Credit Unions (Modernisation)

Damian Hinds Excerpts

Tuesday 10th July 2012 Commons Chamber

[Mrs Moon]

I thank the hon. Gentleman for his intervention. That is exactly where I was going in my speech. The average size of a credit union is around 8,000 members, but many fall below that, including Bridgend Lifesavers. Its membership is growing, but it is still about 3,000, so it would be excluded from the modernisation plans. In fact, it would be impossible to meet the target of 120,000 members given that we do not have that total membership across Wales. Wales is a vibrant and active country for credit unions, and I have no problem being ambitious about what they can achieve, but I would like an assurance from the Minister that smaller credit unions that provide valuable services to their communities, such as Bridgend Lifesavers, will not get lost in a stampede aimed at economies of scale. Perhaps we could hear about the measures to be introduced to protect smaller, but still valuable, credit unions. I recognise the need to increase revenue through the expansion of membership and by increasing the products available and the interest rate that credit unions are able to charge.

Demand for credit unions is certainly not a problem, as the feasibility report’s research found. Of 4,500 consumers on a low income who were contacted, 60% expressed a desire for local trusted services, such as those provided by credit unions. The crunch came when they were asked about their awareness of local credit unions, with only 13% of those surveyed being aware of the services that unions provided. That might in part be explained by the previous links required for membership, so the legislative reform order that came into force in January will, I hope, tackle that issue, and I thank the Government for taking the measure forward.

The feasibility report emphasises the need to raise consumer awareness and to develop a strong credit union brand. A national marketing campaign is needed not only to reach those on lower incomes, but to broaden the appeal of credit unions generally. In the United States and in Canada, 40% of people are members of credit unions. The credit union is not just a low-income organisation; it is active across the income spectrum.

[Damian Hinds (East Hampshire) (Con)]

Will the hon. Lady give way?

[Mrs Moon]

I will most certainly give way to the chairman of the all-party group on social mobility.

[Damian Hinds]

The hon. Lady has mentioned a couple of countries and could have also mentioned Northern Ireland. We have just heard from a colleague from Northern Ireland, where credit unions are widespread, well understood and well known, and, notwithstanding her point, which we all accept, about the benefits of small credit unions, that demonstrates the benefits of scale. If lower-cost operations are to reach out to more people, including to low-income customers, scale will have significant benefits.

[Mrs Moon]

I thank the hon. Gentleman for his intervention. Of course scale has benefits, and I recognise that, but we must not kill off small credit unions that are going to grow—and perhaps the publicity campaign will help them to grow. We must not say, “Credit unions cannot expand; we are only going to service the large ones and stick with them,” otherwise unions in countries such as Wales, where they are growing, will find themselves isolated and unable to meet the growing needs of those who want the low-cost credit that they offer.

Oral Answers to Questions

Damian Hinds Excerpts

Monday 23rd April 2012 Commons Chamber

[Chris Grayling]

I have invited all the charitable groups that have an interest in WCA matters to feel free to offer guidance and training sessions to our decision makers, and to share their views so that any appropriate elements can be included in our training programmes, but of course the best way of helping the homeless is to help them into employment—to use the income to find a home and to sort their lives out properly.

[Damian Hinds (East Hampshire) (Con)]

Given the prevalence of mental health issues among homeless people, is not Professor Harrington’s focus on such issues in his second report particularly important for them? Does the Minister also welcome the view of charities such as Homeless Link that Professor Harrington’s work is making a material difference to the operation of the work capability assessment?

[Chris Grayling]

It might be appropriate at this point to pay tribute to Professor Harrington for the work that he has carried out. Of all the things that I have heard over the past 18 months about the work capability assessment, one thing I have not heard is anyone criticise Professor Harrington, who has done his job excellently and independently.

Work Experience

Damian Hinds Excerpts

Tuesday 13th March 2012 Westminster Hall

[Damian Hinds (East Hampshire) (Con)]

It is a pleasure to see you in the Chair, Mr Howarth. I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing this important debate, on behalf of the striving majority for whom work experience is a great opportunity, for themselves or their children—something to be celebrated and encouraged.

I want to broaden the debate slightly to talk about work experience before children leave school, but before I do that I want to talk about the Government programme that has caused some controversy: what it is, what it does, and for whom. From an employer’s point of view it is a fantastic extended job interview, and an opportunity to see someone in action. Anyone who has ever taken anyone on will know that giving someone a job is always a risk. The more it is possible to see the person in action, the more the risk is mitigated. An employer will get some productive work out of a short-term work experience placement, but, to be honest, it is not nearly as much as some media commentators have suggested. I suggest that, for employers, taking part in the programmes is far more to do with investing in the future and the next generation.

For the individual, the key advantage of work experience is proving oneself—first to the employer directly concerned, bearing in mind the possibility of a job at the end; but, perhaps more importantly, to any employer, by demonstrating recent work experience, involving turning up on time and undergoing the discipline involved. Along the way, of course, people develop skills, and experience a business or occupation that may interest them. But most of all work experience is an in. It is an opportunity that people might not otherwise get. The hon. Member for Edinburgh East (Sheila Gilmore) said that people who apply for jobs in retail know how hard it is to get them. Well, yes: one reason is that without recent work experience people are far less likely to be considered. Other things being equal, at the same rate of pay, the risk is lower and the odds of success are far higher if an employer employs someone who is already in a job or who has just left one, than if they take a punt, as they might see it, on someone who has been out of work for some time. I suggest that anyone who thinks that great employers—great firms with consumer brands of huge value—are in the programme just to get cheap labour, has never held a supervisory position in a consumer-facing branded organisation.

The Government Work Experience programme has generated controversy. I have had e-mails from bemused constituents about both the opposition and Her Majesty’s Opposition: the deafening silence from the Leader of the Opposition has done no credit to the great Labour movement, the party of work.

[Tom Blenkinsop]

We have yet to hear from the Government Benches about how this policy rebalances the economy and how work experience can be used in manufacturing. We hear about employers in the retail sector, but I am interested to hear whether manufacturers have taken on people in this work experience role and whether, if there have been long periods of such experience, greater numbers of people in the north-east have been employed in manufacturing in the traditional sense.

[Mr David Crausby in the Chair]

[Damian Hinds]

The hon. Gentleman makes a good point. I shall leave it hanging, so that the Minister can pluck it at the appropriate moment. All I would say is that the service industry is an enormous part of the economy. We all want to see growth in manufacturing, but services are a huge part of the economy in many of our constituencies. Getting work experience in that area is absolutely valuable in its own right.

