Ian Murray
Main Page: Ian Murray (Labour - Edinburgh South)
Ian Murray (Edinburgh South) (Lab)
May I start by congratulating the new Minister, the right hon. Member for Sevenoaks (Michael Fallon)? I believe this is the first time for 20 years that he has been back at the Dispatch Box, so we look forward to his contribution. Unfortunately I will not be able to compare it with his last contribution—I am afraid we were not allowed to watch television at school.
I pay warm tribute to my right hon. Friend the Member for Leeds Central (Hilary Benn). He completely disembowelled the Government’s case for the Bill in forensic detail, which was very pleasing indeed to watch. He was not the only one who pulled the Bill apart; he was joined by the Liberal Democrat Members for Cheltenham (Martin Horwood) and for Mid Dorset and North Poole (Annette Brooke). I look forward to them joining us later in the Lobby.
Today’s debate has been important. We meet only weeks since the Third Reading of the Government’s Enterprise and Regulatory Reform Bill, which they heralded as their flagship for growth. Indeed, the Secretary of State for Business, Innovation and Skills said that the measures in that Bill would
“help make Britain one of the most enterprise-friendly countries in the world.”
It feels very much like Groundhog day: another week, another flagship Bill that the Government insist will drive the recovery and our economy. However, this Bill is a knee-jerk and shambolic reaction by the Government to their summer panic over the lack of growth and their response to the failure of the Enterprise and Regulatory Reform Bill, with its rag-bag of measures labelled as “growth”—as my hon. Friend the Member for Easington (Grahame M. Morris) put it, the Secretary of State was trying to sell this Bill like a fishmonger shouting, “Please buy my rotten fish.” As with the Enterprise and Regulatory Reform Bill, this Bill shows again that the Government have all the wrong priorities. They are consistent, though—promoting measures with no evidence to underpin them, with no consultation responses to guide them and not much support from anyone to add force to them. I have been eagerly awaiting the Government’s evidence in this debate, but I have yet to hear it.
We may finally be returning to some economic growth from this Government, but as the Prime Minister himself said earlier this year:
“If you could legislate your way to growth, obviously we would. The truth is you can’t.”
He is right. Calling this a “growth” Bill does not make it so. There is nothing in the Bill to address the root causes of the Government’s economic failure, or indeed the housing crisis. Instead, there are a number of ways in which the Bill could damage the planning system, housing delivery and local communities, as my right hon. and hon. Friends have pointed out. Even the construction industry has said that there is no point in this Bill. It was revealed over the summer that 60% of construction industry leaders who were surveyed said that the main deterrent to investing in infrastructure was a
“lack of clarity from the government”.
This Bill will only compound that uncertainty, as the construction sector continues to shrink. That is a very worrying trend, which has sparked fears that the construction sector will lose much capacity in the longer term. However, I repeat: the Bill does nothing to address the root causes of the catastrophic downturn in construction. The key point is that builders are not building because banks are not lending and people are unable to borrow and buy. Mortgage lending fell again this month, with 6% fewer people securing mortgages than in the previous month and half as many as in what would be termed a normal year.
Whatever happened to the Government’s much vaunted localism agenda? Again, I refer the House to the super contributions by the hon. Members for Cheltenham and for Mid Dorset and North Poole, who have said that they are against the centralism agenda in this Bill. This is the Government who came to power on promises of returning power to local people. In fact, one pre-election policy green paper stated:
“Localism holds the key to economic, social and political success in the future,”
but in this Bill, for “localism” replace with “centralisation”.
The Bill’s focus on planning is misguided and the measures will not tackle the real barriers to growth. That assertion is backed by research—not that the Government ever use research or evidence—that shows two things. First, there is a building backlog of 400,000 new homes that have planning permission but have yet to be built by developers. Secondly, approval for residential and commercial applications is at a record 10-year high, with 87% of such applications being approved in 2011-12. The hon. Member for Bury St Edmunds (Mr Ruffley) mentioned commercial development earlier.
