Jobs and the Unemployed

Graham Stuart Excerpts

Wednesday 7th July 2010 Commons Chamber

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“welcomes the emergency budget which will tackle the unprecedented legacy of debt over the next five years by reducing borrowing from a projected £149 billion this year to just £20 billion in 2015- 16; notes the Office for Budget Responsibility’s projection that unemployment will fall in every year of this Parliament as a result of the Government’s policies to stimulate private sector employment by reversing the damaging increase planned for employer national insurance contributions, introducing a £1 billion Regional Growth Fund, reducing the corporation and small profits tax rates and increasing the Enterprise Finance Guarantee, resulting in the creation of a projected two million new private sector jobs by 2015-16; further welcomes moves to implement a single work programme that will provide personalised support to help people move into sustained employment, to introduce a £1,000 increase in income tax personal allowances which will incentivise work, to reform the benefits system to ensure that work pays and to provide 50,000 new apprenticeships and 10,000 new university places for young people, thus stimulating growth, delivering jobs and creating a fairer society for all.”

May I start by passing on the apologies of my right hon. Friend the Secretary of State to the House? Despite what the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) said, he has an important job to do in helping to lead our public sector out of the mess in which the previous Government left it, and he has an important leadership role with the people who will help him to do that. I am sorry that the right hon. Lady is disappointed to be debating against me this afternoon. I am rather pleased, frankly, to be debating against her and I was impressed by her lively form. I somehow think that the wrong member of her household is running a Labour leadership campaign.

Listening to the right hon. Lady, one would think that the past decade had been one of economic triumph and effective employment policies, and that the previous Government had left behind a golden legacy of wise and effective policies. Well, they did not. What they left behind was an economic hangover that we will all be dealing with for years to come, and I am not referring just to the huge deficits or the huge planned spending cuts that Labour had lined up. Indeed, one would think from listening to her this afternoon that the previous Government had no plans to cut spending. Actually, the opposite was the case. What they did not do was give us any detail whatever on where that money was going to be saved.

If we look back over the previous 13 years, the story is a pretty sorry one, with 400,000 more unemployed people today than when Labour came to power in 1997, a higher level of young people not in education or employment, and a lower proportion of people in work. Over that period, Labour spent billions of pounds on projects to try to get people back into work. They spent billions through the recession on supported programmes, but things have actually got worse. What we on the Government Benches know is that long-term sustainable jobs are created by the private sector, not by Government schemes.

Even when jobs were being created over that decade, Labour completely failed in its mission of trying to get people into work. Large numbers of people managed to come into the UK from overseas and find jobs, yet through the years of Labour Government, we consistently had some 5 million people stranded on out-of-work benefits. Many of them could have worked and many of them should have worked, but under Labour it just never happened. So much for “Things can only get better”.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

A particularly poisonous legacy of the previous Government and their economic failure was the plight of young people. We now have 1 million young people who are NEET—not in employment, education or training—but even before the credit crunch came, there were as many people NEET at the end of that period of economic growth—albeit unsustainable growth, as we now find—as there were when Labour came to power. The previous Government let down young people, scarring them for life. We now have 1 million young people unemployed because of Labour, yet we have had no apology. What we need is this Government to sort out the mess that the previous Government left behind.

[Chris Grayling]

My hon. Friend is absolutely right, and I would ask the House this question. Why would we take Labour Members seriously on youth unemployment when they had such a terrible record on youth unemployment over 13 years in government? What we saw from Labour in office was at best incompetence, at worst a wilful disregard for taxpayers’ money, and a failure to understand how to create long-term sustainable jobs in the economy.

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[Mr Graham Stuart]

I am grateful to the hon. Lady for giving way. As ever, she speaks with passion if not on this occasion with quite so much knowledge. Business is struggling because when the economy was booming and it was necessary to curb the lending of the banks, the Labour Government did the opposite and loosened the conditions for lending. After the collapse, the Labour Government did the opposite and tightened the requirements on the banks so that they were unable to lend. That is how the Labour Government both fuelled the boom and boosted the bust and that is why business is struggling so much to recover from Labour’s disaster.

[Mary Creagh]

I am so grateful to the hon. Gentleman for that basic lesson in economics. He may not be aware of my past working as an adviser to small businesses and to MBAs at Cranfield university on how to set up small businesses. Our economic record between 1997 and 2005 was extremely good when it came to ensuring that new businesses were created—[Interruption.] Would he care to listen to my answer or does he just want to keep commenting from a sedentary position? He claims that we turned the tap on too fast and then turned it off. It is understandable that when Governments end up owning majority shares in banks, they want to ensure that credit flows to businesses—and we ensured that that was happening through the small firm loan guarantee scheme. Now, the banks are almost in a monopoly position, and we need more competition for high street banks and to change their risk aversion when it comes to lending to small businesses.

