Employment

Lord Sheikh Excerpts

Thursday 20th March 2014 Lords Chamber

[Lord Sheikh (Con)]

My Lords, I pay tribute to my noble friend Lord Freud for introducing this subject and for his excellent speech. I speak as a businessman and as somebody who has employed many people through several business ventures. At the outset I take the opportunity to commend the Chancellor of the Exchequer on his Budget Statement. I hope to speak more on this subject during the impending debate next week but it is useful to note in this debate the measures that will boost employment.

I welcome measures announced in the Budget to support businesses, which include cutting the cost of energy bills for manufacturing and doubling the annual investment allowance to £500,000. The Chancellor also stated that we will have the most competitive export finance in Europe, by doubling government lending available to exporters to £3 billion and cutting the typical interest rate by a third. All these will provide a much needed financial boost to businesses and free up money to spend on employing more staff, among other things. This was a Budget that backed businesses and, as a result, backed employment.

It is my belief that this Government’s work on welfare and employment is one of their greatest achievements. I have spoken on this subject in your Lordships’ House previously. It has been stated many times in this Chamber, in the other place and elsewhere that the coalition Government inherited a dire financial situation—but we must not forget that this was not the only legacy that their predecessors left behind. This Government also inherited a culture of worklessness, one whereby welfare could and often did pay more than work and where generations did not work. Let us not forget that children and young people who live in households where adults do not engage in any form of employment are not only the most deprived in our society but also the most likely to follow this path once they leave full-time compulsory education. This generational cycle of worklessness was a key factor in the rising levels of welfare dependency and poverty in our communities. Alongside this, there were also vastly high levels of unemployment.

There are now 1.3 million more people in work than when Labour left office. Unemployment now stands at 7.2%, the lowest for the past five years. The number of young people in work has increased by 43,000 in the past three months and the employment rate has now hit a five-year high with a record 30.1 million people in jobs. The OBR has forecast that over the next five years a further 1.5 million jobs will be created, with real earnings growing every year.

It is however important that we remember that employment is not merely a matter of statistics. Every position filled means another family have the security of a regular pay packet. We must not forget that this pay packet is put back into the economy both in taxation and in consumer spending, supporting yet more jobs and growth. Nor should we forget the great benefit to the person’s individual well-being. I am sure noble Lords will agree that work gives people pride and confidence. As an employer, I know that people tend to work for two reasons. The first is to earn a living and the second is to get job satisfaction. On the contrary, being out of work sometimes creates depression and has an adverse effect on people. Work is good for people’s mental health, their physical health and their general well-being—benefits that have been demonstrated repeatedly. Dependency is not liberating. It constrains people and prevents them from achieving their ambitions. What is more, if we can get more people in work, some of them will receive salary progressions and improve their standards of living.

The Government deserve recognition for trying to ensure that we have a fair welfare system to support those in genuine need. Since benefits were capped, 9,200 households have moved into work or reduced their own benefit claim. Some 4,300 of these households have found jobs. We have heard many times that it is the Government's aim to reward those families who want to work hard and get on. Here we are seeing that, as a result, thousands of people are finding jobs and moving off benefits. It was not right that tens of thousands of households received far more in benefits than the ordinary hard-working family earns. We cannot underestimate the resentment and anger felt by hard-working families who saw others who made a conscious effort not to work being rewarded handsomely by the state. This caused tensions within our communities, which is understandable. To have people saying that they “could not afford to work” was absurd. Britain must be one of the few countries in the world where this was the case. Social security should be for people who find themselves out of work and are trying to get back into employment. Few people would disagree with these aims.

I pay tribute to those who offer people the chance of work. The rise in employment is not created by Government alone. It is being fuelled by businesses and entrepreneurs across the country. They should be congratulated. As the economy continues to improve they are feeling increasingly confident about employing more people. I have spoken many times in this Chamber and elsewhere on the importance of supporting small businesses. As has been said many times, SMEs are the lifeblood of the British economy. An ambitious and thriving small business sector is vital for steering the economic recovery in the right direction. None of the early signs of recovery that we are seeing today would have been possible without these small businesses. Their importance comes not only in the money they can make but also in the jobs they create. We must ensure that the systems are in place to aid them in doing this. The National Insurance Contributions Act, given Royal Assent recently, was one such measure. The employment allowance will give businesses and charities a much needed tax cut as a result of the Act. This will benefit over 1 million businesses, with almost 500,000 being taken out of paying national insurance contributions altogether. Businesses will, more often than not, spend these savings on their business—investing it, increasing wages and creating jobs.

Let us also not forget the smallest of businesses, those which currently have no employees at all. The allowance will create a strong incentive for sole traders and new and start-up businesses to hire their first employee. The number of self-employed people has risen. I hope that soon they will have more employees of their own, creating wealth and jobs through innovation.

Another welcome measure is the removal of the jobs tax on young people under the age of 21. As a result of this, employer national insurance contributions will be removed altogether on 1.5 million jobs for young people. Youth unemployment is falling, but it is important that more is done to get young people into work. We can see from the experience of previous generations that the longer the period spent out of work as a youth, the longer the time spent out of work later in life. I am pleased that, thanks to this measure, the future is looking brighter for young people in this country. This will also come as a great benefit to the businesses that employ them. A young, vibrant and skilled workforce is a benefit for us all.

We should also welcome the rise in the number of women in employment. As someone who has spoken many times about female empowerment, it is most welcome that the number of women in employment has reached a record high, with more than 14 million in work for the first time. The number has increased by over 500,000 since the election. Getting into employment should not be something that people are expected to do alone, particularly for those who have never worked before. It can be a daunting process. I am pleased that the Government’s Work Programme is helping people into work. Unlike the short-term focus of previous schemes, the Work Programme is geared towards not just getting people into work, but keeping them there. It is helping large numbers of people escape the misery of long-term unemployment and get back into real jobs. Through this scheme, providers are rightly paid according to results. They have the flexibility to design support systems that address the needs both of the individual and of the local labour market. So far the scheme has helped 208,000 jobseekers find lasting work, including 17,560 young people. This is evidence that there are jobs available, but we must work to ensure that all the measures are in place to get those who need jobs into them.

It is my belief that this Government are committed to lowering unemployment and helping people back into work. However, we must not be complacent. More needs to be done to increase employment and train people to fill the jobs. To enable us to achieve that, we should not rely on my business, which is financial services, but expand our manufacturing activities and undertake more business overseas. We must increase our trade with India, China, Brazil and Africa. There are considerable opportunities in Africa, where I was brought up and with which I still have connections. Given our historic ties with a number of African countries, we must promote more trade with them. Also, we should increase apprenticeships and train more people in different trades and businesses.