The Bill suggests that the only way to support recovery is to centralise the planning system. Clause 1 would enable developers to ask for their applications to be decided by the Secretary of State when a local authority has been designated as having been stripped of its planning status. This is where we come to the Secretary of State’s bombshell. He professed earlier that Hackney was the worst-performing authority in the country, but he could not say whether it would be designated for these purposes or what criteria would be used to determine whether it should lose its planning status.
According to Hackney’s figures for the past year, 42% of applications were determined within 13 weeks, with 80% of minor applications being dealt with in eight weeks. Of the 59 planning appeals, 17—or 31%—were allowed. Let us compare that with the figures from the Minister of State’s own local authority, Sevenoaks. There, 62% of applications were determined within 13 weeks, but less than 74% of minor applications—fewer than in Hackney—were determined in eight weeks, and 35% of planning appeals were allowed. Simply by comparing Hackney with the Minister’s own council shows us that it is above the average in this regard.
I therefore challenge the Secretary of State to tell the House whether the average is now to be determined as the worst. Will the 200 or so authorities that are below the average be designated as failing, and if so how will their planning powers be removed? I suggest that Members on the Government Benches look at the tables that have been produced and, as my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) encouraged them to ask, the Secretary of State whether they will be worse off or better off than Hackney. If Hackney is indeed the worst, their own local authorities could be under the control of the Secretary of State very soon indeed.
There would also be no right of appeal if the Secretary of State were to take charge of such local authorities. I wonder whether he is familiar with the decision by the First Minister of Scotland to call in a planning decision for the first time in the Scottish Parliament’s history, following what was seen as the wrong judgment being made by the democratically elected planning committee in Aberdeen. This of course involved the Trump golf course development on the shore near Aberdeen, and it was an example of centralisation over proper local accountability. The hon. Member for Mid Dorset and North Poole, the right hon. Member for Arundel and South Downs (Nick Herbert) and my hon. Friend the Member for North Tyneside (Mrs Glindon) have all said today that the Local Government Association believes the Bill to be a blow for local democracy.
We know that Ministers dropped Labour’s ambitious plans to establish universal broadband for all by the end of 2012. We now have chaos and incompetence at the heart of the Government over plans for this major piece of infrastructure that could drive growth in this country. The Bill’s measures on broadband will result in a free-for-all of building in areas of outstanding natural beauty. They will not drive the economic growth that we need. We support a more efficient planning regime, but the duty of the Secretary of State to “have regard” to natural parks is not what is holding back the roll-out of broadband in this country. We have seen no evidence to substantiate the claim that the “have regard” duty is an obstacle to broadband and mobile roll-out.
On the section 106 provisions, my hon. Friend the Member for Sefton Central (Bill Esterson) was right to mention the survey carried out by the shadow Secretary of State, my right hon. Friend the Member for Leeds Central, which showed that five times as many social homes for rent had been built in Labour authorities than had been built in Conservative ones. It has been estimated that some 50% of affordable housing is delivered through section 106 agreements, which oblige developers to make a contribution to community benefits as a condition of receiving their planning approval. So why have the Government singled out affordable housing contributions as the most disposable of the many section 106 categories? Getting rid of these will simply mean fewer affordable homes at a time when more are needed. [Interruption.] I hear a sedentary intervention from the Treasury Bench, saying that this is not correct, but let us listen to David Orr—I know that some of my right hon. Friend and hon. Friends have already mentioned his quote—the chief executive of the National Housing Federation. He warned that the abolition of section 106 would
“wipe out at a stroke 35,000 affordable homes a year”.
I am more likely to believe the chief executive of the National Housing Federation than the Government, who have come forward with proposals on the basis of no evidence whatever.
