Opportunities for the Next Generation

Geraint Davies Excerpts

Tuesday 13th September 2011 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does my right hon. Friend agree that the key choice in cutting the deficit is the balance between growth and cuts? If the cuts reduce our capacity to grow, as do the cuts to the future jobs fund and in proper apprenticeships, they will be completely counter-productive and economically illiterate.

[Mr Denham]

My hon. Friend is absolutely right, but there is a further point. The refusal to link Government procurement to the provision of apprenticeships has nothing to do with the deficit. It is wrong policy. The Government could take that action whatever their deficit reduction strategy, but they refuse to do so. It is not just about the deficit; it is about missed opportunities.

I am pleased to say that after what could be called a cock-up—I hope it is not an unparliamentary term—by the Government Whips, Labour’s call for green apprenticeships is now in the Energy Bill, and it looks as though it will stay there. One bit of Government will be doing the right thing, thanks to Labour, but more than £200 billion of public procurement—taxpayers’ money—could be working harder by providing apprenticeships.

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[Mr Willetts]

My hon. Friend is absolutely right, and I should have included Alison Wolf’s excellent report on my list of the things that we were doing to try to offer a fairer deal for young people.

[Geraint Davies]

Does the Secretary of State agree that sovereign debt in Ireland, Iceland, Spain, Italy, Portugal and so on is much worse than that of Britain, and the reason is that Labour left 2 million more people in jobs in Britain than we inherited in 1997? The future of keeping deficits down is jobs and growth—not stupid cuts, like those he is pushing forward with.

[Mr Willetts]

The crucial difference between our economy and those that the hon. Gentleman listed is that our economy has the benefit of a credible package for bringing down the public deficit, as a result of which the markets have retained confidence in us. It is because of this Government’s economic policies that we are not facing the same risks.

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[Mr Willetts]

No, I shall try to make progress. We are delivering more apprenticeship places, which I very much hope will be of value to the people of Northern Ireland, as it is to the rest of the United Kingdom. The figures are dramatic: the provisional figures for the first three quarters of the academic year 2010-11 show 330,000 apprenticeship starts—an excellent record.

Let me turn to universities, briefly. Of course, we have debated this issue many times in the House, and will doubtless do so again. I begin by accepting something that the shadow Secretary of State said, and a point that he made when he was Secretary of State. It is painful when, in the summer, one is confronted with young people who have done their best in applying for university, and have not secured a place. It is painful for them, and we recognise the work that they have put in, but in recognising the difficulties that they face, I cannot do better than repeat the words spoken by the shadow Secretary of State when he was Secretary of State and was responsible for the matter:

“In terms of student numbers, going to university has always been a competitive process…we cannot afford to fully fund every single person who might like to go to university and we never have been able to.”

That is the correct position. We have been able to continue to provide record numbers of places at university, despite all the funding pressures that we face and the need to make reductions.

The previous Government, in their final days, had a plan for 20,000 extra places, as they called them, but there was no funding attached beyond the first year. There was no money to pay for years 2 or 3 of the studentship. Incidentally, contrary to the implication in the motion and to what the shadow Secretary of State said, that was explicitly described as a one-off funding stream for one year—“extra one-off funding” were the words of the then Chancellor in the 2010 Budget. What we have done instead is provide those 10,000 places last year, and we will provide another 10,000 next year. Instead of having to reduce places, we hope to maintain broadly that number, so that at least an equivalent proportion of the cohort of 18-year-olds has a chance of getting to university.

We inherited from the previous Government a simple statement, which I shall quote from the pre-Budget report of December 2009. In their list of cuts, there was

“£600 million from higher education and science and research budgets from a combination of changes to student support within existing arrangements; efficiency savings and prioritisation across universities”.

We never knew how that £600 million-worth of cuts was to have been delivered, but it was very hard to see how we could maintain the number of university places that we have done and continue to provide high-quality education given that we inherited that commitment to a cut of £600 million. That is why we took the tough but controversial decision, rather than simply face cuts and reduce student numbers, to base university financing on student fees and loans—absolutely following the model used by the previous Government, with no payment up front. I believe, given the fiscal pressures that we face, that that is in the best interests both of universities, which will find, if anything, that they have extra cash as a result of our reforms, and of students, as it has enabled us to maintain a high level of places, and to reduce the monthly repayments facing students. The shadow Secretary of State failed to explain at any point what Labour would do.