The bemused e-mails that I have been receiving from my constituents say something along these lines: “I understand that the programme is voluntary. There are some advantages to the individual in taking part, but if, after a period of time—not on the first day but after a week or so—they just cease to turn up to work for no good reasons, there are adverse consequences.” It is called a work experience programme—I do not know about you, Mr Crausby, but that sounds an awful lot like an experience of work. I pay tribute to the firms that have taken part in the programme, particularly those that have stood firm and not given in. However, I also understand the nervousness of some of the firms that have issued statements expressing concerns.

We all welcome the new media campaigns with which we are pleased to communicate on a regular basis. As politicians, we also know that they are not always all that they purport to be. I am probably unusual on the Conservative Benches in being a Guardian reader. Perhaps I was the only Member present who was a little bemused, or amused, to read the helpful clarification in The Guardian that this right to work campaign was not run by a bunch of lefties because it contained not only the Socialist Workers party, but members of UK Uncut and the Occupy protest movement. I understand the nervousness of firms with quarterly results to deliver and daily revenues to monitor. We need a debate about how some of these campaigning organisations work and about their proper role in society.

[Sheila Gilmore]

I can say from my long political experience that if views that might be deemed extremist do not strike a chord with the public, they will simply sink. If some of the criticisms of this initiative, which have been raised in this House previously, had had no resonance with the public—

[Damian Hinds]

I am grateful to the hon. Lady. All credit to those organisations for creating a splash over the issue. However, I am afraid that they have done it by misleading the public and saying that young people are being forced into slave labour when that is absolutely not the case. This relates to what I was saying about the Opposition—I do not include the small number of Labour Members who have come here today. When their leader had an opportunity to debunk that theory and to put the record straight, he failed to do so. It was a great shame that we did not hear such a view from Labour, the party of work.

I know that we are short of time, but I should like to broaden my contribution to include work experience at school. Whenever employers give evidence on the Education Committee, on which I sit, they predictably complain about qualifications not doing what they say on the tin and about young people not being work ready. Work readiness is sometimes called employability skills, soft skills or, when the terminological obfuscation gets extreme, transferable non-cognitive skills. Essentially, what it means is all the stuff about dealing with other people—turning up to work on time, knowing the right way to dress, empathy with the customer, smiling and pride in a job well done. All those things can be partly developed through work experience. When we ask employers if the situation is getting worse, they often say that it is. We cannot demonstrate that it is getting worse. It may be just not getting better, but we are in the business of economic growth. To achieve economic growth, we need such things to be improving year on year.

We need a debate about the role and quality of work experience in schools. It may be that the two-week block in years 10 or 11 is an important part of that, but it does not seem to be doing the full job. With the rise in the participation age, I wonder whether moving the bulk of work experience into the sixth form might be more appropriate. It may well be that there is a role for both. I also hope that we can consider other ways of augmenting and bolstering that work experience. Perhaps we can have a more formal assessment of that young person’s performance in work experience that can count towards their future job prospects.

[Tom Blenkinsop]

The hon. Gentleman makes an interesting point. I suggest that we bring in that introduction to work experience at the options stage, when children at 14 and 15 are choosing their options for GCSEs, which usually indicate what career they might be going into.

[Damian Hinds]

I absolutely see that point. That is why I said that there could be a role for both. Even at the options stage, there is only an opportunity to see one employer, so it will not give a full range of career choices. We certainly need more firms to step up to the plate for school-age work experience. There are many myths about health and safety compliance and Criminal Records Bureau checks and so on. I hope the Government will turn their attention to encouraging more and more quality employers to get on board with that programme and offer more opportunities to young people.

There is a particular area in which school-age work experience can deliver huge benefits to our country. I am talking about work in the public sector, particularly in teaching. The Education Committee is currently conducting an inquiry into what makes a great teacher. One of the recurring themes is that everybody knows what a great teacher is because they have had one. They know it when they see it, but it is very difficult to predict in advance who is going to make a great teacher unless they are seen teaching. I hope we can encourage young people who are interested in teaching, particularly from the sixth form, to do teaching placements of one or two weeks in a school. By working alongside a QTS teacher, they will be able to develop their skills and decide whether teaching is right for them. Furthermore, qualified teachers will be able to assess whether they are well suited to the job.

[Graham Evans (Weaver Vale) (Con)]

Just this morning, I visited the charity City Year, which enables young people to volunteer for one year to work, unpaid, in local schools—Hackney schools in this particular instance. Some 86% of students who volunteer get a job after, largely as teachers.

[Damian Hinds]

That is a fascinating scheme. I am not familiar with it, but I will certainly look it up. As it transpires, that was the end of my remarks, so I will stop.

[Mr David Crausby (in the Chair)]

I want to call the two Front-Benchers at 12.10 pm, so I would appreciate a very short contribution from Graham Evans.

Living Standards

Damian Hinds Excerpts

Wednesday 30th November 2011 Commons Chamber

[Hugh Bayley]

My hon. Friend is absolutely right. The reason why, under a Labour Government, there was a 2% real-terms increase in the NHS budget is that the cost of an ageing population and the new medical technologies introduced to the NHS is roughly 2% a year. A 2% real-terms increase, therefore, is a standstill in the ability to treat patients, but adding in a costly health service reorganisation and a real-terms cut in the budget means a savage cut in the availability of care for NHS patients.

[Damian Hinds (East Hampshire) (Con)]

At what point was the £20 billion shortfall in NHS financing spotted?

[Hugh Bayley]

The hon. Gentleman should simply look at the record of the 13 years when Labour was in power. The real budget of the NHS almost doubled, but now we are seeing its real spending power being reduced, which his party promised that it would not cut.

I want to speak briefly about help for small and medium-sized enterprises. Autohorn, a successful York business, runs the Europcar franchise and other car leasing and care hire businesses in my constituency, employing 60 staff. A couple of months ago, one of the high street banks withdrew a credit line worth £750,000, which financed roughly a sixth of the company’s fleet. I wrote to the Minister with responsibility for small businesses and asked what he could do to help. He was sympathetic, but offered no practical help. I went to the bank, and I am pleased to say that it has renegotiated with the company and reinstated the credit line. The jobs in that business are now safe, and I hope that it will expand and take on more people. None the less, I say to the Government, “The rhetoric is right, but please, you must do more to back up your rhetoric.” They should make the banks do what they say they are doing and extend credit to successful businesses.

There is no time for me to say what I intended to say about the debt, but let me just say this: there is no argument between our parties about the need to reduce the deficit, but there is a sharp difference about how to do it. The Government’s plan A has made a difficult situation worse over the past 18 months. By cutting growth they have cut tax revenues, and by driving up unemployment they have increased spending. It is time for them to change their policy.

--- Later in debate ---

[Amber Rudd]

I thank my hon. Friend for that intervention, and I would like to take the opportunity to say how much I respect the people who work in the public sector. I value the important work that they do. I and my family have used our local hospital in Hastings and they do an excellent job. It is important that we recognise the enormous value that the public sector provides, but we need more job creation in the private sector.

