his much-deserved elevation and on his speech, which has been very interesting so far. I put it to him that the Opposition’s plan would have been to borrow about £100 billion more than the Government plan to borrow in the current Parliament, which would lead to higher interest rates and push us closer to the situation Italy and Greece find themselves in and to what is happening in the eurozone, which would be irresponsible and reckless.
Mr Umunna
I thank the hon. Gentleman for welcoming me to my post. First, if he looks at page 22 of the Government’s summary of independent forecasts, he will see that they are projected to borrow, on average, over £100 billion more than the Government thought they would. Secondly, when he returns to his constituency he might wish to explain to his constituents, particularly the young people—youth unemployment there is up by 155% since January this year—why he cannot get his Government to change course.
Mr Julian Brazier (Canterbury) (Con)
I am most grateful to the hon. Gentleman, who has shown considerable courtesy already in giving way. Does he accept that the markets set long-term interest rates, whatever the MPC does, and that the problems in countries that have let their fiscal position get out of hand with interest rates have been driven not by a choice given by the European Central Bank, but by the markets setting the prices for their medium and long-term bonds?
Mr Umunna
The market is not irrational, as the Government seem to suggest. The suggestion is that if they move their direction and course by even one millimetre, even if economic circumstances justify such a change, they will be hammered by the market, but that is clearly not the case. I invite the hon. Gentleman to read the numerous articles and speeches by the former adviser to the Chancellor and the Prime Minister and former chief economist of the Cabinet Office, Mr Jonathan Portes, now director of the National Institute of Economic and Social Research, who makes that very point.
Stephen Timms (East Ham) (Lab)
Does my hon. Friend recall, as I do, the Prime Minister telling the House in June of last year that employment would rise in every year of this Parliament, and did he notice in last week’s unemployment figures that employment fell by more than 100,000 in the year after that pledge was made? Is it not absolutely clear that the policy is not working and must now change?
Mr Umunna
I completely agree with my right hon. Friend. Of course, another question for the Government is why they will not listen to business organisations that have been calling for action. The CBI is calling for infrastructure spending to be brought forward, the Federation of Small Businesses is calling for a one-year national insurance break for every small firm taking on extra workers, and the Federation of Master Builders would like a targeted cut in VAT to 5% for home improvements, maintenance and repairs. Business organisations, from those representing the food and beverage sectors to those representing businesses on our high streets, which are suffering, are calling for a reversal of this year’s hike in VAT. What do all those measures have in common? They are all part of Labour’s plan for growth and jobs. As our motion stated, the Government must take action now to increase demand and growth and give immediate help to the high street—[Interruption.] The Minister of State, the hon. Member for Hertford and Stortford (Mr Prisk), chunters from a sedentary position. If he wishes to ignore all the various business organisations, people might put a big question mark over his judgment. It is clear that the Government need to back our plan and that they must do so now.
Julian Smith (Skipton and Ripon) (Con)
Does the hon. Gentleman not agree that the Government have been listening to businesses organisations with regard to employment law and deregulation? I am surprised that he, as a former employment lawyer, has not included in the motion a single proposal to make it easier for small businesses in Britain to take on staff.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
When businesses get in touch to tell me about the problems they are suffering from, none of them tells me about problems with employment law. They tell me about the lack of public procurement and problems with VAT and financing from the banks. Those are the concerns that need to be tackled, rather than the side issues that Government Members are pursuing.
Mr Umunna
I agree with my hon. Friend. We all know what is holding back business in taking on workers: the forecast economic projections for this country. That is the real problem. What has been the centrepiece of the Business Secretary’s alternative offer? How will he turn things around? The answer is the regional growth fund. The aim of the fund is to unlock private sector investment, support areas that are dependent on the public sector and help them become more balanced economies. Good. We take no issue with those objectives. We want that money to get to business and to create the jobs that will support growth, yet the scheme has been managed shambolically. It has been an utter fiasco. The fund is a third of the size of the moneys distributed through the regional development agencies, which have been scrapped without effective replacement, so it has been hugely over-subscribed, which demonstrates businesses’ craving for capital. Of the 956 bids received, only 50 were successful in the first round and 119 in the second round. There have been many more losers than winners. It is difficult for the losers, but what of the winners?
Of course, due diligence is needed to ensure the proper use of public funds. The permanent secretary at the Department for Business, Innovation and Skills told the Business, Innovation and Skills Committee that due diligence on successful bids tends to take between two and six weeks, and that until it is complete the successful bidder is not given its money. Yet, clearly, very few successful bidders have received what was promised, because it has taken so long for due diligence to be completed.
