Economic Justice Commission

Kelly Tolhurst Excerpts

Tuesday 11th September 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

It is an absolute pleasure to serve under your chairmanship for my first Westminster Hall debate, Mr Hollobone.

I congratulate the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) on securing this debate. The IPPR’s Commission on Economic Justice has produced a thoughtful and wide-ranging report on our economy, and it is absolutely right that this House should debate it and its recommendations. I thank him for bringing it to the House and for introducing it, and I congratulate the IPPR and the commission on their contribution to the public debate.

We can all agree that the issues raised today are of fundamental importance. Tackling low pay, boosting equality and putting fairness at the heart of society, while building on the strength of our jobs market and on economic growth, are issues that affect all our constituents. I will start by simply reflecting on where we are now. We have a deserved reputation for being a great place to do business, with high standards, respected institutions and the reliable rule of law. We are an enterprising and successful economy, built on firm foundations: the skills of our workers, the quality of the infrastructure, and a fair and predictable business environment.

The Government are committed to building an economy that works for everyone, to raising living standards and to growing our national wealth, not just for today, but for future generations. That commitment is demonstrated by our progress since 2010: near-record levels of employment, with more than 3.3 million more people in work than in 2010, unemployment at a record low, income inequality down, fairness in the tax system—the right hon. Gentleman spoke about the wealthiest 1% in this country, but the top 1% contribute 28% to income tax and the top 5% contribute nearly 50% of income tax—and absolute poverty falling.

[Alan Brown]

In terms of rebalancing the economy and an economy that works for everyone, can the Minister explain how cutting the rate of inheritance tax and cutting capital gains tax help the poorest in society?

[Kelly Tolhurst]

One of the things we have absolutely seen is that putting wealth back into the system creates wealth. That is one reason why we have these measures and why we take some of these fiscal decisions—to ensure that we are fuelling wealth to be spent in order to benefit the lowest in our society.

We recognise the progress that has already been achieved in improving the life chances of millions around the country, but the right hon. Gentleman is right that we must not be complacent. For all our many strengths, we have businesses, people and places whose level of productivity is well below what can be achieved. That is why the Government have launched ambitious and transformative plans for our economy and for employment. The industrial strategy deliberately strengthens the five foundations of productivity: ideas, people, infrastructure, the business environment and places. It is a strategy that is being implemented with, not just for, British enterprise. It provides a template for the partnership between Government and the private sector that is required to solve productivity issues. Through the “Good Work” plan, the Government are supporting people to seize those opportunities as the labour market is changed by technological advances. I will talk about those today.

The Government’s industrial strategy is our long-term plan for building a Britain that is fit for the future. It sets out how we will help businesses to create better, higher paying jobs in every part of the UK. It focuses on the necessary investment in the skills, industry and infrastructure of the future. It ensures that our country and its citizens can embrace and benefit from the opportunities of technological change. We need to prepare to seize those opportunities. That would be necessary at any time, but Britain’s decision to leave the European Union makes it even more important.

Technology is transforming the world of work. That means we must invest in our workforce. We have committed to establishing a technical education system that rivals the best in the world, to stand alongside our already world-class higher education system. As part of wide-ranging reforms, we will invest an additional £406 million in maths, digital and technical education. Technological progress and a faster pace of change create opportunities but also challenges for those who may find themselves needing to learn new skills to find a job. We will therefore embed a culture of career-long learning through a new national retraining scheme that supports people to re-skill and grow their earning power throughout their lives.

We should not forget that it was the Conservative party that introduced the national living wage, delivering the lowest earners their fastest pay rise in 20 years. In April this year, we increased the national living wage by 4.4%, from £7.50 to £7.83. That increase is expected to benefit more than 2 million people and means that a full-time worker on the national living wage will see their pay increase by over £600 over the year.

Our industrial strategy also sets out what we are doing to make sure that the UK is the best place in the world to start and grow a business, which will create new jobs. We firmly believe in business as a force for good in society.

[Alan Brown]

Will the Minister give way?

[Kelly Tolhurst]

I will make some more progress.

Our corporate governance reforms are driving changes in how our largest companies engage, at board level, with employees and external stakeholders. Significant changes to the corporate governance code will strengthen workers’ voices in boardrooms by requiring boardrooms to put in place robust employee engagement mechanisms, while new laws will require companies to report how they engage with employees and have regard to their interests. Amplifying the voices of employees and external stakeholders will improve boardroom decision making, deliver more sustainable business performance and build confidence in the way businesses are run.

