Jobs and Business

Liam Byrne Excerpts

Friday 10th May 2013 Commons Chamber

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

It is a great pleasure to wind up this debate on the Gracious Speech, but on a topic as serious as this, I cannot help but express a little disappointment at the fact that there have been twice as many speakers from the Opposition Benches as we have heard from the Government Benches. Often, as we have looked at the Government Benches in the course of the debate, we have found them as empty as the Queen’s Speech. There appear to be very few people on the Government Benches who are prepared to defend this Queen’s Speech, just as there were very few people to defend the Budget earlier this year.

[Mr Kevan Jones]

I agree with my right hon. Friend’s observation. It obviously reflects the amount of support that the Prime Minister has from his Back Benchers. He was so desperate in the earlier stages that he had to have his Parliamentary Private Secretary intervening in the debate.

[Mr Byrne]

My hon. Friend makes a good point. Looking at the Queen’s Speech, perhaps it is not a surprise that so few people in the Government party are prepared to defend it.

I shall start where my hon. Friend the Member for Streatham (Mr Umunna), the shadow Business Secretary, concluded. After three wasted years, we have this year had a wasted Queen’s Speech. The task on Wednesday was simple—to give us a legislative programme as big as the challenges that face our country. What we got instead was practically nothing. It seems that this Government are incapable of proposing any ideas that they can agree on. They are a weak Government who are out of ideas, and that is why the public want them out of office. They have chosen to fight the biggest economic battle confronting this country for decades by arming themselves only with pea-shooters.

We should be clear about the task that we confront. It was set out brilliantly by my hon. Friend the Member for Streatham. We have an economy that is flatlining. We have growth of just 1.8%. That is a third of the level of growth seen in the United States. Living standards are falling. The wages of our constituents have fallen by £1,700 a year since the election. Our constituents are getting poorer. GDP per capita has fallen by £1,500 since the election. Unemployment is rising and is 90,000 higher than at the election. The consequence of all this is a catastrophe for the public finances. Borrowing is now £245 billion more than forecast. Worst of all, perhaps, is what is happening to the fundamentals of our economy.

The hon. Member for Tamworth (Christopher Pincher) expressed some confidence that the economy is beginning to rebalance. If only. Consumer demand is flat. Business investment is stalled. We had great hopes that economic growth would come from some kind of rebalancing towards exports. As the Business Secretary said in his lengthy but rather good essay in the New Statesman not long ago, there is not necessarily a problem with global demand. The problem is that we in these islands are not tapping into that demand.

Our exchange rate has fallen by roughly 20% since 2007, but exports have grown by 1% or 2%. Once upon a time the OBR forecast that net trade would add 1.2% to GDP. Now it admits that net trade is a drag on growth, not a boost. That is a huge contrast to what we saw in the 1990s, when sterling depreciated by about 20% and exports grew by a third. If our economy is to grow at the level that the OBR forecasts it should between now and 2016-17, we need to grow exports by 45% over and above the level we saw in 2009, but we are simply not on track to deliver that change.

[Mark Hendrick]

I am listening with interest to my right hon. Friend’s comments on growth. Does he think, as some Government Members do, that withdrawing from the European Union is likely to increase jobs and growth in this country?

[Mr Byrne]

My hon. Friend is absolutely right, and that was outlined very well in today’s newspapers by the former Chancellor of the Exchequer. At a time when we are struggling to grow our export base, why on earth would we choose voluntarily to put in jeopardy our membership of the world’s largest free trade zone?

The challenge is not simply that global demand conditions are weak—the Business Secretary said as much in his New Statesman essay—but that our exporters are losing market share. The Prime Minister is fond of telling us that we are in a global race, but the problem is that we have stalled on the starting grid. He is instead locking us into a race to the bottom, with a policy that will deliver nothing better than low growth, low skills and a low-wage future.

Those are the challenges that the Queen’s Speech should have addressed—the investment crisis on the one hand and the jobs crisis on the other—but there were big holes where the Bills on promoting investment and growing jobs should have been. Let us start with the investment crisis. The Breedon review showed some time ago that SMEs in our country confront banks that are deleveraging on a scale unseen anywhere else in Europe. The country’s investment rate is now under 15%. It is flatlining and well below the levels seen elsewhere in Europe. Business investment is £11 billion lower than it was during the peak before the crash, and there is falling investment in the venture capital industry, which is £80 million down on the latest set of figures.