I have written to the Secretary of State and tabled parliamentary questions, and in fact the Minister of State, the hon. Member for Hertford and Stortford, who has continually chuntered from a sedentary position today, provided the answers. I tabled those questions to get the answers, to get the facts and to get to the bottom of the delays and mess.
On Monday I received answers to those parliamentary questions, indicating that 30 weeks—30 weeks—after the original announcement just nine of the 50 first-round winners have completed due diligence. When I asked why due diligence has taken so long, I was told:
“It is for successful bidders to initiate due diligence upon receipt of a conditional offer letter from the Department.”—[Official Report, 21 November 2011; Vol. 536, c. 154W.]
Usually, the Government blame us for all the mistakes; now, it seems that they are seeking to pass on blame to the very businesses that they claim to want to help—and the bidder has to pay for the due diligence cost, too.
As it happens, I met—[Interruption.] Ministers shake their heads—
Mr Umunna
I will in a moment.
Last week I met one of the first-round bidders, who told me that on learning of their successful bid in April they immediately sought to progress due diligence but, despite chasing the Secretary of State’s Department, received no further documentation for four months. When they got it, they immediately responded but, again, heard nothing for another three months—until around the time that my right hon. Friend the Leader of the Opposition raised the issue of the regional growth fund at Prime Minister’s questions. I am sure that the timing was totally coincidental.
Even now, formal due diligence is not complete, and the matter is due to go to the permanent secretary’s committee for approval on 2 December.
Angela Smith (Penistone and Stocksbridge) (Lab)
On that important point, the Institute of Chartered Accountants believes that one reason for the length of time taken on due diligence is the disappearance of the RDAs’ expertise in following up the process, and the efficiency savings within the Department, meaning that the skills base there has evaporated, too. Is that not the case?
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I reiterate the point about the expertise that has been lost due to the abolition of the RDAs. The European regional development fund is another vital source of money for businesses. Millions of pounds, particularly in the north-east, remain unspent, and only one fund, from the regional growth fund in Manchester, has been used as match funding for ERD funding. That is a huge waste of important business support that could be going to people throughout the country.
Mr Umunna
Perhaps the Secretary of State will address that comment in his response.
Almost one year after the regional growth fund was announced, and six months after due diligence should have been completed, the winning bidder to which I have referred has still not received any money from the regional growth fund. It is clear to me, in that case, where the blame lies for the delay: it is not with the successful bidder. That organisation provides onward distribution of fund awards to businesses that desperately need it. As a result of the chaos, confusion and delay, the bidder in that case tells me that between 3,000 and 4,000 businesses are being deprived of the moneys they need, putting an estimated 11,800 jobs at risk.
What about the other bidders that provide the onward distribution of funds, and the businesses that could support jobs and growth? As I have said, the situation is a fiasco. It is no way to run a Department, and it is no way to treat our businesses or grow our economy. The Secretary of State and his Department are not doing enough to get our economy growing; what little they are doing, they are doing badly.
Andrew Percy (Brigg and Goole) (Con)
The hon. Gentleman makes a reasonable point about ERDF delays, one of which I have drawn to the attention of Ministers myself, but, having spent 10 years a councillor in the city of Hull dealing with organisations such as Yorkshire Forward, I must say that the nirvana picture of the RDAs that he tries to paint is certainly not my experience. The points he makes now are exactly the same points that we could have made about Yorkshire Forward and its processes for the past 10 years. The problem is the systems, not, as he outlines, how we structure them.
Mr Umunna
With the greatest respect to the hon. Gentleman, the question is whether the Department is doing what it promised to do for those businesses, which is to give them money and to carry out due diligence in a quick and timely way. It has failed to do so. I do not claim that there was a nirvana in relation to RDAs, but we are talking about the regional growth fund, and we actually want it to succeed.
The Government’s latest attempt to grow the economy consists of making it easier to fire, not hire, people. Today, to great fanfare, the Secretary of State said that the service required to claim for unfair dismissal should be increased from one to two years. He said this morning that
“this will mean that business can once again have the confidence to hire the staff they need to grow and thrive.”
That is a retrograde step for a Government who think that watering down employees’ rights is a substitute for a proper growth plan.
Mr Denis MacShane (Rotherham) (Lab)
Even at the height of the Thatcher years, there was no attempt to target individual workers—their unions, yes, because industrial tribunals were a Conservative Government invention, but the measure under discussion is utterly shameless. The efficient European economies are partnership economies, but targeting weaker workers and, particularly, women workers is to the utter and contemptible shame, above all, of a Liberal Democrat Business Secretary.