We are also introducing pay ratio reporting, requiring quoted companies to compare CEO pay with average worker pay, supported by an explanation of why the ratio is consistent with pay, reward and progression policies in the wider workforce. Under the revised UK corporate governance code, remuneration committees will have to engage with the workforce to explain how executive remuneration aligns with wider company policy. These changes will help to ensure that boardroom pay is connected with wider workforce pay and not set in an artificial bubble.

[Chi Onwurah]

I thank the Minister for setting out the Government’s industrial strategy proposals. Does she intend to deal with the proposals in the report? Specifically, does she agree with the report’s underlying assertion—that our economy is currently unjust?

[Kelly Tolhurst]

The premise of the report and some of the measures it suggests are already being considered by the Government, and I am outlining the actions we are taking in those areas. I am committed, and so are the Government, to providing fairness and high-quality jobs in the workforce.

The Government are investing. We plan to deliver £20 billion of investment in innovative and high-potential businesses by establishing a new £2.5 billion investment fund, incubated in the British Business Bank, and we will continue to support businesses to grow by accessing international markets. We aim to create a business environment well equipped to meet the challenges and opportunities of new technologies and new ways of doing business.

Across Government we are making huge strides towards rebalancing the economy and empowering local government. Through devolution deals we have strengthened local leadership and devolved powers and funding away from Whitehall, so that they are exercised by those with the strongest understanding of the needs of their communities. We are absolutely committed to this continuing.

[Liz Saville Roberts]

The Minister must forgive me for presuming that she will refer to the UK shared prosperity fund; she already referred to the importance of regionality and understanding the regions. Will she explain why a devolved English Ministry—namely the Ministry of Housing, Communities and Local Government—will administer the shared prosperity fund? Its history has involved dealing with English issues, rather than, for example, deprived communities in Wales.

[Kelly Tolhurst]

As I have outlined, the Government are committed to devolution and to giving local people the power to take decisions. There is a Minister responsible for the shared prosperity fund in that Ministry, but we feed into it across Government.

However, we are committed to delivering for the whole UK, including England, Wales and Scotland. That is why we are implementing the industrial strategy and why we are working with local communities to come up with, for example, local industrial strategies, which will build on their strengths and deliver on the economic opportunities that every region in the UK requires. Leadership and ambition for the future are key, and we recognise that there are individuals in those regions who can deliver those. The Government also continue to support the northern powerhouse strategy and have invested more than £3.4 billion directly into it for locally determined projects. Public support, combined with private sector dynamism, is enabling the region to flourish.

Technological change presents both challenges and opportunities for the world of work. New ways of working have a part to play in a modern, flexible labour market, but it is absolutely right that we look at what we can do to support people through these changes. In response to Matthew Taylor’s review of modern employment practices, the Government published the “Good Work” plan, in which we commit to reporting annually on the quality of work in the UK, with the first baseline report to be published later this year. I am clear that quality of work should take equal priority to quantity of work. Through the plan, we are also supporting workers by introducing a right to request a more predictable and stable contract, to tackle issues around one-sided flexibility, and by introducing enforcement of holiday pay.

I will pick up on some of the points raised by hon. Members. I again thank the right hon. Member for Birmingham, Hodge Hill for bringing the debate before us. I also thank the hon. Member for Mitcham and Morden (Siobhain McDonagh), who has a strong interest in this area and is extremely committed to tackling the injustices that affect her constituents.

On the point from the right hon. Gentleman about AI, robotics and the potential loss of 2.4 million jobs, the report by the Royal Society for the Encouragement of Arts, Manufactures and Commerce, “The Age of Automation”, suggests that technological advances would not necessarily lead to job losses in the medium term but would actually improve opportunities for workers.

I must also clarify a point around zero-hours contracts. We often hear that they are all bad contracts and that people do not want them. In reality, we need to keep up with modern practices, and people want the flexibility that these contracts provide to work around childcare or other home commitments. That is why it is important that we are truthful about the benefits of zero-hours contracts.

On the Taylor review, we are analysing the responses to it and we will come forward with proposals in the relatively short term. I am committed to that.

I thank the IPPR for its report. I am committed, as the Minister responsible, to delivering fairness and quality of work for the people of this country. I must mention that I am not smug and I am not wealthy. I am a working-class girl who is a Conservative MP. I am absolutely committed to delivering for the people of my country.