Meanwhile, in corporate bank accounts cash is piling up. It is what the incoming Governor of the Bank of England, Mark Carney, has criticised in Canada as the phenomenon of “dead money”. Dead money is piling up in bank accounts in this country because the business community does not have confidence in the Government’s economic plans, yet all we got in the Queen’s Speech was a carry-over Bill on bank reform. As the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) said, that will probably not unlock the kind of business and banking investment we need. The Chair of the Treasury Committee has criticised the Bill because he found the Government’s arguments insubstantial. We did not get answers to Britain’s investment crisis in the Queen’s Speech, which is why it is such a wasted opportunity.

The wasted opportunity on jobs is perhaps more serious. Unemployment today is 90,000 higher than it was at the general election. There is simply not enough work to go around. Once upon a time we were promised a welfare revolution, and no doubt it was well intentioned, but the Work programme is not delivering for those who need jobs or those on employment and support allowance. I look forward to some reassurance from the Secretary of State when he responds. Universal credit, again, was a good idea, but if its virtues are confined to 300 citizens in Tameside, I am afraid that it will not revolutionise the back-to-work business here in Britain.

Perhaps worst of all, the Secretary of State stands before us today as a man who has failed the test he set himself in Easterhouse. Unemployment on three quarters of our worst estates is going up, not coming down, and long-term unemployment is going up on two thirds of those estates. Three years into this Parliament, that is simply not good enough, and it is not good enough that there was nothing in the Queen’s Speech to fix it.

[Stephen Metcalfe]

The right hon. Gentleman makes an interesting point about rising unemployment on some of our estates. Does he not accept any responsibility for failing to give those people the skills they need to access the opportunities that do exist across our economy? I think that is why some people on our estates are, unfortunately, finding it so hard to get the employment opportunities that do exist.

[Mr Byrne]

Apprenticeships quadrupled during our time in office. In the decade before the crash, we achieved rising productivity and rising wage growth. That is why wages were so much higher when we left office than when we began. Because we invested in skills, our record on rising wages was beaten only by Ireland and Australia. The Government should be building on that record, not watering it down.

[Christopher Pincher]

Will the right hon. Gentleman give way?

[Mr Byrne]

I am going to move on quickly because I need to refer to some contributions to the debate.

The price that is being paid by our constituents, including our young people, has been well set out. My hon. Friend the Member for North Durham (Mr Jones) spoke eloquently, with force and power, about the price being paid by young people and the long-term damage that is being confronted. Some of my colleagues, such as my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), face very high levels of youth unemployment in their constituencies. To echo the substance of the argument made by my hon. Friend the Member for Preston (Mark Hendrick), we need more apprenticeships, not least because in many parts of our country right now—in Yorkshire, the north-east and the north-west—employers are saying that they cannot get skilled workers at a time when unemployment is higher than it was at the last election. That shows that the system put in place by this Government is not working.

We need to do more for the long-term unemployed. We also need to do more to support women back into work. In a brilliant speech, my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) argued powerfully that women are not being supported into work at the rate we would like. The shambles that we saw in the House yesterday on child care policy did not give us much confidence that things are going to change. The price of failure is being paid by families and the 2.5 million people denied the chance to work. That point was made by my hon. Friend the Member for Bolton West (Julie Hilling). As we heard in the powerful speech by my hon. Friend the Member for Bristol East (Kerry McCarthy), very many families are contending with falling wages and rising living costs because there is simply not enough work to go round.

Perhaps worst of all for the long term is the price being paid through rising levels of child poverty, about which my hon. Friend the Member for Bethnal Green and Bow spoke eloquently. We lifted 1 million children out of poverty during our time in office, and now most commentators agree that all that progress will be wiped out by the decisions of this Government. It is record of shame that we will hang around their neck at the next election. That is why it is such a tragedy that at a time when so many people are paying so much, the Government singled out as their chief priority giving a £2,000-a-week tax cut to millionaires.

We will look carefully at some of the Bills in the Queen’s Speech. We will study with close attention the proposals on mesothelioma. I will heed the words and sentiments expressed by my hon. Friend the Member for North Durham. The consultation that we undertook in February 2010 is the benchmark against which we will judge the Bill, and if we find it wanting we will oppose it.

We will look closely at the plans for flat-rate pensions. We support the principle of a flat-rate pension, which locks in the changes we made in office that lifted so many pensioners out of poverty. We hope, however, that the Government will acknowledge that many people’s income replacement rate will fall very low under these proposals. Unless there is reform of the private pensions industry that frees the fetters on the National Employment Savings Trust, caps charges and ensures that there is real transparency, we do not believe that plans are yet in place for a low-cost, low-risk private alternative to help people to save for the long term. That will be the thrust of our opposition to and constructive engagement with the Bill when it comes to this place.