[Damian Hinds]

With employers talking more than ever about work-readiness and employability skills among the young work force, and with the danger of so many young people not being able to get into work quickly, does my hon. Friend agree that work experience placements are a great way of increasing those young people’s value to employers compared with not having had any experience of formal work?

[Amber Rudd]

I agree with my hon. Friend. The Government’s initiative to bring in work experience is valuable and I understand that the scheme is going well, with people picking up jobs after their work experience.

--- Later in debate ---

[Lisa Nandy (Wigan) (Lab)]

I want to talk about the living standards of women in my constituency who work in the public sector, who are deeply concerned about their prospects for a decent and dignified retirement, and who are today trying to make the Government listen. A third of my constituents are employed in the public sector. All of us in Wigan have friends or family who are affected by the changes to public sector pensions. To them—and to me, having met so many of these workers over the past six months—the Government’s attempt to characterise this as a strike whipped up by a group of self-interested officials not only does not ring true but is, frankly, offensive.

I want to explain to Ministers why so many hard-working, decent people are out on strike today. I have never met a teacher or a nurse who wants to go out on strike; for them, it is a vocation and not just a job. However, like me, they believe strongly in the right of people who have, for very many years, served this country so well, often on very low pay, to retire with dignity. Like me, they do not believe that the interests of the public will be served by running down the professions of which they are so proud to such an extent that nobody in their right mind would go into them. They are as baffled as I am that their Government are describing their pensions—which are, on average, less than £5,000 a year—as gold-plated. Government Members are keen on quoting Lord Hutton; well, I agree with him that we cannot say, in any sense, that public sector pensions are gold-plated.

People pay high premiums for their pensions, and for many women the return is low. My hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) outlined that convincingly. How many of us in this House face that prospect? I am genuinely grateful that Ministers listened and revised their offer for people who are to retire imminently. That will have a particular impact on women, and I thank them for it. However, I am deeply concerned about the situation for part-time workers whose full-time pay may be over £15,000 but whose real pay is far less. What will their Government do for them?

I want to set out what my constituents would like to happen. First, I will address the problem of affordability. Public sector workers are being hit from all directions. Thanks to the Secretary of State, teachers in academies face a pay freeze, and possibly a pay cut. Women are also having to face cuts to child care, tax credits and family support. I put it to Ministers that a scheme that is not affordable is also not sustainable. Young people are saying to me that they will not be opting into these schemes. They are willing to pay into them, but they want to know where the money is going—to know that it is going into the pension scheme. They are not willing to make sacrifices through their pay—

[Damian Hinds]

rose—

[Lisa Nandy]

We have heard enough from Government Members—it is time they listened.

People are willing to make sacrifices but not to pay for the deficit while bankers continue to receive huge bonuses and executive pay in the City continues to rise. I urge Ministers to understand that in some professions, such as teaching and policing, it is unrealistic to ask people to work until they are in their late 60s. Will they please look at the situation of people who do hard, front-line work day in, day out, and recognise that it is unrealistic to ask them to work for that long?

My constituents and I want the Government to set an example. It is not good enough to say that because low-paid private sector workers receive appallingly low pensions their public sector counterparts should receive the same. The Government should be setting an example to employers by taking a lead on tackling the grossly unfair pay and pensions gap between high-paid and low-paid private sector workers, not pushing their own employees into the most appalling poverty after a lifetime of service.

Oral Answers to Questions

Damian Hinds Excerpts

Monday 28th November 2011 Commons Chamber

[Mr Duncan Smith]

I think the hon. Lady is referring to the cap, but I do not agree with her. The cap, which I understand Labour Front Benchers support, is rational and reasonable in that nobody who is out of work should be earning more than average earnings—that is, about £26,000 net. She may deal with constituents who have to travel perhaps an hour into work in the morning and an hour back, who work very hard and who look at those who are out of work and on benefits and find it difficult to accept that they are unable to earn as much.

[Damian Hinds (East Hampshire) (Con)]

With child poverty targets repeatedly missed pre-2010, what role does the Government’s support for child care and the extension of early years provision play in helping families and keeping children out of poverty?

[Mr Duncan Smith]

My hon. Friend has hit the issue right on the head. If we focus narrowly on income, we get a perverse result. Through our early years work, through the support provided by the pupil premium in schools, and through the work that we are doing with universal credit, we have been hugely improving future outcomes for parents and their children who currently languish in poverty.

Credit Unions

Damian Hinds Excerpts

Wednesday 23rd November 2011 Westminster Hall

[Damian Hinds (East Hampshire) (Con)]

It is a pleasure to see you in the Chair for this important debate, Mr Streeter. I know that we are competing against an Opposition day debate in the main Chamber and the appearance of Mr Patrick Vieira, so it is particularly good to see many hon. Members present. The subject matters to Members from all parties in the House. It is good to see at least four parties represented here already, with possibly a fifth quite soon.

I should declare an interest at the outset in that, like many hon. Members present, I am a member of a local credit union—in my case, United Savings and Loans, in Hampshire. I also chair the all-party group on credit unions, whose secretariat is provided by the Association of British Credit Unions Ltd.

The debate is timely, and that timeliness is to do with the making earlier this month of a legislative reform order that will come into effect in January. It is a key milestone enabler for the credit union sector that will boost the ability of credit unions to improve financial inclusion right across the piece. There are other timely aspects, such as the Government’s recent announcement on the modernisation fund and the exciting possibility of linking up credit unions with the post office network. More broadly, the debate is timely also because of the focus that we have these days on debt at all levels—national, corporate and individual—and because of the desire to re-encourage a culture of savings at a time when 4 million households in the country have no savings at all.

Several related debates are taking place within Parliament, such as on capping the cost of credit, debt management companies and credit brokerage. While those are not debates for today, I would not be surprised if hon. Members brought up aspects of them.

Credit unions have a huge growth opportunity in this country. The sector has already seen substantial and rapid growth over the past decade—between 200% and 300%, depending on which measure we choose. The growth fund, which was introduced under the previous Government, was a big part of that growth. There had already been substantial momentum for growth, but the growth fund also enabled credit unions to reach out to a new category of clients and members. Credit unions in Britain now have more than 800,000 adult members and more than 100,000 junior savers.

However, on an international level, membership penetration of the population by credit unions in this country remains small—a low, single-digit percentage, compared with almost a third in the United States and Australia, and almost half in Ireland. Before I am corrected, I should say that when I talk about credit unions in Britain being small, I am referring to Britain, not the United Kingdom, because in Northern Ireland, as in the Republic of Ireland, credit union penetration is massively higher than it is in England, Scotland and Wales. Globally, there are some 53,000 credit unions, with 188 million members across 100 countries. This model is not some newfangled idea or experiment; it has a great international, long-term record.