We are straying from the point, which is the effect of the Budget on unemployment. The OBR has had an extraordinary few weeks. It was set up and has published its little forecasts, but now suddenly Sir Alan Budd—who set it all up—is to leave. I have been in politics a few years now and when someone leaves unexpectedly, I try to work out why. Why is it that someone in a brand-new, start-up situation who wants to perform a public service is leaving? I wonder whether there has been a row. Perhaps in the future we will find out the real reason—perhaps that he was leant on for the employment figures, which are heroically optimistic. The OBR claims that more than 2 million jobs will be created in the private sector over the next five years, but John Philpott, the chief economist at the Chartered Institute for Personnel and Development, has said:

“There is not a hope in hell's chance of this happening. There would have to be extraordinarily strong private sector employment growth in a…much less conducive economic environment than it was during the boom.”

The hon. Member for Beverley and Holderness (Mr Stuart) says that we funded small businesses through the boom, but the OBR and the Treasury now claim that we will have a similar level of employment growth—another boom—but there is no credit to finance it and, by the way, they are cutting huge amounts out of the public sector. I will give way if any Member opposite can tell me how that will happen. I thought not.

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[Mary Creagh]

In the end, we all end up paying for it. We made pension reforms to try and get people in the private sector to enrol in pension funds, because companies in that sector tend not to pay pensions or enrol their staff in stakeholder pensions. As a result, the taxpayer—the state—picks up the bill and we all end up paying for it. The important point is that the state is, in the end, the lender and the funder of last resort.

[Mr Graham Stuart]

Will the hon. Lady give way?

[Mary Creagh]

I will not take any more interventions, as this debate is turning into another Second Reading of the Finance Bill and I want to talk about unemployment and the future jobs fund.

In my constituency of Wakefield—which is well known to my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper)—700 places were allocated under the future jobs fund. We are not clear how many have survived the Government’s hatchet job, but I was privileged to welcome 50 young recruits to Wakefield council.

In addition, with my right hon. Friend I met three future jobs fund recruits at the Able project, an environmental scheme that uses a piece of disused land owned by Yorkshire Water that lies next to a sewage treatment works. One could not hope to find a less glamorous environment, but the project has created something very beautiful. Its organisers have worked with Nacro and the mental health trust to get people digging, growing, learning and being out in nature. The land is between a sewage works and a railway line, but it is an area of environmental beauty. The project has become a green business, coppicing the hazel and willow that grows there.

I met two young workers there, and we were able to buy some of the honey that they had made. They told me that they had had an apprenticeship but that the collapse of the business meant that they could not carry on. After six months on the dole, they were desperate to get something.

My right hon. Friend the Member for Normanton, Pontefract and Castleford and I made the visit in March, and the young workers told us that they did not know what was going to happen at the end of the six months. They asked us to try and make the period a year, as that would mean that they had a year’s experience under their belts. One young man was working visiting schools and showing children how to build nesting boxes.

The Able project is run by a third sector organisation, but I was aware that, at the end of his time there, the young man I had spoken to would have carpentry skills and experience of working with children. He was going to have all sorts of facts about nature and growing things at his disposal, with the result that a range of different organisations in the area could employ him.

I feel really heartbroken that that young man, the person whom I also met who is a support worker at Reconnect, a project that befriends older people across Wakefield who are at risk of isolation, mental health problems and loneliness, and the three people for whom I was trying to find work as wardens in Thornes park, are all now facing an extremely uncertain future.

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[Mary Creagh]

I am relieved to hear that, but I am afraid that that was not an answer and I am unable to wait for another speech from the right hon. Gentleman to hear these plans emerge. Let us consider the position of an organisation 90% of whose budget depends on public sector contracts. Organisations are planning next year’s budget now. They will be signing off budgets that need to be ready in February and the finance directors will be making those budgets ready in October, November and December. How will such an organisation make plans for 90% of its funding—that could be £35 million, or £37 million at 2005 prices—without knowing what the system and financing mechanism will be for voluntary sector bodies? If the right hon. Gentleman is to grant the voluntary sector privilege, will he not be in danger of doing something about which we have heard a lot—will he not be risking crowding out the private sector? I shall leave those thoughts hanging in the air.