As many colleagues have said, the tragedy of this Queen’s Speech debate is that there was an alternative. We proposed a jobs Bill that would have given the chance of work to young people unemployed for more than a year and to the long-term unemployed out of work for more than two years. We would have used an injection of capital into the construction industry to get our country back to work.

[Christopher Pincher]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will not.

We would have used procurement powers much more strategically to get our young people and long-term unemployed back into work.

[Christopher Pincher]

rose—

[Mr Byrne]

I am going to spare my time for the Secretary of State, I am afraid.

Those were the kinds of measures that we should have seen in this Queen’s Speech. They are simple, costable and easily affordable, and they would have helped to get our country back to work. To conclude, the struggle for jobs has always been at the heart of the struggle of our movement. When Keir Hardie rose on the Benches behind me to make the first speech of a Labour MP in this House, he insisted on the principle of work or maintenance. In our first election address, “Useful Work for the Unemployed” was our rallying cry. Next year marks an important anniversary in that long struggle for jobs. It is the 70th anniversary of the White Paper on employment policy, which accepted for the first time that the Government had a responsibility to ensure that everybody who wanted to work and could work had a job.

Once upon a time, the Conservative party agreed with that principle. When Rab Butler spoke to the 1953 Conservative party conference he said that anyone who believes in

“creating pools of unemployment should be thrown into them and made to swim”.

It is 40 years since the Conservative party backed away from those principles, starting with Sir Keith Joseph’s speech in Preston.

We could pay down our national debt faster if we got our country back to work. That is why the one idea that should have been at the heart of this Queen’s Speech was a plan for jobs and full employment. That is how we rebuilt our country after the second world war and how we rebuilt public services in 1997. Those are the ideas that we needed in the Queen’s Speech. Instead, we have a Government who are out of ideas. The day is fast approaching when we will run them out of office.

--- Later in debate ---

[Mr Duncan Smith]

I will finish a couple of quick points and then I will happily take more interventions.

The hon. Member for Washington and Sunderland West (Mrs Hodgson) made a point about unemployment in her area and the north-east in general. Employment and unemployment are big issues for us all, but I say to the hon. Lady, and to others, that since the election employment in every single area and region of the UK is up from where we found it. Employment is up—I will return to that point in a moment—and what the Government have done has helped that.

The hon. Member for Bristol East (Kerry McCarthy) complained about the absence of legislation on overseas aid, but I thought she might have been a little more generous about the fact that this Government are the first to make such a commitment— stay static, get to 0.7% of GDP, and implement it. It would be more helpful to say, “Yes, this is the right thing to do.” We can by all means debate whether we need to lock that commitment into legislation, but the reality is that we have locked it in because the Government have made it clear that we will not depart from it. We can debate the realities of the legislation, but we are spending more as a proportion of our gross domestic product than any other Government have previously done, and that has shown a lead to the rest of the world.

Let me turn to the Gracious Speech, which I feel has set the tone for a real change to society. I am proud that my Department will be initiating and taking through the Pensions Bill, which is the most important reform and change. It follows a series of reforms and changes that my hon. Friend the Minister of State, Department for Work and Pensions (Steve Webb) has taken through with me: automatic enrolment and ensuring that consultants will not be able to overcharge people for that; making the necessary changes; and, finally, the single tier pension, which I know is close to his heart. I take this opportunity publicly to congratulate my hon. Friend on the hard work he has put in. Without it, the Bill would not exist and it is a very good thing.

With the Immigration Bill we are picking up the pieces of Labour’s immigration strategy that saw net immigration of more than 2 million people between 1997 and 2010. New legislation will ensure we have the power to limit access to public services and housing, attracting people who will contribute, and deterring those who will not. As contributions from Government Members have made clear, we are already making progress towards that business-led recovery, and out of the mess left by the previous Government we are creating jobs and helping people get into work.

