Jobs and the Unemployed

Debate between Margot James and Lord Jackson of Peterborough

Wednesday 7th July 2010 Commons Chamber

[Margot James]

The previous Government inherited falling unemployment in 1997, and it steadily increased during the first decade of this century. We have been through a couple of economic cycles during that time, but historically unemployment is always greater when a Labour Government leave office than when they arrive.

Rising unemployment under Labour Governments is always followed by a lot of well-meaning interventions to try to support people back into work. That is a laudable aim, with which we all agree, but it leads, as it has during the past five or six years, to a confusing array of individual benefit programmes that create a flourishing array of different funding streams and agencies, and they grow like Topsy. They beget a flourishing cottage industry of providers, all of which make money out of the taxpayer in trying to deliver the same services. It is imperative that the Government simplify, as they are doing, the 12 support-for-work programmes. I congratulate the new team on the steps that they have taken to integrate everything into a single get-back-to-work programme.

I do not want to be wholly negative about the interventions under the previous Government. I was a governor of Stourbridge further education college in my constituency, and a good programme was developed with Westfield, the company that manages the retail centre, and it was known as the retail academy. It took long-term unemployed people, such as women who had left the workplace to have a family, who had not been able to get back into work and who had lost their confidence. They did not have to lose their benefits. The programme was a 9-to-5 commitment, and more than half of them managed to get proper long-term jobs in the retail sector. I would not want to imply that all the individual programmes were a waste of money—of course some of them helped, and I am sure that we will learn from them—but simplification and better co-ordination is key, as another example that I want to share with the House demonstrates.

A few weeks ago, like me, some Members will have visited the manufacturing insight conference that took place just off Westminster Hall. I was struck by the story of a managing director of a small business in Lincolnshire employing about 30 people who wanted to access training for her finance staff. They wanted NVQ level 2 finance training, but in order to qualify she had to guarantee that eight people from her workplace would attend the course. She did not have eight people who needed the course, but there was only one provider that she could approach, and it was subcontracted by another provider that had the contract with the college.

All these providers and subcontracted providers take a slice of taxpayers’ money, which is another reason why we must simplify and codify the work, so that just one company or social enterprise is charging the taxpayer a fee for delivering a much-needed service. Business needs support, but it knows, for the most part, what it needs to employ people, and we must give companies much more direct access to the funding. They should not have to go through all these multiple layers of provision, and they should not have to go through regional development agencies, Business Link and so on—they should be able to access the vital help much more easily.

[Mr Stewart Jackson (Peterborough) (Con)]

Does my hon. Friend agree that laudable aims sometimes have perverse consequences? She will no doubt have come across people on the doorstep—usually women—who want to work more, but because of the extremely complex tax credit system built up by the former Government, it is simply not worth their while working. They therefore have an incentive to stay at home and remain on benefits, which cannot be right for them, their families or the wider community.

[Margot James]

I thank my hon. Friend for that excellent intervention. It is absolutely true. We have to create a situation in which people do not fall off the face of a cliff when they lose their benefits overnight, as soon as they take on a job for not that many hours a week. It is a poverty trap—it traps the children as well as the parents—so we have to address that. He raises an important matter.

We have talked a lot in this debate about various Government support initiatives with which we will continue under the new simplified Work programme. However, let us not forget that what the private sector really needs is a vibrant economy. First and foremost, that is what drives jobs. It is not rocket science: we need an educated and skilled work force; controlled immigration, so that businesses are not tempted simply to seize on quickly available, easy and cheap labour—we really must stop that—a benefits system that does not discourage people from going into work, as my hon. Friend the Member for Peterborough (Mr Jackson) said; and, above all, a low tax and a light regulatory regime that encourages investment, rewards risk and stimulates growth. That is our golden vision on the Conservative Benches, that is what we will deliver over five years, and that is what the Budget was all about.

I am pleased to say that, despite the dire economic circumstances we are having to deal with, and the deficit reduction plan that has been forced upon us, we are making great headway in creating the conditions for business that I just described. I will conclude by running through some of the excellent programmes that will drive the recovery. For a start, the employers’ national insurance increase will be tempered and the planned increase on the employers’ side will not go ahead. Although the employees’ side will go ahead, it will be compensated for by the raising of the nil rate on personal tax allowances. We are also looking at tax relief for small businesses, and the first 10 members of staff in any business will be exempt from national insurance contributions.

Whenever I do a survey of businesses in Stourbridge, I find that one of the biggest complaints is the cost of business rates, and by increasing the small business rate relief for one year from October, we will help an estimated 500,000 small businesses. Furthermore, as a west midlands Member, I can say with great passion that the regional growth fund and the commitment of £1 billion will help areas and communities particularly affected by the spending reductions forced upon us. There are other regional policies designed to correct the balance as far as we can. The number of jobs in the boom years created in London, the south-east and the east rose at 10 times the rate of new jobs everywhere else in the economy. Having come from the west midlands, worked for many years in London and gone back to the west midlands, it is deeply striking to me how we have almost become two nations. I am therefore delighted that my right hon. Friend the Chancellor of the Exchequer is so committed to helping regions outside London, the south-east and the east.

Finally, I wish to acknowledge the words of the Secretary of State for Business, Innovation and Skills, who has said that

“the Government’s role is to create the right business environment and the right skills base. The Government cannot simply keep writing out cheques.”

That is the nub of how we propose to stimulate the recovery that this country so urgently needs.