Amendment of the Law

Diana Johnson Excerpts

Wednesday 21st March 2012 Commons Chamber

[Stephen Mosley]

It is funny that my hon. Friend should say that, because our group’s second recommendation was that the Government should increase investment in ICT in schools. I was pleased to hear the Chancellor highlight the importance of education in building our skills base, because if any industry hopes to compete and thrive, the fundamental basis is the skills base of the domestic work force. My right hon. Friend the Education Secretary recently announced a shake-up in the way that computing is taught in schools. That follows calls from industry and academia, who suggest that ICT in schools is too focused on the use of specific software packages, and not focused on the underlying technologies or on learning the computer programming skills that will help to encourage young people to develop their own products and be on the cutting edge.

Rebalancing the curriculum is a vital step, but there also needs to be greater emphasis on the quality of ICT teaching in schools, along with a concerted effort to champion future careers in the sector. I have already outlined the huge significance of IT for the wider UK economy, yet since 2002 there has been a 33% reduction in applications for computing degree courses. More must be done to encourage our young people into an ICT career if we are to reap all the potential benefits to our economy.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Does the hon. Gentleman share my disappointment that the Education Secretary has not included ICT as one of the core subjects in the English baccalaureate, and therefore as one of the key areas that our young people need to study?

[Stephen Mosley]

The English baccalaureate covers the key core skills we want people to learn. ICT is an important skill, but I do not think it should be included in the baccalaureate, which covers maths, English, basic sciences—the basics. IT is a highly skilled area. Some people might be suited to study it, but others might not. Those who have an aptitude for it should pursue it and achieve.

Thirdly, it is imperative that the UK trains and retains world-class individuals. Over the past decade, the UK has become a receiver of technology developed abroad, which has slowed down the development of technology in the UK. The overriding message coming from industry is that the single most important criterion when deciding where to make new investment is whether the skills to support the investment are available in that location. We have the broad skills base in this country to push on and achieve great things, but without the right commitment and investment—such as in ICT apprenticeships—the UK risks being left behind by our global competitors.

Fourthly, we need a strategy to encourage the take-up of new technology by small and medium-sized enterprises, and to encourage their growth and development. Specifically, it was recommended that the Government can assist by encouraging venture capital investment for the longer term. We have a huge wealth of talent in the UK but, in order for our entrepreneurs to grow their ideas into successful long-term businesses, they often have to sell their ideas and businesses abroad. A prime example of that is the once globally dominant UK computer games industry, which is now mainly foreign-owned and seeing future investment disappearing offshore. I was therefore extremely pleased to hear that the Chancellor will focus on that industry. If we want our smaller businesses to flourish, we should be encouraging investment to help nurture existing small businesses to become medium-sized businesses, and medium-sized businesses to become large ones.

I pay tribute to the Government for their catapult centre programme. We in the UK have always been on the cutting edge of technology, but our inability to transfer intellectual advances to market has often proved to be a stumbling block. The new catapult centres will help to commercialise the results of research in technology areas where there is potential for multi-billion pound global markets, including the digital economy. That is to be wholeheartedly welcomed.

Finally, the Treasury must emphasise and reiterate the importance of technology to the economy and commit to the long-term opportunities that the sector has to offer. We in the UK are attracting world leaders in new and emerging technologies to our shores. We have the skills base, the flexibility and the economic foundations to encourage more companies to invest here. The Government must champion the technology sector more vigorously if we are to harness its great potential to act as the catalyst for long-term growth in the United Kingdom. I am delighted that, as spelled out in the Budget, the Chancellor and the Government are now grasping that opportunity.

--- Later in debate ---

[Diana Johnson (Kingston upon Hull North) (Lab)]

As usual, the hon. Members who speak later in the debate will have the advantage of having been able to study the Budget more as it starts to unravel. I will make some initial comments about what is clear so far from the Chancellor’s speech. I think that it is hugely discourteous to the House of Commons that almost everything that was announced in the Budget has appeared in the papers and on other media in the past few days.

Unfortunately, I do not believe that this is a Budget for growth in areas such as Hull, which I represent, nor that it is fair for people in my constituency. On 23 June 2010, after the first coalition Budget, I said in the House that

“wealth creation and enterprise will suffer in Yorkshire.”—[Official Report, 23 June 2010; Vol. 512, c. 326.]