It is also the case that a strong section 106 agreement helps to reduce land values, which is part of the problem in this country when it comes to development. There is absolutely no evidence to support the Prime Minister’s claim that there are a significant number of sites that have planning permission but are not going ahead because there are too many obligations to build council homes.
Neil Carmichael (Stroud) (Con)
That was an incredible list of gloom-laden points, but what does the shadow Minister make of the Centre for Economics and Business Research when it points out that next year and the year after Britain will be notching up the highest level of growth in the European area?
Ian Murray
Given the current state of the economy, the hon. Gentleman should be a little more contrite when it comes to economic growth. I only hope that those remarks do not come back to haunt him when the effects of the Olympics are stripped out of growth in the next forecast. We all want to see growth in this country, but we need to wait and see what happens. As I was saying, the Prime Minister’s claim is not supported by the evidence in front of us.
Let me move on to what I think is the worst part of the Bill—shares for rights, or, more accurately, rights for peanuts. This part of the Bill introduces the new concept of an employee owner, but not one Government Member has raised this issue during the debate. I think that perhaps says it all and reflects the debate we had on Third Reading of the Enterprise and Regulatory Reform Bill. On the Opposition side, we are strongly in favour of employee ownership, but coupling it with slashing employment rights is contradictory and counter-productive.
Doing away with people’s rights at work is wrong in principle and will do nothing for economic growth. The Employee Ownership Association has pointed out that boosting employee ownership
“does not require the dilution of rights”.
The Chancellor heralded this as an attempt to create a flexible work force, which is ironic given that taking up the shares for rights scheme will mean giving up on flexibility in the sense of flexible working. We must emphasise time and time again that the UK already has the third most flexible employment regime in the OECD—even before the measures passed on Third Reading of the Enterprise and Regulatory Reform Bill last week. This has nothing to do with flexibility; it will simply allow employers to fire at will.
We oppose these measures, not just because they are bad for employees, but crucially because they are bad for business. As Justin King of Sainsbury’s has said, these proposals are likely further to damage the already fragile reputation of business. He said:
“What do you think the population at large will think of businesses that want to trade employment rights for money?”
Any employee who signs up to the scheme will effectively allow the employer to operate a compensated no-fault dismissal scheme of the type proposed by Adrian Beecroft which, apparently, is so fiercely resisted by the Secretary of State for Business, Innovation and Skills. Simon Caulkin, a writer on management and business, said:
“In effect, Osborne’s cobbled-together scheme is a back-door re-run of the agenda of Adrian Beecroft”.
Paul Callaghan, partner in the employment team at Taylor Wessing, went further when he said:
“This makes Adrian Beecroft’s fire at will proposals look moderate.”
There is absolutely no evidence to back up these proposals. Being offered as little as £2,000 in shares to give up entitlements to redundancy payments, training, unfair dismissal and some maternity provisions is bad enough, but how can the Government claim to be the most family-friendly ever, when the right to request flexible working hours, which might be helpful for child care and parental employment prospects, is also included in the Bill?
Mel Stride (Central Devon) (Con)
Surely the whole point of an employee share scheme is that it is voluntary and optional. Is it not rather patronising of the hon. Gentleman to suggest that those in employment are incapable of exercising such a choice?
Ian Murray
Let me make three points in answer to that question. First, this applies to new jobs. Secondly, there would be nothing to prevent an employer from sacking all the work force and then taking them on again with new contracts. Thirdly, how can the scheme be voluntary if the job is conditional on people signing up to one of those contracts?
Sarah Jackson, chief executive of Working Families, has said:
“Employers beware. Offering owner employee contracts—where employees effectively sell their employment rights for shares—is unlikely to deliver the highly motivated, engaged workforce you need.
Few men or women with family responsibilities would want such a contract”.
Mel Stride
I thank the hon. Gentleman for giving way again. If the scheme is not voluntary, can he explain exactly who will be forced to take part in it?