We are here to talk specifically about credit unions and financial inclusion. It is important to note that when we talk about financial inclusion or exclusion, the subject is not quite as binary as those terms suggest. It is not that someone is either included or excluded, but that there is a scale in between. No one has no access to any financial service whatever. The scale runs from one end—people trading derivatives on personal accounts—to the other, which is people borrowing money from the sort of lender whose idea of a late-payment penalty is a cigarette burn to the forearm. The question is not whether someone is absolutely included or excluded, but what sort of financial services they can access and at what cost.

A great deal of progress has been made on the entry level of financial inclusion, which is having a transactional bank account. In 2002-03, 10% of households did not have a bank account, and the latest figures suggest 4%. That, however, is still one household in 25, or 1.5 million adults in 1 million homes. Disproportionately, such households are single households, households with single parents and pensioner households, and they tend to be at the bottom of the income scale.

Not having a bank account matters on a practical level. Figures suggest that people could save between £125 and £215 just on utilities in the first year, because they could use direct debit. Interestingly and importantly, such savings can be wiped out by bank charges, particularly behavioural charges for people who are more used to dealing on a cash-only basis.

Broader than the question whether someone has a bank account is how much they pay. Risk will always be priced into credit. Different people will always pay different prices. However, it remains the case that some people pay massively more than others. In credit and other sectors, there is still a significant problem in that the poorest pay the most.

The Centre for Responsible Credit recently produced a good analysis and report, showing how much more the poorest pay for their credit than we—people with access to mainstream credit—do. It found that for every £100 borrowed for infrequent purchases, such as white goods, the cost of credit for people with access only to high-cost credit was on average 2.5 times as much as for people who accessed mainstream financial services. For annually recurring items, such as Christmas presents and back-to-school purchases, that figure rose to 10 times: the cost was £7.80 per £100 borrowed on a Barclaycard, and £71.90 if someone borrowed from home credit providers.

We are not talking about small numbers of people, even though sub-prime and high-cost credit is not an issue that many opinion formers and journalists are particularly aware of because they do not see some of the issues. The leader in the home credit market has 11,000 agents calling weekly on one home in 20 in the UK to collect repayments. Payday loan companies have between 1 million and 2 million customers per annum, and the segment is growing quickly. The leader in the rent-to-own market has 245 stores nationwide, with an ambition to more than double that. With rent-to-own in particular, the question is not only the advertised annual percentage interest rate, which is high enough, but the hidden costs that go with that, especially on the mark-up of goods and the additional cost of service cover.

Across personal credit, particularly to the most disadvantaged, although we could argue that this extends far beyond them, much of the emphasis is not on what they can afford to repay, but on what they want. Combining that with extensions and roll-overs, too many of the poorest and most disadvantaged people in society find themselves in a seemingly never-ending trap of debt, from which it is difficult to break out.

How do credit unions address financial inclusion? On transactional bank accounts, credit unions offer current accounts, and I have such a card with me. There are 33,000 active accounts through 25 different credit unions. Credit unions also offer affordable credit. Interest on loans from credit unions is capped at 26.8% APR, which is a small fraction of what someone might pay to high-cost and sub-prime lenders. Importantly, credit unions must have a balance between savings and loans, so they encourage savings. They are personal, community focused and responsible, and perhaps most importantly, they have an ethos about helping people. They are run by and for their members and are truly co-operative, without a profit motive.

One of the most important development and growth areas for the credit union sector recently has been forging partnerships to reach out to people at risk of financial exclusion. That can be groups of people who would identifiably be at risk of exclusion and a broader group who would, at certain times, be at risk of exclusion. To help such groups, many credit unions work actively with local community organisations, ethnic associations and so on. Some excellent work is being done in prisons to help offenders to prepare for release, rehabilitation and work. Leeds City credit union, for example, is undertaking a number of such projects. Care leavers are an important segment. There is a new financial savings product for children in care, and I hope that credit unions will take the opportunity to work actively in that area.

There is also a broader group of people who, at different times in their life, will face the trigger points at which the risk of financial exclusion becomes that much greater. For example, those trigger points can come when a person is setting up their first home or moving into a flat for the first time. The temptation of going down the high street and seeing the furniture and the flat screen telly in the window of the BrightHouse store is a real danger point, because if someone gets into the trap then, it may take them years and years, or perhaps longer, to get out of it.

There are also those who, perhaps through a change in circumstance—a change in job or the breakdown of a relationship—suddenly find themselves in rent arrears, and the problem can build up and snowball. Organisations such as the London Mutual credit union do a lot of great work with housing associations on exactly that area. By coincidence, right now, in the room next to this Chamber, the all-party parliamentary group on credit unions is holding a fair that showcases some of those partnerships, including London Mutual’s work with the Family Mosaic housing association.

Other types of partnership that credit unions engage in do something slightly different. Rather than just targeting people at risk of exclusion, they seek to grow to build up their self-sustainability and reach out to more people. An important way in which that can be done is with housing associations. Such a partnership is a great way to reach people—it is absolutely in the interests of the housing association that new tenants do not fall into rent arrears. They need tenants to become better at managing their finances and, ideally, to build up savings. Credit unions including my own, United Savings and Loans, do very good work in that area.

Payroll deduction schemes are another interesting and exciting development. They drive savings accounts, either through employer-based credit unions—credit unions can be community, employer or association based—or in partnerships. For example, we could see a community-based credit union partnering with local companies.

[Richard Graham (Gloucester) (Con)]

I congratulate my hon. Friend hugely on securing today’s debate and on his leadership of the all-party parliamentary group on credit unions. He mentioned the importance of the legislative reform order that is due to come in, and also alluded to the important role that housing associations can play in the spread of credit union membership, which we both agree is incredibly important. Does he not agree that there is a real opportunity for the National Housing Federation and the Local Government Association to go out there and encourage all their members to join their local credit union so that almost immediately the number of people across the country with access to loans and a place to deposit their money would increase sharply overnight?

[Damian Hinds]

My hon. Friend makes an important point. There is a great opportunity to expand the work between credit unions and housing associations. I hope that the number of those partnerships will increase greatly.

Some credit unions have been involved in payroll deduction savings accounts for many years. I had the privilege of visiting the Voyager Alliance credit union in Manchester. Based at the Stagecoach bus depot in Moss Side, the credit union runs a slick operation. When bus drivers and transport workers join the organisation, they frequently open a savings account from day one. Very small amounts go into the account from their wages. It is a bit like pay-as-you-earn in that they almost do not notice the deduction—well, they do notice it, but hon. Members know what I mean. Before they know it, a small nest egg has been built up, which is important for their financial stability.