It did suffer. On 23 March 2011, after the second coalition Budget, I said:

“this is not a fair Budget; neither is it a Budget for growth.”—[Official Report, 23 March 2011; Vol. 525, c. 1024.]

It was not a Budget for growth. The growth that was starting to return under Labour in 2010 was snuffed out by 2011. We have now had a year of flatlining. In Yorkshire and the Humber, 40,000 private jobs have gone in a year. We are supposed to be gaining private sector jobs, not losing them. Private sector jobs were supposed to replace the public service jobs that are being slashed, to create the growth that is needed to cut the deficit. We all, of course, want to see that.

Just outside Hull, there are 845 long-standing, skilled employees at BAE Systems, working in the strategically vital defence manufacturing industry, who will probably lose their jobs this year because of BAE’s decision. Taxpayers will have to meet costs of up to £100 million because of those redundancies. Those skilled jobs will be exported to countries that have Governments who are willing to nurture their industries for the long term. It is worrying that the defence White Paper, which was produced just a few weeks ago, indicated that the British Government would not necessarily buy defence equipment from British companies, but they certainly want other Governments to buy from British companies. What kind of message does that send out to support exports?

Hull’s future is as a national hub for green technology. Thanks to the local efforts of businesses, councils and others, Siemens will we hope be bringing offshore wind turbine manufacturing to Hull shortly. That would open up a wealth of opportunities for the city and the sub-region. Hull would have been an ideal location for the green investment bank, but unfortunately that has gone to Scotland. In one sense, squandering the chances to attract new jobs in sunrise industries to Hull is more damaging than losing existing local jobs. Recently, 100 jobs were under threat at Warmsure in Hull because of the Government’s decision in the solar feed-in tariff debacle. We know that there is strong overseas competition in renewables. We cannot afford to export jobs in these growth industries. We need to export our products, not our jobs. I was concerned that the Chancellor did not give a clear message today about the Government’s commitment to renewables.

Hidden in the Budget is the announcement that VAT will be charged on caravans. That will have a real impact on the economy in Hull, because we manufacture a great deal of this country’s caravans. I understand that it could reduce demand by almost 30%, which would be another hammer blow.

[Mr David Hanson (Delyn) (Lab)]

My hon. Friend may not know that only two weeks ago, I opened a new caravan park in my constituency in north Wales with caravans supplied by manufacturers in Hull. The proposed VAT on caravans will have a dramatic impact, and as she has just said, it will reduce demand by 30%. Is it good practice to reduce demand for the manufacturing industry in the UK through a tax that will damage our economy?

[Diana Johnson]

My right hon. Friend makes a very good point and indicates, again, that this is not a Budget for growth—the very opposite, it seems.

The latest official statistics show that there are 5,447 jobseeker’s allowance claimants in Hull chasing 177 vacancies. That is 30.8 people after each job, which is the 10th worst rate in the country. The overall claimant count across Hull was up by 12.4% in the latest period. Kingston upon Hull North’s long-term youth unemployment among 18 to 24-year-olds has gone up by 155% in the year to February, which is shocking. Hull needs a determined focus on specialist vocational education and training, to equip our youngsters to get the jobs in green industry that could be important to the economy of Hull and the region.

Engineering qualifications are very important, and I was disappointed that the Secretary of State scrapped the diplomas scheme, particularly for engineering diplomas. As I asked the hon. Member for City of Chester (Stephen Mosley), why is information and communications technology not part of the English baccalaureate to show how important ICT skills are for our future?

The Government have talked a lot about rebalancing the economy, but people in the north who are seeking work—the north’s jobless—are being told to move to the south for work, and those in the south who are looking for affordable homes are being told to move to the north. Is that rebalancing the economy? The Government have to think again. They should ensure that there are enough jobs and homes in each region to make the whole country work together effectively.

I wish to focus on some of the key announcements in today’s Budget, starting with the raising of the personal allowance to £9,000 next April. Citizens Advice has already put out a quote on the matter, stating:

“Raising the personal tax allowance is an empty gesture to struggling families on low wages.”

That blows a hole in the argument that the Liberal Democrats try to put forward about the Budget promoting fairness.