Ian Murray
I suspect that we shall see two developments. We shall probably see an advertisement for employee ownership contracts in the first instance, and we shall probably see unscrupulous employers offering contracts on an employee-ownership basis to people when they feel that it will not be in the best interests for those people to be on normal full-time contracts. [Interruption.] Ministers are shouting “You cannot answer the question” from a sedentary position. I should like the Minister of State to come to the Dispatch Box and give a cast-iron guarantee that not one employee in the country, either in or out of work, will be forced to accept one of these contracts. I can assure him that that will not be the case.
Ian Murray
I am running out of time, so I shall canter on, if I may.
There are so many unanswered questions that I should probably be here until midnight if I dealt with them in detail, but let me give a little of the flavour of what people have been saying to me. I hope that the Minister of State has had his pencil sharpened so that he can take all this down.
First, the value of shares that employees receive in return for relinquishing their rights is wholly inadequate. It may also be difficult in some instances for employees to value the shares accurately, or indeed to realise fair value in the event of sale. Those problems are all the more pronounced given the absence of provision for independent legal and financial advice for employees.
Secondly, the administrative costs of valuing and issuing or allotting small numbers of new shares to a great many employees may be prohibitively high for business. If there is no market, companies may have to purchase the shares back, which will impose a huge financial burden on them.
Thirdly, most of the businesses involved will not be listed. Who will value the shares, what voting rights will be attached to them, how can they be redeemed or transferred when they have no real market value, and who will deal with any disputes that arise?
Fourthly, at a time when an employee wishes to sell, on redundancy or otherwise, the company is likely to be performing poorly, which is why staff are being laid off. That means that the shares will be worth less, or indeed worthless. What happens if a business issues more shares to itself to dilute staff holdings prior to any redundancy? What about dilution in the event of further investment in the company?
Ian Murray
I will give way to the hon. Member for Warrington South (David Mowat), who was a member of the Committee considering the Enterprise and Regulatory Reform Bill.
David Mowat
I was indeed.
Every year, thousands of people who work for firms of lawyers and accountants give away all their employment rights by joining the partnership, thus taking a stake in the business. Why are Opposition Front Benchers opposed to the extension of that principle to ordinary people in ordinary companies?
Ian Murray
I think that there is a slight difference between people who take on a partnership in an accountancy firm and people who embark on training.
Fifthly, what will happen to PAYE and national insurance contributions? At present, any shares “in kind” would be subject to the usual Inland Revenue rules.
Ian Murray
I am afraid that I do not have time. [Interruption.] It is the Government who schedule these debates, not me. The hon. Gentleman should have a chat with the Government Whips Office.
Could such shares also be used for tax avoidance purposes when executives receive the maximum allocation and take full advantage of the corporation tax regime?
Sixthly, will the contracts be voluntary? Could an employer make it a condition of employment that they are signed? Could an entire work force be moved on to them? Could a post be advertised as an “employee only” vacancy?
The list is endless. This is a ragtag of a Bill and a ragtag of a proposal. The Chancellor proclaimed in his conference speech that the proposal represented
“owners, workers and the taxman”
—where have we heard this phrase before?—
“all in it together”.
In reality, the measure is divisive, it risks creating a two-tier labour market, and it flies in the face of the “one nation” approach that Opposition Members wish to see. Making it easier to fire people will not help economic recovery.
There is nothing in the Bill to address the root causes of the Government’s economic failure or housing crisis. Instead the Bill could damage in a number of ways the planning system, housing delivery, communities and relationships in the workplace. It is also clear that, although the Secretary of State for Business, Innovation and Skills is resisting the Beecroft fire-at-will agenda, it is alive and being delivered by his Department minders, who were brought in at the reshuffle to sort the Secretary of State out.
Like the Enterprise and Regulatory Reform Bill, this Bill is an ill thought through, incoherent, “make it up as you go along” mess of measures cobbled together by an increasingly desperate, out of touch Prime Minister and Chancellor. I look forward to Members joining us in the Lobby later.