The Police credit union does great work with a number of different forces. The Glasgow credit union, which is one of the most successful in the country, has 71 partnerships with different organisations to facilitate building up exactly this kind of savings account. The book on the power of nudge is required reading for all political anoraks these days, and we have talked about that mostly in the context of auto-enrolment pensions, but there is great potential for savings products as well.

Those are some of the things that credit unions themselves are doing, but as my hon. Friend the Member for Gloucester (Richard Graham) mentioned, deregulation of the sector and Government support are about to unleash a set of new and exciting opportunities.

[Mr Andrew Smith (Oxford East) (Lab)]

I too congratulate the hon. Gentleman on this debate and on his wider work in this area. My intervention gives me the opportunity to praise Blackbird Leys credit union and Oxford credit union in my own area. Does he not agree that there is scope to do more through the Post Office to reach out more widely to communities across the country?

[Damian Hinds]

I agree with the right hon. Gentleman. That is the single most exciting potential opportunity for the sector, and I will come to it shortly.

The key piece of deregulation, and what makes this debate particularly timely, is the passing of what in the credit union movement is known as the LRO. Politicos, however, prefer the longer title of Legislative Reform (Industrial and Providence Societies and Credit Unions) Order 2011, which is an awfully long phrase to get one’s head around. It is very important to the sector and has been an awful long time in the making. When speaking to credit union groups, we always get a groan when we say, “Soon, the LRO will be with us.” I am pleased to say that the order has now been passed and will be with us in the new year.

There are three critical elements to the LRO. First, there is the liberalisation of the common bond requirements. Traditionally, there has to be something in common between the members of a credit union. Although that has some advantages, it is also restrictive of growth. In future, credit unions will be able to open up membership to residents of a local housing association, which may have tenants outside the common bond area, or to employers who may have different branches and operations elsewhere. It will also help to facilitate the growth of the strongest credit unions, thus helping to serve more people.

The second key element is the capacity to pay interest on savings rather than the traditional dividend. The divvy, as it is known, has many advantages. However, it is rather difficult to explain, especially if someone is trying to persuade people to put their savings into a particular product. They may say, “Well, it depends how much money is left at the end of the year and then we will divide it all up and you will get whatever you get.” When a credit union is trying to compete in the market against individual savings accounts, it needs to be able to demonstrate a competitive rate. In future, it will be possible for credit unions to do that.

The third important change is in the type of members. It will be possible for credit unions to engage with not only individuals but organisations for a portion of their business. I do not think that we will see many large plcs suddenly starting to bank with their credit union, but it will work for local community groups, not-for-profit groups, small traders and so on that keep relatively small, but not totally insubstantial, positive balances in their account.

On a wider basis, we could say that credit unions have the potential to be the banker to the big society. Importantly, these changes are enabling; they are not compulsory. Three-quarters of credit unions intend to extend their membership base as a result of the changes.

What are the critical success factors for credit unions to be able to promote financial inclusion? We have to look at that on two levels: individual credit union and system-wide. For an individual credit union, scale is needed. It then needs a proportionate cost base so that it can run a surplus. It needs a good mix of savers and borrowers and income groups. To be successful, credit unions cannot just be for the most disadvantaged; they need a good mix. MPs and our local media can play an important part by encouraging more people to put a proportion of their savings—it does not have to be all—into credit unions in the knowledge that they are totally safe and that they will be doing some good in the local community.

On the system-wide level, scale is again at the top of the list of success factors. Alongside that are awareness, visibility and accessibility. Credit unions suffer on that count at the moment. Not as many people are aware of credit unions as they are of the sort of organisations that can afford to advertise constantly on daytime television. Credit unions need attractive, competitive products and substantial, robust back-office processes and interfaces.

[Mr Andrew Turner (Isle of Wight) (Con)]

My hon. Friend is drawing our attention to a number of issues; one of which I am aware is that the Isle of Wight credit union died earlier this year and was helped to amalgamate with the Hampshire credit union. We were greatly helped by the Financial Services Authority, and of course the local people were helped too, but it is important that people should feel some local connection. We do not need huge credit unions that go all over the country.

[Damian Hinds]

My hon. Friend makes a fine point. There will be variety. One of the things that sets credit unions apart is having something about them other than just being a financial institution, and that aspect will absolutely continue. However, these deregulatory changes will also enable stronger credit unions to grow and reach out to more people.

The other thing that can facilitate great change, improvement and growth in the sector is the modernisation fund of up to £73 million, which the Government are making available to help credit unions that can expand to reach self-sustainability in four to five years. I know that Ministers are considering a feasibility study on this issue, and whether and how best to use that money. There are some ways that Government capital can make a big difference. First, it can help the sector to develop a common banking platform and business processing. The sector has already demonstrated its potential for doing that with the credit union card account and the credit union prepaid card.

Secondly, as has been alluded to already, there is the possibility of linking credit unions with the Post Office, marrying a huge, trusted, visible and, for most people, accessible network with financial services from credit unions, which currently suffer from not having that presence. Thirdly, there is the development of the brilliantly named Jam Jar budget account, which is all about helping people to mimic the way that our mums and dads’ generation organised their finances. They had a jar for the rent, a jar for this outgoing, a jar for that outgoing and then they knew what they had left. It is a lot harder to know that these days. I mentioned some of the bank charges that people can incur, particularly in the first year they have a transactional bank account and move away from operating on a cash-only basis. Of course, that is of particular interest at the moment, not least because of the Government’s ambitious welfare reform programme.

There is another idea that I want to throw into the debate. It is not something that the sector is calling for, but I want to see new and innovative ways for people right across the country who may not have an immediate association with a credit union to put part of their investment portfolio through something like a social ISA, to hook them up with opportunities with credit unions and perhaps also with community development finance institutions or other social enterprises, social impact projects and so on.

We want growth in the sector and we want more financial inclusion, but we have to note and accept that particular costs are associated with inclusive growth. I am not a banker—thankfully—but to oversimplify things hugely I suggest that there are three key cost drivers to extending credit: the first is the riskiness of the customer base; the second is the term, or length, of the loan; and the third is the cost of collecting repayments. On those criteria, operating in the sub-prime segment of the market and reaching out to riskier types of customer, particularly with small loans and shorter-term loans, carries an additional cost.

Credit unions are known as an affordable option; that is what makes them so attractive. Their 26.8% APR limit is absolutely key, but the thing that we perhaps do not speak about often enough is that the limit has limits and it restricts what credit unions can do. With the growth fund, credit unions were able to reach out to a more excluded segment of the market. For the people that process helped, the savings have been quite substantial; there have been total savings in interest of more than £100 million and there has been a big drop-off in that group in the use of high-cost credit. However, for the credit unions themselves it is a costlier segment of the market, which is part of the reason why we have seen an erosion of the growth fund over time. Of course, with the growth of payday loans in particular it is especially difficult—actually, it is mathematically impossible—for credit unions to compete with organisations that are able to charge an APR in the thousands per cent, when credit unions themselves are capped at an APR of something less than 30%.