Mr Umunna
I am glad that my right hon. Friend brings up the Thatcher era, because a well known noble Lord was asked on Sunday whether such initiatives, which seek to make it easier to fire as opposed to hire people, act as a stimulus to job creation. He told the BBC what he thought of that, saying:
“I’ve been responsible for one of those deregulation initiatives for many years and I would be quite frank in telling you that I don’t think we achieved much.”
He went on to say that
“you want to be very careful in political terms that you don’t get the reputation that all you’re trying to do is make life rougher and tougher for large numbers of people.”
Those are the words of the noble Lord Heseltine, and, if a Conservative-led Government are unable to persuade him to buy into the concept, why should the rest of us do so?
Bill Esterson (Sefton Central) (Lab)
My hon. Friend makes an excellent point about what Lord Heseltine said, and the evidence is that, when we create uncertainty for workers by attacking their rights, we find that their behaviour changes in relation to the economy. They stop spending money in the economy, and that undermines the opportunity for growth and the support for businesses, so any Government Member who thinks that cutting workers’ rights is a way to grow the economy is sadly mistaken.
Mr Umunna
My hon. Friend is right, and when the Chartered Institute of Personnel and Development looked at the economic effects of the proposal to increase the service requirement from one to two years, the chief economist, Dr John Philpott, said that
“any positive effect on hiring is likely to be offset by a corresponding increase in the rate of dismissals. Increasing the qualifying period for obtaining unfair dismissal rights thus runs the risk of reinforcing a hire and fire culture in UK workplaces. Although the policy change will undoubtedly be welcomed by the de-regulation lobby, it isn’t the way to boost growth and jobs.”
Nadhim Zahawi
The hon. Gentleman is now quoting selectively. Will he tell us what the Federation of Small Businesses, which he quoted earlier, or the chambers of commerce think of that policy?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman has had his intervention, and he should please wait for the answer. We do not need comments from the side.
Mr Umunna
I withdraw that comment.
The hon. Gentleman asked whether business organisations were in favour of increasing the unfair dismissal service requirement from one to two years. That policy may sound good on the face of it, but what will happen—I say this as a former employment lawyer—is that we will simply end up with more employees making spurious discrimination claims, because there is no service requirement for them. When we put that to businesses, they take quite a different point of view of the policy.
Mr Umunna
I have given way several times, and I want to make a bit of progress.
Instead of reverting to the tired old mantras and doing over the people who work in this country, perhaps the Secretary of State could tell us what he will do to get banks lending to small and medium-sized businesses that are, by his and the Chancellor’s own admission, currently being starved of credit. We know that the Project Merlin accord between the banks and the Government failed. The Secretary of State more or less admitted as much when he said:
“Merlin was necessary but it was never going to be sufficient. I don’t think any of us pretended it was enough.”
We know that the figures published under Merlin are entirely misleading, because under the agreement between the banks and the Government a gross lending measure was adopted, not the more meaningful net figure used by the Bank of England. The truth is that Project Merlin was really no more than a public relations gimmick designed to get the Government out of a hole when banks’ declarations of bonuses were in full flow earlier this year.
For real businesses, the failure is real. The Bank of England’s “Trends in Lending” publication for last month showed the stock of lending to UK businesses contracting overall in the three months to August. The Bank’s latest agents’ summary, for this month, stated that small businesses were still reporting that credit conditions
“remained tight, and in some cases had become tighter.”
That is supported by the figures released this morning by the British Bankers Association, showing lending by the high street banking groups to non-financial businesses contracting this month.
To resolve that problem, the Government first need to change their overall economic strategy, to give businesses the confidence to borrow and grow. The small and medium-sized enterprise finance monitor published last week showed that the main barrier to future borrowing by SMEs was the economic climate, but that the other major barrier was the lending practices of the banks. The Government need to use their influence with the banks, particularly through United Kingdom Financial Investments in the case of the banks in which the state has a stake, to insist that they get money out of the door to responsible businesses that have sound business models but are struggling to access finance. In addition, they must urge those banks to adopt a better lending culture—for example, by ensuring that they have local relationship managers on the ground who get to know the business concerned.
