Youth Unemployment and Bank Bonuses

Esther McVey Excerpts

Monday 23rd January 2012 Commons Chamber

[Mr Mudie]

No, because I am short of time.

The people who caused the difficulty earn huge salaries because of gambling in the investment market, which has brought country after country and bank after bank to their knees, and which is now imperilling people’s standard of living—their homes, jobs and future. I find that unacceptable.

The shadow Minister has called for leadership, but real leadership would not involve avoiding questions about whether there is going to be a limit of £2,000 on bank bonuses. The senior director of RBS will be disappointed if he is not allowed to take his £4 million and the chief executive is expecting £2.5 million, but this is in a bank that the Government own. If we want leadership, it should come from the Chancellor and the Government, who should take the steps that are needed.

[Esther McVey (Wirral West) (Con)]

Will the hon. Gentleman give way?

[Mr Mudie]

No, I am sorry because I will be stopped quite soon.

The last point I want to make concerns the irresponsibility of the banks in refusing to operate Project Merlin, which would have brought jobs for younger and older people. The cynical and shoddy way that they got out of that agreement is totally unacceptable, as is the way they are refusing to fund small and medium-sized businesses. If we are going to rebalance the economy, that is the area that will provide the jobs. We need the Government to show some leadership because the banks must be forced to fund and put resources into that sector.

--- Later in debate ---

[Jake Berry (Rossendale and Darwen) (Con)]

It is clear to everybody in the House, regardless which side they sit on, that we are facing exceptionally difficult economic times in this country. I calculated that by the end of this speech, with a six-minute time limit in force and with no interventions, we will have spent in excess of £500,000 just on debt interest. Our national debt is like a credit card, and the sooner we get to grips with it, the better. I do not want to have to look the next generation of young people in the eye and say, “We were the Government, we were the group of MPs, who shoved our heads in the sand and refused to tackle our national debt,” so that we could pass it on to them.

We have seen a hugely unwelcome increase in unemployment, and an exacerbation of the existing problem of youth unemployment. The Leader of the Opposition admitted in November last year that youth unemployment was not invented by this Government, but was a problem under the previous Government. The motion seeks to link the problem of youth unemployment simplistically to a failed tax on bankers’ bonuses.

This truly is the tax that keeps on giving. So far, there have been proposals to use it to tackle unemployment among older people, to tackle unemployment among younger people, to fund capital projects, to reverse VAT increases, to cut taxes on fuel, to cut VAT on home improvements, to build 25,000 more houses, and today to create 100,000 new jobs. That clearly shows that the Labour party has no new ideas. It cannot be only today’s ICM/Guardian poll that is depressing them. It is also the fact that a party that claims to represent the workers has come to represent the something-for-nothing culture, a party that claims to fight inequality increased inequality in 13 years in government, and at the end of the largest economic boom that we have ever witnessed, Labour left 270,000 more young people out of work than when it came to office. That is an appalling legacy. The solution is not more of the same, not to pile debt on debt, not to try and spend ourselves rich.

The motion sounds like the Opposition are being advised by Charles Ponzi and has about as much credence as the claim by the captain of the Costa Concordia that he slipped and fell into the lifeboat. The Government, however, must take true steps to tackle youth unemployment, and there is no panacea.

One thing we must do is tackle the skills gap. The hon. Member for Leeds West (Rachel Reeves), who is no longer in her place, said that she hoped MPs would today bring forward positive solutions on the question of what they can do. A little-known fact about the junction 4 retail park in Darwen—unless one is the MP for the area—is that it is the country’s specialist area for the creation of computer games. When I ask those businesses how many young people from the area they employ, they say none, because young people in Darwen are leaving our schools without the menu of skills that the businesses want when they recruit. That is why it is vital that we continue to increase the links between schools and local employers.

[Esther McVey]

It is not just computer games and electronics companies that say that. The Institute for Manufacturing, the Institute of Physics and the chemicals industry say that we have not produced enough people in science to be the technicians and engineers, that we have a dearth of those skills and that they have had to bring in people from outside the country to do those jobs, which is a crying shame.

[Jake Berry]

I agree. Of particular joy to me is the fact that my constituency has a new academy school, which has entrepreneurship and technology at its heart. We are starting to have those conversations with business in order to equip our young people for the jobs market.

