Unemployment

Denis MacShane Excerpts

Wednesday 14th December 2011 Commons Chamber

[Mr Denis MacShane (Rotherham) (Lab)]

I am disappointed by the previous speech, because it repeated the yah-boo exchanges on what is, frankly, a generalised crisis that has touched us all. The notion that it is all the fault of either the previous Government, or of everything that has happened since May 2010, is simply not valid. In 2008, I wrote in The Daily Telegraph a letter to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) stating that we should cut spending and taxes, and he ignored me, but the year before the right hon. Member for Tatton (Mr Osborne), then the shadow Chancellor, wrote in The Times that the model Britain should emulate was that of Ireland. I think that I was right, and I hope that Government Members think that the Chancellor was completely and utterly wrong.

In Rotherham we received news today that 597 more people are unemployed than there were this time last year, which is an increase of about 15%. This is profoundly serious, with families now facing a miserable Christmas.

I do not blame all those problems on this Government—it is absurd to do so. Around the world, we are facing a generalised crisis of the market economics—or, if one prefers, capitalist—model. There is Government debt but, as the remarkable graph put up on last night’s “Newsnight” by Miss Vicky Pryce, the distinguished economist, showed, there is far greater private debt. Everybody is going through the detoxification problem of getting out of debt, and we do not know how to handle it. Niall Ferguson—a distinguished conservative, right-wing historian—writes in Newsweek:

“In normal times it would be legitimate to worry about the consequences of money printing and outsize debts. But history”—

he is writing about how people handled the 1929 Wall street crash and the 1931 Credit-Anstalt crash; there was not one general crash but two—

“tells us these are anything but normal times.”

When Monsieur Hollande, the French Socialist candidate whom I wish to see elected President of France, says that we should be looking at spending more money and at job creation measures, he is shouted down, but I think he is right. Frankly, the Conservatives ought to be in their own little Euro-heaven. We have conservative Governments and conservative presidents of the Commission, the Council and the Parliament proposing fiscal austerity, balanced budgets, making the poor pay, and protecting bankers and the rich. I thought that that was classic liberal—in the Manchester sense of the word—Conservative policy. I do not know why the Conservatives are at odds with Europe, because Europe is doing exactly what they are trying to do with the policy that is having such disastrous consequences in this country.

We look to the BRICs—Brazil, Russia, India and China—but growth in them is slowing down. Today’s figures from the IMF show that Russia, South Africa and Brazil have 3% or 4% growth and China and India have below 10% growth. There is a generalised crisis of world market economics. The United States is in disarray. The United Kingdom is part of the problem as well. We are not the solution to the European crisis—we are intimately part of it. There is no growth, no demand, increasing unemployment and increasing debt.

I am not going to say that this is all the fault of decisions taken since May 2010. I wish we had a Chancellor of the Exchequer of the maturity of Nigel Lawson, Geoffrey Howe or Denis Healey; it is rather disappointing that we have a PPE graduate from Oxford who has just done a little bit of political research in his life. We are going to have to work these problems through internationally.

“No man is an island, entire of itself”,

as John Donne said; every man is a piece of the continent. We will have to find global and European solutions to this crisis or, believe me, we will all be sunk.

--- Later in debate ---

[Steve Webb]

Of course, I did not say that everything is going well, but the right hon. Gentleman cannot deny that in the last month, an extra 38,000 jobs, net, have been created. We can choose different time periods. As my right hon. Friend the Minister of State said, the claimant count rose by 3,000 in the last month, but that is more than offset by the fact that people who were previously on incapacity benefit have been reassessed on to JSA, and lone parents have been required to look for work and moved on to JSA. In fact, without those policy changes, JSA numbers would have fallen in the last month. That is why my right hon. Friend was absolutely right to talk about signs of stabilisation in the job market.

As a number of Members on both sides of the House said—my hon. Friend the Member for Salisbury (John Glen), the right hon. Member for Rother Valley (Mr Barron) and others—every single person on the unemployment roll is a person too many, but if we overstate the doom and gloom, we talk down confidence in the economy, which is to the detriment of all our constituents.