Some of the increased costs may be mitigated by technology. Of course, part of the point of the social fund is that if there is direct benefit deduction it greatly reduces the cost of collection and the cost of default. Jam Jar budget accounts are another development that would help in that respect, as would different channel developments. Those developments may mitigate the increased costs, but they are not the whole answer.

The sector is not calling for a lifting of the 26.8% APR limit, but I am sure that some right hon. and hon. Members have heard from individual credit unions, as I have, that they would like a liberalisation of the limit. There are big perception issues around that question but we must keep the debate active, because even if the limit on credit unions was somewhat higher than it is today there would still be a huge gap between the APR of credit unions and the 272% that someone might pay a home credit provider, or the thousands of per cent to a payday lender.

In recent months, a wider debate about APR caps and restrictions overall has had quite a lot of currency in this place, although as I said earlier, that is not a debate for today. Suffice to say, however, that everything I know about economics tells me that a blunt general cap on APR would be a terrible idea for multiple reasons, with all sorts of unintended consequences. I know that the Government are actively engaging in debate and analysis of the issue, so perhaps it is possible to have a different sort of regime—a different structure to the restrictions—which would get rid of the worst excesses of the market without denying people access to credit altogether. Personally, I have been kicking around the idea of a double-restriction scheme, whereby there is a limit on the initial set-up fee and then a separate limit, or set of limits, on the interest rate charge, which would enable payday loans, home credit and all sorts of things to continue while getting rid of the worst excesses of the market. In that different way of thinking, it might also be possible to create a different sort of regime for credit unions, although I stress again that it is not something that the sector is calling for.

To conclude, credit unions can deliver in Britain on a much bigger scale than they do today; we have only to look to Northern Ireland for a model of what things could look like. Credit unions can also deliver greatly enhanced financial inclusion. Let us not forget the human angle: more stable lives, less pressure on relationships and families and, essentially, happier people. Credit unions can also target and reach at-risk groups, such as those leaving care or ex-offenders.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I declare an interest as a fully paid-up member of the Society Credit Union in Londonderry. I congratulate the hon. Member for East Hampshire (Damian Hinds) on securing this debate. In his very illuminating introduction, he mentioned a couple of times the differing aspects of credit unions. That applies particularly to Northern Ireland, where credit unions are flourishing and have done so for many decades. He has already alluded to flexibility, but does he agree that any changes we contemplate need to be sufficiently flexible to allow for growth in communities where credit unions have been stunted and have not really taken root, while allowing credit unions in areas where they show significant growth to expand even beyond the reach that they have managed over many decades?

[Damian Hinds]

I certainly take, accept and agree with the hon. Gentleman’s general point. There are very specific issues about the regulatory regime in Northern Ireland, but I am not an expert so I will not attempt to talk about things that I do not know enough about. However, I have a feeling that we may hear more about the Northern Ireland situation later in the debate.

More generally with affordable credit, if people are not overpaying for their loans it means that wages go further, and of course that has a beneficial marginal effect on employment and growth. Benefits go further too, and when taxpayers are paying out sums in benefit they want to know that it is going to support families and children, rather than being swallowed up in sky-high interest rates. Credit unions can also help to deliver a renewed savings culture.

I thank the Government for their support of the sector, their recognition of the role that credit unions can play in increasing and improving financial inclusion, and for their general interest in mutuals, especially in the wake of the banking crisis. I also thank them for seeing the legislative reform order through, for their boldness and ambition with the modernisation fund of up to £73 million, and their willingness to look at radical options, such as the Post Office link-up.

Inevitably, however, I also have some asks. First, I ask the Government to please provide a proportionate regulatory framework for credit unions in the post-FSA world. Credit unions should not be penalised for a crisis in which they played no part, and for which they share none of the blame. Secondly, it would be good to get further details of the modernisation fund, and to get the key projects under way as soon as possible. Thirdly, we ask the Government to understand the pressures, challenges and costs associated with reaching the hard-to-reach and, finally, to continue to work as partners with all levels of government to address financial inclusion, rip-off loans and the erosion of the savings culture, to help responsive and responsible financial services, and to further the cause of social justice that brought us all into politics.

Oral Answers to Questions

Damian Hinds Excerpts

Monday 28th March 2011 Commons Chamber

[Chris Grayling]

The hon. Gentleman is absolutely right to highlight the flaws in the system we inherited from his party when it was in government. We have taken steps to improve the process. The Harrington review was designed to ensure that we have a better and more just process, with fewer appeals being made. I agree with the hon. Gentleman about wanting to see the number of appeals reduced significantly, but it is the right of the individual claimant to appeal if they so choose.

[Damian Hinds (East Hampshire) (Con)]

7. What assessment he has made of the potential effects on incentives to work of implementation of the provisions of the Welfare Reform Bill.

[Nick de Bois (Enfield North) (Con)]

8. What assessment he has made of the potential effects on incentives to work of implementation of the provisions of the Welfare Reform Bill.

[Damian Hinds]

Casual work and temporary work are important routes into employment, but many people are put off them, not only by benefit loss but by the complexities they will face. How will my right hon. Friend’s welfare reform programme help to address that disincentive?

[Mr Duncan Smith]

One of the complexities that most people face is the fact that two Departments administer what are, in essence, benefits: the working tax credit and the Department’s own benefits system. One of the problems that occurs is that people in difficulty often find it difficult and stressful to figure out who they are supposed to notify of the changes taking place in their lives, their working hours and so on, and they have to go to two Departments to deal with two sets of figures. That will all be sorted out as we bring those together under one benefit. First, these people will not have to notify so many people, and secondly, universal credit will pick up a great deal of that through the real-time system.

Welfare Reform Bill

Damian Hinds Excerpts

Wednesday 9th March 2011 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

As some hon. Members are still waiting to speak, I shall strive for brevity. We are, of course, debating the principle of the Bill, which I am very proud to support, and we will vote on whether we get the chance to discuss in Committee many of the important issues that hon. Members on both sides of the House have rightly raised. We will also vote on whether to progress with the Bill’s central reform: the universal credit, which is ambitious, bold and compassionate.

I am sure that we have all had discussions with our constituents in which they say, “Why can’t we just have a benefits system that means that you are always better off in work than out of work? Why can’t we have a system where everybody who can work does work and where we provide proper support to those who can’t? Why can’t we just simplify the whole system so that people understand it and we do not spend so much money on bureaucracy?” This Government answer those questions by saying, “Actually, we can.”