Like cuts to income tax rates, raising the personal allowance could be part of a plan to boost demand and growth, provided that it was part of a group of measures such as those outlined in Labour’s five-point plan. In a time of scarcity, the Government’s plan, costing about £3.3 billion, is an inefficient way of helping the poorest in our society. It is clear that middle and upper earners will benefit most from the change. I understand that they will get about an additional £175 each year.

We must consider that against the losses that individuals and families will experience. For instance, the average family is due to lose £530 from 1 April because of the changes to VAT and benefits, including child benefit freezes. This April’s changes to the working tax credit requiring couples working part time to do a 24-hour week rather than a 16-hour week, at a time when a lot of people’s hours are being cut and jobs are disappearing, will affect 212,000 families across the country, including nearly 450 in my constituency. They will lose nearly £4,000 a year, and they are families that are struggling just to get by. What help was announced for those families? There was nothing. If the Government were serious about fairness, they could have done something about that.

Research by the Child Poverty Action Group shows that two thirds of the families who are about to lose tax credits are already in poverty, so I dread to think what will happen to them now. They are punished for doing the right thing and for trying to hold down a job at a time when it is so difficult to get a job or to get further hours of work.

To make matters worse, the coalition is now moving ahead with regional pay in the public sector, with the Liberal Democrats’ support. That is not surprising, because the Liberal Democrats have often advocated a regional minimum wage. Regional pay is more evidence-free policy making by this Government, based on free market dogma. There is no real evidence that national public sector pay crowds out the local private sector. Indeed, public sector workers, living and spending locally, are a vital part of supporting the private sector in Hull’s local economy. We already have London weighting to help workers with the extra costs of living in the south, so there is no reason for different pay rates between the regions.

Local or regional public sector pay could drive down wages in some of the poorest areas, taking billions more out of local economies and accelerating the growing north-south divide. So much for rebalancing the economy.

[Andrew Gwynne (Denton and Reddish) (Lab)]

My hon. Friend is making a pertinent point, but in some parts of the public sector will not the opposite be the case, so that, for example, hospitals, desperate to recruit the best clinicians, will end up paying more to compete with hospitals in London and the south?

[Diana Johnson]

Absolutely. My hon. Friend makes an important point. We know that the NHS is in for a torrid time in the months and years ahead, and he has identified another problem that it has to tackle.

The combination of regional pay and the unfairness in the Budget contradicts the coalition’s rhetoric about making work pay and rebalancing the economy, sucking even more money out of areas such as Hull and the north in favour of the wealthier areas, mostly in London and the south-east.

I am also worried that regional pay could mean that some of the brightest and best, for example, teachers—we need the brightest and best teachers in areas such as Hull—will not come to Hull if the pay is not the same as in some other parts of the country.

Let me comment on the Liberal Democrats’ spin to the effect that this is a Robin Hood Budget. It joins the long list of broken Liberal Democrat promises. We had the abolition of tuition fees, which were then tripled, and education maintenance allowance was axed. The Liberal Democrats promised 3,000 more police but we are getting 16,000 fewer. They promised opposition to VAT, but we how have higher VAT. They seem to have dropped the armed forces pay increase and many more of the opportunist promises they made before 2010, when they had full knowledge of the deficit that would face them. The tycoon tax is just the latest Lib Dem slogan. Increased stamp duty is all very well, but it hits only the minority who sell the property in any year. It needs to be matched by a clampdown on general stamp duty avoidance.

The other major announcement is to cut the top rate of tax. [Interruption.] The Liberal Democrats have no defence on that.

[Tom Brake (Carshalton and Wallington) (LD)]

What did you do in 13 years?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The right hon. Gentleman will not shout across the Chamber at somebody who is speaking. If he wishes to intervene, he should do it in the normal way. That applies to all hon. Members.

[Diana Johnson]

The other major announcement is the top rate of income tax reducing from 50p to 45p for those earning more than £150,000. To do that, given the current state of public finances and the economic situation, is simply wrong and unfair. I do not understand why the Liberal Democrats have agreed to that when it will deliver a £40,000 windfall to 14,000 people. That helps the wealthiest, which always seems affordable to the Government. Boardroom pay rose by 49% last year; the bonus season is running riot—we are not all in this together. It is austerity for the many and wealth for the few.