Charlie Elphicke
I am sure the whole House has considerable sympathy with the hon. Gentleman’s position. Unfortunately, the Government’s hands are somewhat tied, because UKFI was set up on the basis that it was at arm’s length. When the original deal was done with the banks, the then Government did not force any lending targets on them. This Government have been trying their best to undo that damage through Merlin and other measures, but the previous Government should have got it right in the first place and have made it harder now.
Mr Umunna
When will Government Members take responsibility? I wish that we were still in government, but we have not been for 18 months now. It is about time that they got used to the fact that they are in government and took responsibility.
Business is crying out not for a Government who step aside and fail or refuse to act but for one who adopt an active approach, using all the tools at their disposal to create the conditions for private sector growth. For all their claims about our record, such as the ones that we have just heard, the Government have kept in place some of the support measures for business that we left them on leaving office. I should point out that under Labour, 1.1 million businesses were created. When we left office, the UK was rated fourth by the World Bank for the ease of doing business, and first in Europe. Under this Government, the UK has dropped to seventh in the global rankings. We will take no lectures from the Government on support for business.
In government, we set up the Better Regulation Executive and the Regulatory Policy Committee to improve the quality, and where appropriate reduce the quantity, of regulation on business. I note that the Government have continued with them.
Julian Smith
Will the hon. Gentleman clarify the top five deregulatory measures that his party took in the 13 years it was in government?
Mr Umunna
I cannot name the top five, but the whole reason the Better Regulation Executive and the Regulatory Policy Committee were set up was to reduce regulations by a huge number and improve their quality.
In government, we also conceived the technology and innovation centres, to promote innovation. The Government are now rolling them out across the country, and they have sought to build on the measures that we put in place to reduce the bureaucracy of Government procurement and increase SMEs’ access to it.
In many other areas, however, there has been a disorderly retreat from an active approach. The Government have undermined certainty for investment, cut the science and research funding budget by 15% in real terms and abandoned the 10-year funding plan, and they have abandoned sector strategies such as the defence industrial strategy. The Automotive Council continues, but the RDAs, which could have helped make a reality of the ambition to strengthen companies’ supply chains, no longer exist.
The Government have undermined new industries, such as green industries, as my right hon. Friend the Member for Don Valley (Caroline Flint) will outline in the debate that will follow this one. They have delayed the roll-out of universal broadband and undermined the collaborative institutions that we set up to work with businesses, such as the Office for Life Sciences and the Technology Strategy Board, which are widely respected. The higher education sector, the seventh-largest export industry, has been put in disarray by the Government’s visa changes. Support for the digital, creative and educational sectors has been scaled back. Then there is the decision to award the £1.5 billion contract for new Thameslink trains to a manufacturer that will make them in Germany, which means that Bombardier is reviewing its activities in Britain.
The Government have retreated from action, undermined confidence, failed to unlock investment, failed to deliver a credible plan for growth and failed to use action to back business. They need to back our five-point plan for growth now and put in place a credible plan to build for our long-term success. These are difficult and challenging times for businesses and people in this country. They deserve better from a Government who say, “We are all in it together”, but who, time and again, show that they have absolutely no understanding of the concept.
Vince Cable
Let me just finish this argument. Some of us have argued for a long time that the underlying problem is that, since the beginning of the crisis, the British economy has suffered—I use my own metaphor— the economic equivalent of a heart attack. There is a profound problem, and what lies behind it is the fact that, more than any other developed country, we have quite extraordinary levels of debt.
There are different kinds of debt. Household debt is 160% of gross domestic product and, after the boom that took place under the previous Government, it is higher than in other developed countries. Banks’ balance sheets are more than 400% of GDP, after they were allowed to run out of control. Government debt is 180% and rising as a result of the deficit financing we had to undertake. If we put those things together, as McKinsey has done, they show that the position we inherited is one where total debt in the UK is approaching 500% of our GDP. The only other country with a problem of that scale is Japan. That is the inheritance we are now seeking to manage.
Mr Umunna
First, on borrowing, does the Business Secretary accept that the average of the independent forecast that his Government published last week shows that, for all his claims to be working to a strategy to reduce our debts, his Government could end up borrowing more in every single year remaining of this Parliament than under Labour’s more sensible deficit reduction plan? Secondly, does he accept that confidence indicators when he took office and took charge of his Department were not too bad and were improving until the comprehensive spending review was announced, after which it nosedived?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We must have shorter interventions.
Vince Cable
On the level of borrowing, let us wait until next week and see what the independent forecast is in the Chancellor’s statement. Of course, the reason why borrowing rises when the economy slows down is the flexibility that is built in—the so-called counter-cyclical stabilisers that we employ as part of our fiscal policy. Unlike the United States and other countries, we allow slow-downs to be accommodated in that way, supporting the economy.