I want to talk about what hon. Members can do positively in their constituencies to tackle youth unemployment. As we have heard, much of it is about leadership. At the start of next month I will launch the “100 in 100” campaign in my constituency, which is my pledge to get 100 people into 100 apprenticeships in 100 days. Building up to this, I have visited as many local companies as I can to talk with them about what we hope to do, and I have found that there is a huge appetite for giving young people a chance.

--- Later in debate ---

[Mr Meacher]

My hon. Friend makes a very important point. As I am sure everyone in the House realises, there is far too much short-term instinct, particularly in the City. What we need, and have not had, is the relational banking that exists in the mittelstand in Germany. Banks there spend a lot of time, effort and money producing a long-term relationship with manufacturing units that they can support. That is the type of model that we need in this country, but it is not what we have got.

The banks continue to put their money overwhelmingly into property, mortgages, offshore speculation and tax havens, all for their own enrichment, and stuff the rest of the economy and jobs for young people. I am putting it strongly, but there is huge bitterness outside, as one can see from the August riots, from the Occupy movement and from many other instances of anger beginning to bubble up.

[Esther McVey]

Will the right hon. Gentleman give way?

[Mr Meacher]

No, I will not give way now.

Bankers’ bonuses have already nearly proved the ruination of this country. What we need is a smaller banking sector that serves the real needs of this country, and particularly of its young people, if we are to avoid a lost generation. Saying no to bonuses, or at least taxing them, is certainly the right way to start.

--- Later in debate ---

[Stephen Timms]

We do support the benefit cap. The version that the Minister is pressing through is, as the House of Lords has rightly pointed out, going to cause huge costs for the Exchequer. I hope that even now the Secretary of State will think again before returning to the House with the measure next week.

The Work programme was rushed, and badly prepared. As we pointed out at the time, there should have been a plan for transition to the new programme. There was no plan. We can glimpse how the Work programme has been going by looking at the number of people coming off benefit each month. The number plummeted last May, when the flexible new deal stopped, and it stayed low as the Work programme got going. I invite the Minister to compare the months after May with the same period the previous year, because he will see that poor Work programme performance resulted in 86,000 people not getting into work who should have done. That is probably a permanent unemployment rise. The damage will be with us for years.

The Government told us that the Work programme would enlist an army of voluntary organisations to give specialist help to jobseekers. To begin with, we were told that 508 voluntary sector organisations would be involved. By August, that number had fallen to 423. Next week the Government will count once again. Last week, apparently, at a crunch meeting, voluntary sector organisations told the Minister that they were being used as “bid candy” to win contracts. Some of them still have not had a single referral since the Work programme began last summer.

The “Open Public Services White Paper” promised, as I quoted to the Minister earlier:

“Providers of public services from all sectors will need to publish information on performance and user satisfaction.”

I welcome the Minister’s U-turn on performance. What about user satisfaction? Let me tell him about the satisfaction of one user, the father of a constituent of mine, who came to me to complain about his daughter’s experience on the Work programme. She received a letter referring her to mandatory work activity. It was completely incomprehensible; I will send the Minister a copy. She lives in my constituency in east London. The letter appeared to require her to report on an unspecified date to an address with a postcode in Sheffield, and the telephone number was given as 000. It was a shambles. It is no wonder the Work programme is not delivering and youth unemployment is rocketing.

[Esther McVey]

When I read the title of today’s Opposition day debate, which mentioned youth unemployment and bank bonuses, I thought it was a list of Labour’s worst failings—youth unemployment up by 40% and a banks bonus culture developed under Labour and signed, sealed and delivered with a knighthood under Labour—so will not the right hon. Gentleman concede that where Labour messed up, the coalition is cleaning up?

[Stephen Timms]

We had some discussion in the debate about the future jobs fund. The Minister has awarded a contract for the evaluation of the Work programme. I welcome the fact that he has done that. He should read the evaluation of the future jobs fund carried out by the same organisation that he has commissioned to evaluate the Work programme. It points out just how effective the future jobs fund was and the crucial value for young people of

“a real job with a real wage”.

We need a new approach. We should repeat the tax on bankers’ bonuses to bring in £2 billion, funding 100,000 real jobs for young people. We need, once again, a temporary cut in VAT to rebuild momentum in the economy, as the VAT cut did before the general election. A further VAT cut on home improvements would give the construction industry, which is in a desperate state, the chance that it needs. We should bring forward investment in schools, roads and transport, and we should listen to the Federation of Small Businesses and give small firms hiring new staff a break from paying national insurance—five points that would give us, at last, a chance.