Jobs and Growth

Mark Spencer Excerpts

Thursday 17th May 2012 Commons Chamber

[Mr Osborne]

For a start, as of today Spain is in recession, so I am not sure that the hon. Gentleman’s point has a huge amount of force. This claim, which I guess is made only by Opposition Members whom I am looking at now, that the Labour party somehow bequeathed the new Government some enormous golden economic legacy and that we were incredibly fortunate to inherit this massive budget deficit and totally unbalanced economy with no real plan to deal with that debt or deficit—not that we have heard a plan today, either—is absolute nonsense.

We have also had the good news this week, which was of course not mentioned by the shadow Chancellor, that for the second month in a row unemployment has fallen and employment is up. We have 400,000 more people employed than two years ago, and 190,000 fewer people on welfare rolls. Yes, it is an exceptionally difficult economic time and the legacy of debt and disinvestment is a heavy one, but the tough decisions we are making are moving Britain in the right direction.

[Mr Mark Spencer (Sherwood) (Con)]

I too welcome the improvements in the manufacturing sector of the automotive industry. Does my right hon. Friend recognise that in the food and drinks sector, which is also in manufacturing, there have been enormous increases in the number of jobs and of exports?

[Mr Osborne]

I certainly do. Part of the work we published last autumn specifically supported what we can do in that sector. We are not ashamed to identify sectors where Britain has a competitive advantage and to see what we can do to enhance it.

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[David Miliband (South Shields) (Lab)]

I want to make two points in this debate. The first is about youth unemployment. I will present some figures showing the rising cost of the Government’s economic failure. The second is that the neglect in respect of youth unemployment is mirrored by a misguided response to the storms in the eurozone.

I do not think that we need to debate whether youth unemployment is a big problem; it is a massive problem. As the Chancellor and others have said in previous debates, long-term youth unemployment is the greatest danger to not only our economic future, but our social future. Today, according to the Government’s own figures, 260,000 young people have been unemployed for more than a year, which means long-term unemployment. Another 200,000 have been unemployed for more than six months. The interesting, depressing and worrying thing is that the situation is getting worse. As recently as 2008, 6,000 18 to 24-year-olds had been claiming jobseeker’s allowance for a year. By April last year that figure had tripled. Over the past year—just 12 months—it has tripled again, to 55,000. In my constituency, this time last year there were 15 18 to 24-year-olds who had been claiming jobseeker’s allowance for over a year, but now the number is 250, which is a 1,500% increase. The total figure for youth unemployment is 1.3 million or 1.4 million, which comes from the labour force survey, but these are JSA claimants, because that is a claimant count figure.

As for the costs, in February this year I chaired the Association of Chief Executives of Voluntary Organisations commission on youth unemployment. We costed the levels of youth unemployment on the basis of the figures for the first quarter of 2011, which showed a net present value cost of some £28 billion. I asked the university of Bristol to rerun the figures for the last quarter of 2011, which it has done, and the calculation now stands at £30 billion. In the space of 2011, the net present value cost has gone up by £2 billion. That seems to me to be 2 billion reasons for a greater degree of urgency and effectiveness in Government policy.

The Minister responsible for employment says that we should be pleased with stability, but stability in this policy field means that the problem is festering and getting worse. The deputy leader of the Lib Dems, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), said we should celebrate the “huge success” of Government policy. The wage subsidy that was introduced in April is at best unproven. The majority of jobs under the apprenticeship drive are the result of jobs for the over-25s being rebadged, not new apprenticeships for the under-25s. The expertise in the voluntary sector is being squeezed out by the Work programme. Some 20% of voluntary sector providers have stopped providing under the Work programme. There is a gaping hole in Government policy on transport costs for people to get to interviews, never mind getting to work.

I make no apology for repeating this very basic fact: the Work programme, which is the Government’s flagship programme, helps one in 10 of the youth unemployed. Its success rate is 20%, according to the Government’s own figures. That means that one in 50 of the young unemployed are getting a job as a result of Government interventions. I say to the Chancellor—I am grateful that he has stayed for the debate—that there are three steps that he could take now. First, he could require all public contracts over £1 million to offer apprenticeships to young people. In his autumn statement last year he announced infrastructure expenditure, which is a good thing, but where are the apprenticeships to go with it? Secondly, he could bring forward from 2014 money to raise the size of the wage subsidy or the number of young people helped. In 1995, when his predecessor, the right hon. and learned Member for Rushcliffe (Mr Clarke), tried a wage subsidy, it helped only 6,000 young people. He will have to boost the effort to get take-up. Thirdly, he should bite the bullet and recognise that every study anywhere in the world has shown that for the long-term unemployed only a part-time job guarantee can ensure that one year’s unemployment does not become three, four or five years’ unemployment.

[Mr Spencer]

The right hon. Gentleman is making a compelling case, and I know that he has worked very hard on this matter in the past, but surely he recognises that the best way to solve this is to increase the number of apprenticeships, which the Government are doing, and that his Government encouraged young people to try to aspire to university and many of them, when they did not meet that aspiration, found that deflating.

[David Miliband]

I am grateful to the hon. Gentleman, who makes a perfectly intelligent point. It seems to me to be a good thing to raise university participation levels up to international standards, which is between 45% and 50%, but it is crucial for those who do not go to university that we have high-quality options for them. High-quality apprenticeships are an important part of that.

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[Mr Mark Spencer (Sherwood) (Con)]

I am delighted to be called to speak in this debate. The number of Members who want to speak is an indication of how important it is that the economy runs smoothly and allows the Government to do the exciting and generous things that they want to do in their programme. The economy is fundamental to that process. The same is true in our communities. In Sherwood, the fundamental issue is jobs and how we can create them.

The last Labour Administration created many jobs in the public sector, expanding it to such an enormous degree that we reached the point at the last general election—[Interruption.] The shadow Secretary of State for Work and Pensions says that they created jobs in the NHS. That is true—they were people walking around with clipboards who restricted our doctors and nurses. The last Government created jobs within quangos that restricted the private sector. Those jobs became unsustainable, to the extent that when the previous Administration left office, £1 in every £4 that was spent was being borrowed.

This is the fundamental argument. We need growth in our economy, but it must be sustainable for the long term. The Government have grasped that the only way to create sustainable jobs is to have an even-keel economy. That involves having low interest rates. Anybody running a small business in one of our constituencies who has an overdraft or a long-term loan with a variable interest rate understands how important low interest rates are. Once interest rates start to climb, the pressure on one’s cash flow and the pressure to reduce one’s wage bill become unsustainable.

So what have the Government done to create jobs? Our record is pretty good. One of the first things that the Government did was to reduce corporation tax to attract investment from overseas. That is just starting to show fruit, with companies relocating to the UK. We are using the planning system to try to make it easier for companies to establish themselves, and trying to ensure that the system works to create new businesses. For small businesses, we have looked at reducing business rates, which have a crippling effect. Anyone who runs a small shop and pays enormous local business rates will understand how important rate relief is in allowing their business to flourish. Reducing the burden of employment law on such businesses is also very important. Small businesses fear taking on new staff. If we can remove some of that fear, those businesses will be more likely to take on more staff.

What is happening in Sherwood? The good news is that unemployment is slowly coming down, which I welcome. There is still a long way to go, but the good news is we finally have a Government who understand business and how to run the economy. We are on the right course. We need to hold our ground and ensure we keep interest rates at their current level.