This welfare package contains many elements. Hon. Members have focused on different ones, but I wish to focus briefly on the social fund. It contains many diverse elements but, as the hon. Member for Belfast East (Naomi Long) identified, it is the crisis loans that have been growing most recently. In the past year, there were 2.7 million loans to 1.1 million people. Although the number of people taking crisis loans has grown rapidly—it has doubled over four years—the number of individual loans has grown even faster. That, in itself, has driven a big increase in the administration costs of the scheme, which have risen from £70 million in 2007 to £120 million last year. Of course it is right that we provide extra support for people in times of personal crisis, but it is also right to question those rates of growth.

There are many other problems with the social fund: a lack of awareness, particularly about community care grants; the long processing times that sometimes occur; and, on occasion, perverse incentives. One such incentive results in families applying for loans for cookers and beds because they are “priority items”, even if they are not actually the things that are most needed at the time.

It is right to devolve these programmes to a local level, where the authorities know their areas more and are better able to put families in touch with other local services that can help them. Work can be done with, for example, citizens advice bureaux on referrals, and with food banks and furniture recycling programmes, such as Furniture Helpline, in Bordon, in my constituency. Credit unions can also play an enhanced role, although we must recognise the limits to that, both in terms of geographical coverage and the client groups they are geared up to serve. I wish to thank the Department for Work and Pensions for another announcement last week on support for credit unions. An extra £73 million is being provided for capitalisation and for the development of something that many hon. Members on both sides of the House have requested for a long time: a robust back-office system that will enable credit unions to work more closely with post offices. That, combined with the imminent legislative reform order, which will allow credit unions to grow more, will mean that they will be able to fulfil an even more important role in providing responsible, affordable financial services to some of the poorest people in this country.

The reforms to the social fund are just one part of a large and radical package of measures. Some issues still need extra attention, as Ministers acknowledged today. The position of cancer sufferers is one such issue, as is the mobility component of disability living allowance, but I suspect that, deep in their hearts, many Opposition Members support the principles behind this ambitious, bold and compassionate Bill, and I urge them to vote with us to move forward on those central themes.

Youth Unemployment

Damian Hinds Excerpts

Wednesday 16th February 2011 Commons Chamber

[Mr Byrne]

My right hon. Friend is right. Unless we hear something of substance from the Minister, I am afraid that her prediction is all too likely to pan out.

When the squeeze on living standards is about to get tougher and tougher, one would expect action from the Government to help. In fact, more than half the welfare cut will hit working families, and by the end of the Parliament £3.4 billion will be taken off benefits for children—far more than the amount being taken off bankers. Putting aside the question of what kind of Government take more money off children than off bankers, if the Chancellor had done what he should have done, and implemented a proper bonus tax on the banks, he would have about £3.5 billion to invest in jobs and growth, including in jobs for young people. That must be the substance of our debate this afternoon.

[Damian Hinds (East Hampshire) (Con)]

On the simple numbers, will the right hon. Gentleman confirm whether youth unemployment was higher or lower at the end of Labour’s term in office, despite the golden economic inheritance that it had?

[Mr Byrne]

Let me respond to that point in substance in a moment, and I will invite the hon. Gentleman to intervene again. Right hon. and hon. Members on both sides of the House will want to ensure that we draw the right lessons from the past 13 years, as they have a critical bearing on the programme that we want the Government to put in place for the future.

There are real differences between Government and Opposition about the macro-economic approach that we should take. We also share some values. Many of us share a passion to attack poverty in all its manifestations. We believe that the poverty of some impoverishes us all, not only because it affects the chances of many to lead the life that they would choose, but because it denies many the chances, opportunities, free range and scope to contribute to our country’s progress. I happen to think that the Secretary of State shares that belief, about which I feel passionately, as my constituency has the second highest unemployment in the country and, as this morning’s figures confirm, the highest youth unemployment. I do not have to go far to see wasted talent—I see it, and think about it, when I go to work every day. That inspires the passion with which many of us think carefully about the programme that the country needs to get youth unemployment back down.

--- Later in debate ---

[Mr Byrne]

The facts speak for themselves. Between 1997 and the start of the financial crisis the number of young people on the claimant count fell by 40%. Because of the changes we put in place, the number of young people coming off JSA within six months was about three quarters of the number going on. That is why Lord Freud—the Government’s own welfare reform Minister—was right to say that the progress we have made was “remarkable”.

[Damian Hinds]

I am sure the right hon. Gentleman recognises the value of international comparisons as well as time series comparisons, so does he acknowledge that in years before the onset of the global financial crisis, such as 2005, the number of young people not in employment, education or training in this country was higher than the OECD average, higher than the EU average, higher than in France, higher than in Germany and higher than in the United States?

[Mr Byrne]

The number of young people not in education, employment or training was lower, not higher, when Labour left office than when we came to office. Far too often, Conservative Members pray in aid that number—a number that is pretty static—but fail to acknowledge that the number of young people in our country increased by 1 million between 2000 and 2009.

--- Later in debate ---

[Damian Hinds (East Hampshire) (Con)]

It is good to strike a bipartisan note in our debates, even on an Opposition day motion, and I am happy to concur with what a number of Opposition Members, including the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), have said about the scourge of youth unemployment and that these are things we cannot wait to tackle. I am pleased and proud to speak in favour of one of the key clauses in the motion—the bit that says,

“urgent action is now required to stop…young people being lost to worklessness”.

I think we can all agree on that but I suspect we might differ on something that I firmly believe—that the change of management in this country in May 2010 was an important first step towards doing that.

The right hon. Gentleman’s Government left one in five young people out of work. The sharp rise in unemployment started in March 2008, but the sad truth is that there was double digit unemployment among young people according to the standard International Labour Organisation measure even in the good years—the years when the Government were borrowing to the hilt and spending money like it was going out of fashion. In an earlier intervention, I presented the right hon. Gentleman with the international comparisons that he declined to comment on in detail, but perhaps he will do so later.

Of course, Government programmes play a part in all this. I do not think that anyone in the House is suggesting there should be no Government intervention on youth unemployment—of course not. However, I say to the hon. Member for Vale of Clwyd (Chris Ruane), who I am delighted has just returned to the Chamber, that the piece of analysis that he presented concerned entirely the wrong question. We should not ask whether turning around a young person’s life is worth £6,500—of course it is. It is worth that and a whole lot more.

[Chris Ruane]

Well do it then!

[Damian Hinds]

The hon. Gentleman displays—I shall not go on.

The important thing to ask is whether that £6,500 is better spent on the fund or on something else that will achieve the same result. It is vital to ask that question at any time, but particularly at a time when the Government and the country not only have no money, but have minus money.