The hon. Gentleman asked me what our strategy is to deal with this problem. I will summarise it. There are three parts. First, we have to stick to fiscal discipline to maintain the confidence of the people who lend to us. That is a very simple proposition that is very difficult to realise and it is something we have done. He quoted various comments from business organisations around the country. I keep in touch with such organisations regularly and go around the country to the regions and nations of the UK. I have yet to meet a single representative of the business community who has asked us to slacken our process of deficit reduction—not a single one. They all make it absolutely clear, including the CBI, that they regard plan A, as it is called, which is deficit reduction, as an absolutely necessary pre-condition to stabilising the economy.
The second element relates to the first. Precisely because we have a large amount of debt in our economy, the priority for Government has to be to preserve an environment in which there are low interest rates. The stimulus we get in our economy—the source of demand—comes primarily through monetary policy. Through the Bank of England acting on short-term interest rates, through long-term interest rates related to bond yields, through quantitative easing at the Bank of England—now credit easing—and through a competitive exchange rate, we have a monetary policy that supports growth and demand. Given the massive debt we have inherited, it is only through monetary policy—relatively low interest rates—that we can possibly support the economy.
Vince Cable
It is certainly a last resort in a major economic crisis. I am sure he appreciates that we are living through an economic crisis that is unparalleled in our lifetimes. That is why not only Britain, but the United States and other countries are having to resort to unorthodox monetary policy. That is a reflection of the desperation of many western countries. Our Bank of England has been comfortable with our fiscal policy and, to that extent, has been willing to support it through monetary means.
Those are two of the three elements of the strategy. The third is rebalancing the economy. We inherited an economy that was horribly unbalanced in favour of debt-supported consumption and banking, and we are now rebalancing the economy towards exports and trade. Rapid growth is taking place at the moment in British exports. That is the strategy on which we will proceed and on which we will be judged. The alternative we have been offered is something called plan B, which I think has been renamed the “Antiques Roadshow” in respect of the shadow Chancellor. No serious business organisation is arguing that such financial irresponsibility has any prospect of success.
Vince Cable
No, I cannot do that, because the projects are under construction. When they are fully completed and fully staffed and their supply chains are established, it will be possible to come up with a meaningful number.
The third area of criticism and questioning of the hon. Member for Streatham related to the banks. The motion recycles the idea of a bank bonus tax, so let us go over what that involves. The current estimate from the CBI, which has carried out research on this in the City, suggests that the yield from bonuses this year—the bonus pool—is likely to be something in the order of £4.2 billion. Of that £4.2 billion, £2.5 billion goes to Her Majesty’s Revenue and Customs in tax because of high tax rates on bonuses, and rightly so. That leaves £1.7 billion in bonuses paid out, assuming that the projection is correct. The Opposition are suggesting that they will have a £2 billion tax on bank bonuses. Where is this £2 billion going to come from? It is considerably more than the total bonuses paid out. Even if they applied 100% tax, which is implausible, what would happen, obviously, is that pay would be consolidated. They have not thought this through. Perhaps that is why the hon. Gentleman did not bother to raise it. Can he can tell us how it will work?
Mr Umunna
I am happy to do so. I am slightly bemused that the Secretary of State should quote those figures from the CBI. It represents all the banks, so would he expect it to say anything different? Of course, the bonus round has not yet been completed, so we have absolutely no idea what the final figure will be.
Vince Cable
I see that the hon. Gentleman is playing for time.
Apart from this slightly mysterious bank bonus tax, what is extraordinary is that we are being lectured on the banking system by a party which in government allowed the banking system to run completely out of control. There was no regulation on cash bonuses. Despite the fact that the banks had an implicit Government guarantee, they were not required to pay any tax for it. We have introduced the banking levy. Labour allowed tax avoidance on an industrial scale and did absolutely nothing about it, yet the hon. Gentleman now presumes to lecture me on banking. I really do think that Labour Members need to reflect a little on what happened in the banking system.
Finally, the hon. Gentleman made various references to spending commitments—or our damaging spending cuts, as he saw them—and tax cuts. This is the time of year when my grandchildren write letters to the north pole addressed to Santa Claus. I have to say that compared with what we are hearing, those letters from my five-year-old grandson are a model of financial discipline and economic literacy. The hon. Gentleman’s predecessor was very eloquent in criticising the cuts to the university teaching grant. The hon. Gentleman has adopted other targets—for example, he has criticised the cuts in the regional development agencies. He has also criticised cuts in the science budget. Last week, he made a very eloquent statement on this, despite the fact that the scientific establishment had been very complimentary about the fact that we had protected the cash budget for science.