[Geraint Davies]

rose—

[Mr Willetts]

I shall not give way, as I am going to try to make progress, although I would welcome an intervention from the shadow Secretary of State, who could usefully clarify his position. We would like to know what Labour policy is. I have been to the House, as have my ministerial colleagues, to explain our policy, and we have heard a range of suggestions from the Labour leadership. We heard what Lord Mandelson, in his memoirs, thought that a Labour Government would have done if they had been re-elected:

“I assumed, as the Treasury did, that the outcome would have to include a significant increase in tuition fees. I felt that they would certainly have to double in order to offset the deficit-reduction measures that we too would have implemented had we won the election. The alternative would have been a disastrous contraction of higher education.”

Separately, the leader of the Labour party, the right hon. Member for Doncaster North (Edward Miliband), said:

“I would not go ahead with the increase they’re going with. I want to have a graduate tax. Why do I want to have a graduate tax? Because I think it’s a fairer way of paying for higher education, because it says the amount you pay is related to the ability to pay”.

We have three options: recognising that fees and loans were the way to help universities out of the fiscal pressures that they faced; having a graduate tax; or having a third policy of no policy whatsoever. Once again, we are having a debate in the House called by the Opposition with no indication whatever of how they would put our universities on a solid financial footing. Governments across Europe are battling to tackle their deficits, and it is important that we hear from Labour what it would do. Instead, what we have in the motion, alongside the promises on NEETs and apprenticeships, and quotes on student places, is a reference to the £2 billion tax on bankers’ bonuses, which will pay for those policies. Let me tell the shadow Secretary of State that that tax is already paying for reversing the consumer prices index-retail prices index switch for benefits and pensions; for jobs and growth spending, which adds up to £9.5 billion; to support the cancellation of the fuel duty escalator, worth £1.7 billion; to enable the Opposition to reverse the child benefit freeze, which costs £1.3 billion; to reverse the time-limited employment and support allowance, costing £1.1 million; to enable them to reverse the working tax credit freeze for £1 billion; and to reduce the age-related payment every year, costing another £600 million. In fact, we estimate that in total, the £2 billion that the Opposition will raise from a bankers’ bonus tax will pay for £27 billion-worth of public spending increases and other tax cuts.

The right hon. Gentleman has put his bid in and it is on the list. If wants to be taken seriously as a member of Government he has to tell us how he would make the figures add up. He does not rise to that challenge. We are rising to the challenge of sorting out the mess in the nation’s finances that we inherited from the Labour Government, and we are addressing that challenge while, at the same time, doing absolutely everything that we can to ensure high-quality education and training opportunities for young people—and we are proud of the commitment that we are displaying to them.

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[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a great pleasure to follow the hon. Member for Birmingham, Yardley (John Hemming), but in general, we have heard a rag-bag of rubbish from Government Members today. Let us think about the big picture: accelerating globalisation; climate change; the ageing of western populations; and the emergence of developing markets, particularly in China and India, that are driving up energy prices, which makes green technologies economical.

In Europe, there is a sovereign debt crisis in the aftermath of a financial crisis, but the UK, after 13 years of Labour Government, is in a pretty strong position. As I pointed out earlier, Iceland, Ireland, Italy, Portugal and Spain are in a much worse position than Britain. Why? It is because Labour had created 2 million extra jobs since 1997. Those people are working, paying tax, and making their way.

Of course, we have a deficit, two thirds of which, as the Institute for Fiscal Studies acknowledged, was created by the bankers. The other third was due to the fact that, in the recession, we invested more than we earned, but there is no apology for that. Yesterday, the Government attempted to say, “Oh well, we’ll sort out the banking crisis,” but their remedy would take eight years. They also acknowledged that they would bail out Lehman Brothers and others, so that was no real solution.