Let me respond to the claim made by the right hon. Member for Rother Valley and others that long-term youth unemployment is up—and I quote—“93%”. Labour Front Benchers have clearly supplied all their Back Benchers with figures for their constituencies. The only problem is that all of them are wrong. Labour Members might be interested to learn that what used to happen is that under measures such as the new deal, people had to move off JSA after a certain period and were paid something else—a training allowance—or they got a temporary job; then, when they went back on to JSA, as so many did, the clock started again. Hey presto—a long-term unemployed person had been converted into a short-term unemployed person. They had not got a job; they had just been taken out of the figures. We have stopped doing that. As a result, if all the factors are taken into account—the people who were excluded from the statistics because they were on training allowances or in temporary jobs—the number of long-term claimants aged 18 to 24 is about the same now as it was in 2010.

To hear Labour Members, one would think that the numbers had doubled. The right hon. Gentleman was very angry about that, and had they doubled he would be right to be so, but they have not doubled—in fact, they are roughly the same.

[Mr MacShane]

Yet.

[Steve Webb]

The right hon. Member for Rotherham (Mr MacShane) said that it was “absurd” to blame all the problems on this Government. That was gracious of him, although I take great offence at his attack on Oxford PPE graduates, but to hear Labour Members today, one would have thought there would have been no public sector job losses at all had they stayed in power. They were planning tens of billions of pounds of cuts. How many public sector jobs would have gone had they gone ahead with their tens of billions of pounds of cuts? They have no idea—no idea at all.

Several hon. Members mentioned interest rates. We were told that we inherited low interest rates, and the Bank of England base rate was indeed low. The question was what decisions did we, as a new Government, have to make to get the fiscal position under control. Because we took the difficult decisions early—pretty much every one of which has been opposed, item by item, in the course of this debate—the interest rates at which the British Government are borrowing have stayed low while other countries’ debt rates have soared. As a result, in this Parliament we have saved £22 billion in debt interest—money we can spend on services and on helping the unemployed which would not have been available had we listened to Labour.

Early in the debate, my hon. Friend the Member for Monmouth (David T. C. Davies) said that we need to tackle red tape. He is right, and we have the red tape challenge, which has already resulted in substantial deregulation in, for example, retail and hospitality, with much more to come. I am grateful to him for making that point.

My hon. Friend the Member for Cardiff Central (Jenny Willott) highlighted the fact that pension funds will now be asked to invest more in the long-term infrastructure of this country—and rightly so. It is shocking that, for so many years, the money in our pension funds was not invested in our long-term infrastructure. This coalition Government are taking action to tackle that.

The hon. Member for Stockton North (Alex Cunningham) referred to the regional growth fund money in his constituency, and I am grateful to him for acknowledging the good that it can do. He asked about incentives to take on the long-term unemployed and the young unemployed. The youth contract is being introduced so that when people take on 18 to 24-year-olds from the Work programme—so they are long-term unemployed—they will get an incentive worth £2,275. That is more than a year’s free national insurance, so it is a valuable incentive. Unlike point five of this fantastic five-point plan we have heard about, which would reward small firms that take on anybody—including someone they were going to take on anyway and who would have got a job—our incentive is targeted on the long-term unemployed. That is the crucial point. Only one person in this debate has mentioned cost-effectiveness—my hon. Friend the Member for Salisbury. The right hon. Member for East Ham (Stephen Timms) said that it was a scandal, or something, to have finished up the future jobs fund, but he should know that that fund was costing more than £6,500 per place, whereas our work experience programme costs a twentieth of that and delivers the same sort of outcomes. Cost-effectiveness simply is not on the Labour party’s radar.

In the few seconds available to me I shall not have the chance to go through all hon. Members’ contributions. My hon. Friend the Member for North East Hertfordshire (Oliver Heald) flagged up the record national debt that we were left and my hon. Friend the Member for St Albans (Mrs Main) talked about the collective amnesia of Labour Members and asked why they did not tackle bankers’ bonuses. Just before the election, they introduced a temporary bankers’ bonus tax—