There are examples of the future jobs fund working well. We have heard about what has been happening in Birmingham and Merseyside and I am sure there are many other examples, but we have to examine whether it was doing its job properly across the piece. I think there were three main problems with the future jobs fund—the future problem, the jobs problem and the fund problem. For the future, it was not sufficiently focused on people’s personal development; the jobs involved were not the private sector jobs needed to drive the recovery; and its funding was simply not the most cost-effective way of spending money. Those problems are quite apart from the onerous application procedures, which were partly why so many of the jobs were in the public sector.

I welcome the new Government’s Work programme, which will be more flexible, centred on the individual and, because of the payment by results element, will result in better value for money. As the Prime Minister said a few hours ago in Prime Minister’s questions, it has often been asked why we cannot use the money that will be saved in future and spend it on those interventions now. That is exactly what the Work programme does.

The expansion of apprenticeships is very welcome. Many hon. Members have mentioned that so I shall not say any more on it, but I do want to talk about the new enterprise allowance, which seems to be based on the best features of the Prince’s Trust work mentoring scheme, which I know a little about having formerly been a Prince’s Trust business mentor. That fantastic programme gives young people who are starting businesses access not only to finance but to support, mentoring and coaching to help see things through. I am delighted that the Government are taking such a programme forward. I hope that we will also see more development of microfinance through community development financial institutions and credit unions once the relevant legislative reform order is brought through.

Welfare reform is also vital to the whole picture—not just the ambition but the intention and the plan to make sure that work will always pay in future. Programmes are only ever a part of all this, and I am glad that my hon. Friend the Member for Enfield North (Nick de Bois) mentioned that we need to broaden the debate. The most important thing of all for youth unemployment—indeed, any unemployment—is the state of the economy and our ability as a nation to take advantage of opportunities. We need a healthy physical and, just as importantly, human infrastructure.

There are three key elements to any overarching programme, which are interrelated. The first is having a buoyant private sector, the second is ensuring that the incentives are there to hire and invest in home-grown workers and the third is ensuring that we have the right skills and capabilities across the economy to take advantage of key growth markets.

[Chris Leslie]

In the city of Nottingham at this time last year, youth unemployment fell for five months continuously, but this year it has been rising. The hon. Gentleman talks about growth and how central it is, but does not he have some doubts that his Government are not doing quite enough on the growth strategy? Could he elaborate on that?

[Damian Hinds]

I do not have such doubts. I cannot comment in detail on Nottingham’s figures over the past few years, but as we have been examining in this debate, the problem of youth unemployment has not started in the past few months: it has been with us for a long time and we have a structural issue.

I was talking about the buoyancy that is needed in the private sector. That starts with investment because when there is investment, businesses grow and take on workers, including young workers. To encourage investment, we need to keep interest rates low. To keep interest rates low, we need a Government who take the nation’s finances seriously. We also need to ensure that lending is happening, and I am pleased that the Government are taking a very robust approach with the banks on that. Something that we need to work on more, but which will take some time, is ensuring that British firms are not bogged down in regulation, dead-weight administration and an enormously complicated tax system.

As well as a buoyant private sector, we need to make sure that we have the right skills to take advantage of the opportunities in the market, both generally and targeted at specific sectors. When we talk about productivity, we tend to focus on manufacturing, but the service sector now accounts for two thirds of the private sector and for much of the productivity gap that we have in relation to other leading nations. Services will continue to be important in future and we need to build up the skills base of our young people—not just their craft skills but their interpersonal and communication skills.

It is also right to have a targeted approach—a strategy for Great Britain plc. Our record on picking winners is not unblemished, but we do need a strategy. We will never again make T-shirts cheaper than China, but there are sectors in which we can excel. The trick is to find sectors in which there is the coincidence of a high-value, attractive growth market and something that Britain is uniquely well-placed to take advantage of, such as advanced manufacturing, pharmaceuticals, the creative industries, financial services, higher education and tourism.

Let me say a word on tourism, because my background is in the hospitality, leisure and tourism sector. [Hon. Members: “Ah!”] I do not know why people are saying “Ah.” That market is in long-term growth and remains a great export opportunity for this country. We are well-placed to take advantage of that market because of our great heritage, our vibrant cities and our beautiful countryside. In that regard, I must say, on a local level, that I am delighted that the South Downs national park will be opening its doors in a few weeks’ time.

When it comes to tourism at Great Britain plc, the marketing department is very good but I am afraid that the human resources department still needs some work.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

This is about the future jobs fund.

--- Later in debate ---

[Damian Hinds]

Actually, this is about unemployment and creating a vibrant economy in which people can be employed. If the hon. Gentleman reads every clause of the motion, he will discover that I am correct.

In the hospitality sector we find that at entry level, kids who have grown up in this country do not have the same skill sets as some of their rivals from other countries. It is not just about being able to make the best eggs benedict: it is about having the interpersonal skills I was talking about—greeting the customer, making eye contact, smiling, offering to help and owning the problem of the customer. Those are the sorts of skills that we need to build up. It is because of some of those gaps that some employers, sadly, actively prefer to take on young people who have not been educated in this country. That is a huge shame.

I am running out of time. I hugely welcome the Work programme, the enterprise allowance and the expansion in apprenticeships. I equally welcome the review of vocational education and training and the fresh look we are taking at the national curriculum and our commitment to improving education and benchmarking it against the very best in the world. I also welcome the fact that the Government are getting a grip on immigration, which is related to this, and the radical welfare reform. Most of all, I welcome the fact that the Government are living up to their responsibilities to eliminate the structural deficit, to keep interest rates low, to get businesses investing and to grow the economy and create jobs.

Benefits Uprating

Damian Hinds Excerpts

Wednesday 8th December 2010 Commons Chamber

[Steve Webb]

No, it is not. Each year the Secretary of State has a duty to assess the general increase in prices; that is what the law requires him to do. If the law required him to link state pensions, for example, to RPI, that would be a different matter, but that is not the duty. The duty is to assess inflation fairly, which is what we are doing. I also announced today that, when companies have RPI written into their rules and no provision for changing those rules, the Government will not allow schemes to change them, precisely for the sorts of reasons that the hon. Gentleman mentions.

[Damian Hinds (East Hampshire) (Con)]

My hon. Friend rightly identified in his statement that the upratings policy forms part of a much wider review of social security policy, which will include major investment in the radical universal credit. Which elements of the Government’s programme does he think will have the most impact on people of working age?

[Steve Webb]

I am grateful to my hon. Friend for stressing that, as well as setting benefit rates, the Department, led by my right hon. Friend the Secretary of State, is looking at major structural reform to ensure that work pays. The hon. Member for Leeds West asked about making sure work pays, and we need to ensure that the move into work is seamless, people know what they will get and there are not the complexities of multiple withdrawal rates. I think that history will judge this Department and my right hon. Friend’s record very favourably for putting in place the structural reform that has been overdue for far too long.