The big choice is in deciding what the balance should be between growth and cuts to get the deficit down, and there is also the issue of timing. We have not heard much about what a growth strategy would look like. We have seen what a cuts strategy looks like; we are living that awful nightmare. What we need in a growth strategy is a strategy for indigenous growth, in which we invest in education, skills, apprenticeships, economic clusters, and an entrepreneurial culture; we have heard some reference to that. We need to build up trade links, which have been savaged by the Government’s disinvestment in regional development agencies, which means that UK Trade & Investment cannot market the UK abroad effectively and get companies to invest in Britain. We need to invest in infrastructure and, in particular, in housing, as is mentioned in the motion, to crank up the economy once again.

We need inward investment, resulting from the effective marketing of Britain—something that has been cut to the bone. We need to create economic conditions of stability and certainty, not just in Britain but across Europe and globally, to give business the confidence to invest. We need to spot the obvious fact that the emerging opportunities are in future markets, not least in China and India. What is the verdict on the Government’s efforts so far? Pretty poor, frankly. Small business is starved of cash from banks. The news of massive cuts in public services means that consumers are saving instead of consuming, so companies are not investing in new jobs. In construction, things are almost as dead as a door-nail.

On education and skills, Government Front Benchers deny that it is possible to send students to university for £3,000, yet in Wales that is precisely what is happening. A student from Wales will leave university with a debt of £10,000, but in England, it will be £30,000. If there are three children in a family, that is £100,000 in England, versus £30,000 in Wales.

[John Hemming]

Does the hon. Gentleman accept that Wales gets a lot more money per capita through the Barnett formula?

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[Geraint Davies]

That is complete rubbish. The calculation is that Wales is underpaid by £300 million. We started in the same position. This is about economic choices. There are tough choices; the choice in Wales was to cap investment in the health service. It was a tough choice, but the right choice, to invest in skills for the future and productivity to make Wales strong—

[Mr Davey]

rose—

[Geraint Davies]

What the hon. Gentleman is doing is making England weak.

[Mr Davey]

The hon. Gentleman and his colleague from Wales, the hon. Member for Islwyn (Chris Evans), have praised the Welsh Government. Can the hon. Member for Swansea West (Geraint Davies) explain why the average spend per school pupil in Wales is £604 less than in England in 2010-11?

[Geraint Davies]

The average spend in Wales is less, but the reality is that the Welsh Government have given an undertaking to increase that spend year on year. In fact, because the Government are cutting local authority funding by 7% a year for four years, there will be less money for education in England. What there is will be funnelled into middle-class free schools, to the cost of poorer communities. Wales will put a cap on health spending, and more money will go into education. It will have a comprehensive system in which there is more money, instead of cuts, and a system in which people are enabled to go to university. That is investing in the skills of the future.

As I have mentioned, UK Trade & Investment has historically been very effective in promoting inward investment and trade in Britain, but crucially, that relied on regional development agencies, which have been abolished. When I spoke to UKTI in Brussels, Belgium, and in Düsseldorf, the same message came back: German companies would come back with a computer platform, saying, “We want to put a factory somewhere.” Where are the RDAs to draw that down? They have been abolished. Well done, the Tories and the Liberals.

On infrastructure and construction, the Government have abolished the scheme to renew schools, which basically means that construction workers are being laid off. As for future markets, we have to look at companies such as Tata Steel near Swansea, and Airbus in north Wales. Those big consumers of energy are being penalised by the Government and their unilateral carbon pricing. The Government forget that we operate in a European market, and do not understand how the markets work at all. Those companies are part of the solution. Tata Steel has a new generation of steel, with seven layers, that generates its own heat and energy; that reduces the carbon footprint by cladding a building. Airbus has a new generation of planes that use 30% less energy. That is part of the solution, and we should be supporting, not penalising, those big employers and companies.

Let me talk about Swansea. I am proud that people in companies such as Amazon are flying the flag and saying, “Come to Swansea.” We are in the premier league, so we are a global brand. What is stopping us are the Government, who are cutting the coastguard, which undermines confidence in tourism and investment in wind farms offshore, and are stopping the electrification of the railway from Cardiff to Swansea, which would link us to the European network. We just need a helping hand so that we can keep going for success, can build on the intellectual clusters in the two universities in Swansea, can build on our team spirit in marketing Swansea, and can make our contribution to a sustainable, inclusive, growth-focused future for the rest of Britain. There is enormous opportunity for Britain to get up off the floor and fight, but it is being held down by the Tories’ and Liberals’ ineptitude.