When I came into my current job, the one thing I knew was that my Labour predecessors were planning to cut the Department’s budget by 25%, and that is what we have done, because that was the economic reality. I am therefore left with a question to which I have been trying to get an answer. Perhaps the hon. Gentleman can be more forthcoming and economically rounded than his predecessor in telling me how the Opposition are going to achieve their plans. Where is the money going to come from? We have a whole lot of spending commitments in every area of our Department, but not a single suggestion about where those heroic cuts are going to come from. Of course we would like to spend more money on science and other things, and of course some of the tax cut proposals are very attractive, such as the VAT rate on building repairs, which would cost £1 billion, but where does the money come from? This gets to the heart of the problem, which is that the Labour Opposition’s proposal is financially irresponsible. It deals with the problem of Government borrowing by adding to it and deals with the problem of Government debt by adding to it.
Mr Umunna
The various commitments that we have made are all costed and fund themselves. The Business Secretary has said a lot about banking. If he is so fiscally responsible, will he join us in committing to use all the proceeds from the sales of the public stakes in the banks towards reducing the deficit?
Vince Cable
The hon. Gentleman’s numbers may have been costed but they do not add up—that is the problem. As for the banks, it will be quite some years before the sales take place. The Northern Rock sale has gone ahead—that is a small bank—but for the major banks, it is likely to be some years ahead. We do not know whether it will be in this Parliament or the next; we have no idea what the economic conditions will be. It would be ludicrous for me to hypothecate about revenue receipts at this stage.
I will move on to my final passage, because I would like colleagues to have an opportunity to speak. I will summarise some of the positive things that we are doing, albeit within a very constrained budget, to support growth. Of course, fiscal discipline and monetary policy have to be supported by interventions. The hon. Gentleman is absolutely right that there is a role for state intervention. I am not in favour of laissez-faire. There are things that we can do.
Our concentration is on export growth. There has been 13% export growth over the past year. We are outward looking. The motion does not even mention trade. It is unbelievably parochial. I spend a lot of my time in emerging markets with British exporters—I have been to all of them—to support export growth. I do not claim personal credit for the growth, but we have acted as a catalyst for export growth in Brazil, Russia, India and China—the BRIC countries—of 26%, in India of 34% and in Turkey of 30%. I keep in touch with our exporters by working with them and alongside them to deal with overseas Governments. That is where the recovery is going to take place. It is on the back of those exports that we are getting rapid growth in manufacturing in certain sectors such as the automobile sector, which has attracted big inward investment from Jaguar Land Rover and others.
Richard Fuller (Bedford) (Con)
As this is a business debate, I draw Members’ attention to my entry in the Register of Members’ Financial Interests.
I start by congratulating the hon. Member for Streatham (Mr Umunna) on introducing this debate and on the thoughtful way in which he presented his case. As I said in an intervention, he offers an opportunity for a fresh approach. What a contrast this debate is to the one on the economy called by his colleague the shadow Chancellor a couple of weeks ago, which turned into an episode of “Romper Room”—some hon. Members are old enough to remember that—with childish comments being made left, right and centre. The hon. Member for Streatham presented a much more cogent case today, but that is the root of his problem. He is the fresh new hope, but unfortunately he is held back by sad and discredited ideas, the core policy of which, as the Prime Minister has said, has been reheated and resold at least eight times already.
I encourage the hon. Member for Streatham to be a little bolder in setting out his ideas. I know that he agrees—his speech lasted 31 minutes, but only in the 30th did he get round to talking about Labour’s so-called five-point plan. I ask him to spend more time developing his ideas, and not to be held back by the discredited Labour past.
Mr Umunna
Back-handed compliments aside, it is unfair of the hon. Gentleman to say that I did not talk about the different elements of the five-point plan. I remind him that I cited a list of the different business organisations that have called in different ways for parts of that plan to be implemented—from the Federation of Master Builders to the Federation of Small Businesses and the CBI.
Richard Fuller
I appreciate that, and I shall continue to listen intently to all the hon. Gentleman says.