Rathbone training works with teenagers who have had chaotic homes lives and who have encountered poverty and unemployment. Many of them have failed at school and many have had babies early in their lives. Rathbone carried out a survey of those young people, asking them which profession they would like to pursue. Everyone in the Chamber will probably be relieved to hear that only a handful wanted to be footballers, pop stars or WAGs. Instead, the majority of Rathbone trainees preferred more everyday jobs such as car mechanic or office worker. That was summed up by a 17-year-old lad from Newcastle, who said:

“I’m happy at the moment training to be a bricklayer.”

I just hope that he has a job to go to in the construction industry when he finishes his bricklayer training. On the current prognosis, I am sceptical about that happening.

I am concerned about the incapacity benefit reforms and the assertion that such a one-size-fits-all approach will be better. Why will it be better than programmes run by people in the public sector? I am not so sure that it will be. I am concerned that we are going around in a circle—we are going back to the 1980s, as my right hon. Friend the shadow Secretary of State said, and back to the 1930s. We are going into the failed Thatcherite schemes of the 1980s—a youth training scheme mark 2. In the current plans, however, there is no enterprise investment scheme—and that did exist in the 1980s. We have heard a lot about the need for a vibrant and flourishing small business sector, but these reforms contain nothing, as yet, that allows would-be entrepreneurs in constituencies such as Wakefield and Normanton, Pontefract and Castleford, as well as those in Liverpool, to set up their own businesses. I hope that the Minister, who is no longer in his place, will examine that.

[Mr Graham Stuart]

Does the hon. Lady regret the devastating effects on manufacturing of the past 13 years under the Labour Government? Does she have any thoughts on what can be done to encourage manufacturing? This is not just about construction and other private sector jobs, because we need to restore and rebuild manufacturing, which was growing in the last few years of the previous Conservative Government but has been devastated during the past 13 years under Labour.

[Mary Creagh]

I can perhaps turn the question around on the hon. Gentleman by asking him whether he regrets what happened to cities such as my birthplace of Coventry, where I grew up in the 1980s. All the car factories that I grew up around—the Massey Ferguson tractor plant, the Carbodies taxi plant and the Alvis plant, which used to make tanks, and the Coventry Chain Company—were all replaced, either by housing or by retail parks. The factories were all shut down during the short few years between 1984 and 1989, when thousands of incredibly skilled workers in those factories were lost. In addition, does he regret the fact that the previous Conservative Government shut down the coalfields of Wakefield, which could now be doing something to reduce our dependence on foreign energy supplies? I shall leave that matter for another debate.

I am concerned about the effect of benefit cuts on women. I am keen to hear from Conservative Members about the move to employment and support allowance and to jobseeker’s allowance. A little piece in the Red Book says, “After you have been on JSA for more than a year, your housing benefit is cut by 10%.” I am keen to hear from the Conservative Front-Bench team whether women with children—these children may be only a year old—will be affected by that proposal. If they are affected, that is an incredibly draconian policy.

I have no problem with women who have children going out to work. I am a mother of two children and I came back to work here when my child was six months old. I have no problem with encouraging mothers to get out of the home and into the workplace, and expecting them to begin the search for work when their child is three and has access to the free nursery place is very important. The idea that one can say to a mother with a babe in arms, “You have to put the baby into child care and go out to look for a job otherwise your housing benefit will be cut by 10%” is, as my right hon. Friend the shadow Secretary of State said, a return to the Victorian values of the workhouse and the notion of dividing the poor into two segments: the undeserving poor and the deserving poor. I leave that thought with hon. Members.

I shall now discuss the issues associated with people moving house to find work. I have no problem with mobility, because people should look around, think and open their horizons in the search for work; my parents are Irish and they came to this country on the boat—not on a bicycle—in the 1960s, finding gainful employment in Birmingham and then Coventry, where they settled and got married. However, we need to examine carefully the psychological impacts of asking people to leave their homes to look for work. One of the great untold stories of the Irish diaspora is the psychological impact that emigration has on the mental health, the alcohol dependency and the level of premature death of a particular community. The Irish are the only community whose life expectancy decreases upon emigration to this country. That is perhaps a little-known fact, and I can see the hon. Member for Beverley and Holderness (Mr Stuart) is thinking it through.