That brings me to a series of points about labour market stats. Let me run through a few of the realities, even though sometimes it does not help the Opposition. Since the last election, the number of people with a job is up by well over 750,000. There are 1.25 million more private sector jobs since the election, meaning that over the past year, six private sector jobs have been created for every job lost in the public sector. The number of people of working-age—

[Mr Byrne]

rose—

[Mr Duncan Smith]

I want to get through this point because I think it is important. The number of working-age people without a job is down—I stress that—by 350,000 since the 2010 election, driven by falling inactivity. Inactivity is now at its lowest level for two decades; the Labour party left us with a high rate of inactivity, and we have lowered it. There are now fewer people and fewer young people on jobseeker’s allowance than when Labour was in office. The number of claimants aged 18 has fallen for the 10th consecutive month. In April, we had the lowest number of new jobseeker’s claims for four years, alongside falling redundancies. Let me deal with Opposition Members’ suggestion that those people are moving not into real work, but into part-time work. That is not true. In fact, full-time employment is up more than 500,000 since 2010—it is up 64,000 on the last quarter alone.

My final point on that is that Opposition Members need to lift their heads up occasionally and look elsewhere. My right hon. Friend the Secretary of State for Business, Innovation and Skills compared our situation with that of France, which has 11% unemployment. That comparison bears out very well what the Government are doing. The UK’s overall employment rate is growing at almost double that of the US, and faster than the rate in any other G7 country. That is because the Government have taken the tough decisions to ensure that we have the flexibilities and that people can get back to work. The private sector is now creating jobs, whereas under the previous Government, it was shedding jobs.

Let me remind Labour Members that, for all their crocodile tears, long-term unemployment nearly doubled in two years under the previous Government—from 400,000 in 2008 to 800,000 in 2010. That was a failure on their part. They gerrymandered the figures on youth unemployment, but when we take the gerrymandering out, we find that youth unemployment is now lower than when the Labour Government left office.

The Work programme is a success. In fact, the Office for National Statistics wrote the other day to a number people correcting how they interpreted the figures. It made it very clear that what the right hon. Member for Birmingham, Hodge Hill and others have said about the statistics was completely wrong. The ONS has said that the reality is that the figure of 2% or 3% that he has been using, which is below the minimum performance level, is incorrect. It went on to say that the realistic and more relevant figure is that 8.6% of those referred to the Work programme are in sustained employment in the first six months. That was ahead of the previous position. By the way, I remind him that, unlike all his other programmes, people do not get paid unless they get people into sustained work. That is unlike what happened under the future jobs fund and the flexible new deal, when the Labour Government paid up ahead and wasted the money.

[Mr Byrne]

A payment-by-results system does not cost much money if there are no results. If the Secretary of State is so proud of the 8% figure, why did his Department not use it when it published the results?

[Mr Duncan Smith]

The figure was there and we told the right hon. Gentleman, but he refused to listen—[Interruption.] Yes, it was. The ONS has pointed that out. The point I am making to him is that, when we produce the next figures, the Work programme will show that it is dramatically improving and getting more people back into work. [Interruption.] I will deal with that point, because the right hon. Gentleman believes he has an alternative. He spoke of introducing a new programme. His new programme is a real mess—it has changed on a number of points. When he first referred to it at, I believe, the last Labour party conference, he was offering those who had been unemployed for one year or more a guaranteed job for 12 months.

[Mr Byrne]

Will the Secretary of State give way?

[Mr Duncan Smith]

Hang on a second. As I pointed out to the right hon. Gentleman at the time, that programme sounded rather familiar, so I looked up the programme the previous Government were considering—it was called “step up”. That programme, which was piloted in 20 areas and which bore an uncanny resemblance to his latest programme, gave paid employment to new deal failures who had been out of work for two years. It was never rolled out nationally because it was discredited, even within the Labour party, as not giving value for money. For those nearest to the labour market and those under 25, “step up” had a negative impact on work prospects and came in at a massive cost of £10,000.

After the programme he announced at the party conference was discredited, the right hon. Gentleman went away, fiddled with his plans and came back with a new plan. He will now mandate people to a job for six months, which is half the length of time he previously advertised. Even as recently as April, the Opposition seemed to be in a mess. There is complete confusion. The shadow Chancellor spoke of a guarantee of one year for young people and two years for adults.

[Mr Byrne]

Will the Secretary of State give way on that point?

[Mr Duncan Smith]

I will give way in one moment. The shadow Chancellor gets in a real mess, so I say simply to the right hon. Member for Birmingham, Hodge Hill that the Labour programme will cost huge sums of money. Like the future jobs fund, it will be good only for the public sector, and there will be a net cost to the Exchequer. He will compound all the failures they ever made. They left us with the biggest deficit. We are cutting the deficit by a third and borrowing is down by £38 billion. We have the fastest growing employment rate in the G7. This Queen’s Speech builds on our success, not on Labour’s failure.

Ordered, That the debate be now adjourned.—(Greg Hands.)

Debate to be resumed Monday 13 May.