The challenge that this country faces to restore growth is immense. It needs good ideas from both sides of the House and full commitment to the task. On that point, may I say gently to my right hon. Friend the Secretary of State, who is a noble individual and a good gentleman, that sometimes people feel that commitment may not be there 100% of the time from the Department, and that is a commitment to the role of the free market and business. It is as though we have at times a literary equivalent of Dr Cable and Mr Hyde. There is one part of the personality of the Secretary of State that embraces the idea of business and likes the approach of free markets, and then there is the other side of the personality that likes to hang out with a bunch of people on a camping holiday outside a well-known church musing on the merits of capitalism.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
First, the previous Government inherited a boom, and then they bequeathed a bust and a massive deficit, so our top priority must be to deal with the consequences of that and keep out of the downward spiral into which countries such as Greece and Italy have fallen.
As my hon. Friends the Members for Bedford (Richard Fuller), for Solihull (Lorely Burt), for South Basildon and East Thurrock (Stephen Metcalfe), and for Aberconwy (Guto Bebb) have argued, more than ever we need a plan to give confidence to markets, businesses and our people. This debate was introduced by the shadow Secretary of State, the hon. Member for Streatham (Mr Umunna). It was his first major outing, and I thought that his speech was fair. It was better on structure than on presentation—but then again, I suppose the 11 advisers write the speeches; they do not deliver them. [Interruption.] No, I am a fan of the hon. Gentleman. It has become orthodox to say that he has been over-promoted, but I think that that is a welcome change from the self-promotion that has characterised his career so far. We can therefore be grateful that he is at the Dispatch Box, as he predicted he would be for so long.
The problem with the hon. Gentleman and other Opposition Members—in fairness, we heard some good speeches from them—is that they still refuse to acknowledge that reducing the deficit is central to any credible plan. We only have to look at the continuing crisis on the continent to see what would happen if we do not do so. To be analytical about it, the hon. Gentleman made a speech about cyclical problems in a structural context. The issues around debt and deficit in this country are structural, and they will not be solved by cyclical solutions.
Mr Umunna
The Minister seeks to give me a lecture on reducing the deficit. Can he explain why, as I asked the Secretary of State earlier, in the average of the independent forecasts, his Government are forecast to borrow more in every remaining year of this Parliament than we were under our more responsible deficit reduction strategy?
Mr Hayes
That was the ponderous exaltation of a basic economic fact: when tax yields fall because there is less growth than expected, and welfare payments go up, of course that is a result, but it is not a reason not to have a credible fiscal policy. The hon. Gentleman remains in denial, just as the shadow Chancellor remains in denial, but the OECD—
Oral Answers to Questions
Chuka Umunna Excerpts(12 years, 6 months ago)
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Vince Cable
The hon. Gentleman is right to acknowledge the big increase in apprenticeships, and it is not simply quantity; it is also about quality. Some of the rapid growth that is taking place is in advanced apprenticeships, including in manufacturing, and we welcome that, but we do not accept that the status quo is adequate. We want to strip away some of the bureaucratic barriers that hinder companies, particularly small companies, and my colleagues are working on that.
Mr Chuka Umunna (Streatham) (Lab)
A few years ago, the Business Secretary was described by the Deputy Prime Minister as an “economic prophet”. So in January, when the Secretary of State told the House that
“…economic growth is now strong. It will become stronger as a result of the work that the Government are doing in stabilising finances”—[Official Report, 13 January 2011; Vol. 521, c. 429.]
we listened with interest. Given the performance of the economy since January, does the Business Secretary believe he has lived up to his billing?
Vince Cable
May I first warmly congratulate the hon. Gentleman on his rapid and considerable promotion? I will not tempt fate by hoping that he makes a success of it, but I none the less wish him well. Of course, one advantage that he has in coming into Parliament only very recently is that he is not personally responsible for some of the disasters that occurred under his predecessors. One of our problems is sorting out some of those disasters, not least of which are the massive deficit that we inherited, a broken banking system, large amounts of personal debt and a flat housing market. All those factors explain why it is now very difficult to launch into rapid growth, but we are putting in place the rebalancing of the economy and the financial discipline to make that feasible.
Mr Umunna
I thank the Business Secretary for his kind words, but I wonder when he will take responsibility. In his first speech as Business Secretary, he described his Department as the “Department for economic growth”. The truth is that, under his leadership, it has been the Department for no growth. The economy has stagnated, unemployment has soared and confidence has nose-dived—and that is all before the effects of the eurozone crisis have been felt. Things would be very different if he changed his policy and adopted a proper plan for growth to get demand back again. In January, he thought his policies were working and it turns out he was wrong. He has described himself as a Keynesian, but Keynes famously said:
“When the facts change, I change my mind.”