That is what happens when people move away from their communities, so it is very important that we ensure that we have the structures in place so that people can be supported if they want to move. I would turn the question around by asking another one. Let us consider what would happen if someone from Wakefield or a high unemployment area wanted to move in order to work, found themselves a job in London and went to one of the city centre local authorities, such as Hackney, Camden or Islington, asking to be put at the top of the housing waiting list. What would that do to the Islington, Camden and Hackney residents waiting to get out of overcrowded accommodation? How would seeing people coming in from outside and getting houses affect them? Would any such provision have to involve a minimum time that someone keeps a job? Would people have to stay in their job for three months, six months or a year? If they lost the job after 12 months through no fault of their own, could they keep the house or would they be expected to make the long train journey, or the long car journey back up the M1, to the city that they left?

I conclude by discussing unemployment and what it means to Opposition Members. For us, unemployment is not a theory, an abstract thing or a thing that has to be tackled. For us, unemployment is what happened to our families, friends, communities and, in the recessions of the ’80s and ’90s, ourselves. As for the idea of the big society, I say to Government Members that our society is not broken. Over 13 years, our Labour Government spent a lot of time, energy, money and thought trying to mend the broken society that Thatcher and Major bequeathed us in 1997.

In 1979 there were 1 million people on the dole, and the Conservative party won that year’s election with the posters of unemployment queues and the slogan, “Labour isn’t working”. Three years later, 3 million people were on the dole, a level of unemployment that had not been seen since the depression of the 1930s—a particular type of genius that the Conservative party has in pursuing flawed and deflationary economic policies.

I remember, during my childhood, coming down to breakfast and hearing the figure for the number of cities where riots had taken place in 1981, and I could not believe the number of places where people had spontaneously gone out and created mayhem and anarchy because they were tired of being left behind. I remember the songs, such as “One in 10”, about the one in 10 unemployed, and the song about my city of Coventry, “Ghost Town”. It was a ghost town. That is how I grew up, and I do not want any child or constituent of mine to grow up in a ghost town. Opposition Members will continue to focus on unemployment, because, as my right hon. Friend the Member for Normanton, Pontefract and Castleford said, for us it will never be a price worth paying.

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[Gordon Banks (Ochil and South Perthshire) (Lab)]

It is a pleasure to follow the contribution of the hon. Member for North East Hertfordshire (Mr Heald), but I want to talk about the construction industry and my constituency, and I am sure we will come across other related matters. I refer the House to my declaration in the Register of Members’ Financial Interests.

I was involved in the construction industry for more than 30 years before I was elected to the House in 2005. Frankly, I am shocked at what has happened in the industry in the past few years, and I greatly fear what will hit us in the near future. I started my own business in 1986, so I have weathered a few storms, but I fear that the future has something terrible in store for the industry. If it is bad for the industry, it is bad for jobs.

In the past few years, the construction and housing sectors have contracted massively. With that contraction in activity has come a contraction in the number of jobs. When the banks went into meltdown, the previous Government reacted appropriately. There was action to protect investments and to support failing banks, and genuine attempts to get money back into the marketplace. Although that proved a little more difficult than I would have hoped, that positive action saved jobs. However, now we risk all that effort.

It was necessary for the public sector to step in when the private sector failed—let us not forget that that is what happened. My background is in the private sector, and I am proud of the UK’s private sector—or at least part of it. It should be a driver of growth and the major contributor to addressing our budget deficit, but how will that happen when the private sector remains very fragile and the public sector is faced with ill-thought-out, ideological cuts?

The construction sector is a good example of that. The industry has some 250,000 businesses and employs more than 2 million people in the UK, with turnover of about £6 billion. We had the second largest output in the European Union—I do not know whether we still do—and we all know the role that the industry has played in the UK’s progress in recent years. It is a private sector enterprise, but its clients are both public and private sector. Businesses generally need the construction sector to expand, as does the state, when they are intent on improving the quality of life of citizens.

There are vital sub-sets in the construction sector. Construction product companies have annual turnover of more than £40 billion and employ more than 650,000 people in 30,000 companies. In Scotland, almost 12% of the work force are employed in construction or in some form of building-related activity, whether as a joiner on site, a planner in a local authority office or a lorry driver delivering materials to a building site. Sadly, that is changing for the worse. All those jobs are under threat.

[Mr Graham Stuart]

One great mystery of the past 13 years is that there were record levels of immigration under the Labour Government and record lows in the number of houses built, particularly affordable housing units. I do not know the explanation for that, but I would be interested hear whether the hon. Gentleman, with his background in construction, has any thoughts on how we can increase the number of housing units in this country, so that we can tackle homelessness and boost the construction industry, jobs and employment.