Why will the Business Secretary not do the same?
Vince Cable
Well, Keynes famously wrote in his well-publicised note to Franklin Roosevelt that probably the most useful thing that the Government could do in a depression was keep down long-term interest rates, and that is what this Government have done as a result of their fiscal prudence.
The hon. Gentleman says that we do not have the policies in place; we have two things in place. We have policies for financial stability, which we did not have when we inherited the economy; and on the other hand we have policies in place to rebalance the economy, to reinvent manufacturing, which was allowed to decline catastrophically under the previous Government, and to promote exports and business investment—things that were shamefully neglected when his colleagues were in government.
Oral Answers to Questions
Chuka Umunna Excerpts(12 years, 11 months ago)
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Vince Cable
My colleague puts the point extremely well. What we are dealing with is not a short-term problem but the long-term issue of how to change the culture of banks. One bank in particular, Lloyds, which I think I mentioned yesterday, already has SME lending on its monthly board meeting agendas, and the system of incentives is being changed to create more of that type of relationship management. Crucially, there are new banks entering the market that have exactly the focus that she describes. Competition, ultimately, will help to solve the problem in a major way.
Mr Chuka Umunna (Streatham) (Lab)
We were told that monitoring would be carried out with the assistance of the Bank of England, yet the Governor himself said in March:
“We’re not monitoring. What we are doing is putting up on our website the data that banks submit after a fairly cursory plausibility check.”
The Secretary of State also mentioned CEO pay, which we were told would be linked to the lending targets, yet he failed to check how that would be delivered before he finalised Merlin. Is it any wonder that the banks are already failing to meet their obligations, when the Secretary of State waved through an agreement without teeth?
Vince Cable
First, I congratulate the hon. Gentleman on his new role on the Front Bench. He is a very articulate commentator on economic matters, and I look forward to exchanging views with him.
The Bank of England plays an important role in the monitoring process. Of course the banks’ data are aggregated, but the Bank provides an independent assessment of progress under the agreement, which is important to the credibility of that agreement. Of course, it has pointed out that there has been a failure of lending in the first quarter.
On the wider question of meeting lending objectives, we were assured when the Merlin agreement was signed that senior executives’ incentives would mean that their remuneration was significantly greater than the share of small business lending on their balance sheets. We are now trying to establish in detail exactly what that means for individuals, and we have insisted that more lending be forthcoming.
Higher Education Policy
Chuka Umunna Excerpts(13 years ago)
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Simon Hughes
Yes, they may want to, and people in this country understand that if they earn more they will pay more to the state and pay more back into the system. That is fair Britain; it is not fair Britain if they pay the same amount for a service they have received irrespective of their earnings. Of course there are issues about perception—and they are big issues, which is why I did not vote for the policy—but I hope the right hon. Gentleman agrees that we now need to concentrate on the cost to the individual who will graduate in 2015 and later. If we start getting that message across, we will be helping young people to go to university, not hindering them, and our prime obligation now is to encourage, not reduce, access.
Mr Chuka Umunna (Streatham) (Lab)
The right hon. Gentleman’s constituency and mine share a local university: London South Bank university. May I ask him two questions? First, does he accept that the concerns expressed on this side of the House about the new regime and its deterrent effect on students are not, as it were, crocodile tears, but, rather, reflect real concerns that are felt not least in both of our constituencies? The worries about what this proposal will mean for students and their families have been raised by my constituents, and I am sure they have been raised by the right hon. Gentleman’s too.
Secondly, does the right hon. Gentleman accept or buy into the principle that higher education should be a partnership between government and the individual? If so, how does he explain the 92% cut in the teaching grant, the 60% cut in the capital grant and the 50% in the innovation grant for London South Bank university from the Government?
Simon Hughes
That was a lot of questions and I shall try to answer them briefly. Of course I share a concern about perception, which is why I took on this job. By the time I have carried it out and given my final report to the Prime Minister and Deputy Prime Minister at the end of June, I hope—I have been working with Ministers to make sure this happens—that we will have the right messages coming out about the real cost in the future in a way that encourages people to go to university rather than discourages them.
On the hon. Gentleman’s second issue, the Government have to take responsibility for the tough spending decisions, as they have done. There were other choices they could have made, but if the choice was reducing the money going from the state to universities or reducing the money going to fund apprenticeships for people who do not go to university, I, on behalf of my constituents and his, believe that it may well be better to fund those who go to further education college and have apprenticeships, rather than spend the money on people who will be earning £71,000 a year.