Jobs and the Unemployed

Nadhim Zahawi Excerpts

Wednesday 7th July 2010 Commons Chamber

[Yvette Cooper]

My hon. Friend is right, which is why all young people, no matter what the difficulties they face, should have a guarantee of a job, training or support to get into work. She might also be interested to know that significant numbers of the people going into the future jobs fund were disabled, so it was providing additional support for people who might have found it more difficult to get their first job elsewhere in the economy and to get that start and get into work.

The former Chief Secretary to the Treasury, the right hon. Member for Yeovil (Mr Laws), told the House that DWP officials had advised that the future jobs fund was not effective and not working. That is not what young people and voluntary sector providers are telling us. For example, the Scottish Council for Voluntary Organisations said:

“It is obviously very disappointing that the Future Jobs Fund is not continuing as it was a highly successful initiative which was popular with employers and employees”.

Angie Wilcox, whom I met, from the Manor residents association in Hartlepool, said that

“in one area alone, manor residents have recruited 118 young people, of which the first 17 finished their six months last month, all 17 secured sustained employment...This is a vital programme that must stay”.

So what advice did DWP officials really give to the Treasury? The Employment Minister, the right hon. Member for Epsom and Ewell (Chris Grayling), has so far refused to publish any advice or evidence that it is not effective. That is because, in the end, he does not have any. He has commissioned a detailed evaluation of the future jobs fund for 2011, so there is no evidence to show that the fund is not working and plenty of testimony from young people and employers across the country that it is transforming people’s lives. The Government did not talk to a single voluntary sector provider before they axed the fund, and they did not talk to a single young person on the fund before they made their decisions—actually, the Prime Minister did. He talked to young people at a social enterprise in Liverpool, and told them he would keep the fund. He said that

“it is a good scheme, and good schemes we will keep.”

Was he setting out to deceive those young people, or does he just not care about the broken promises from the election?

The Employment Minister has, I understand, been back to that same corner of Liverpool to see the same social enterprise. He has told us in previous responses that he has not received any representations about the decision to cut the future jobs fund. Yet someone who was at the meeting said that

“when Chris Grayling visited Everton on the 26 May we raised with him the very negative impact cutting the Future Jobs Fund will have and 2 local people said the difference having a future jobs fund position was already having on their lives, their self esteem and their long term job prospects...We asked him specifically about whether his replacement scheme was going to give at least the minimum wage. He couldn’t guarantee that at all...The FJF has already made a big difference to us in Everton... Young people on the FJF have got their heads back up and are going for it.”

So what other excuses have the Government given us for cutting the future jobs fund and the support for the unemployed? The Secretary of State claimed on 8 June that the cost of the programme was “running out of control”. That is rubbish—it is a fixed-cost programme. It costs just over £6,000 per job and is paid when the job is delivered. Furthermore, the taxpayer saves six months of benefits too. It is a fixed cost, so it cannot escalate out of control.

The difference between us is that we want 90,000 people in jobs. The Government would rather have them on the dole than pay for the extra support that those young people and long-term unemployed need. So, from next year, they are cutting the rest of the guarantee. In total, they are cutting £1.2 billion from support for the unemployed—and they tell us it is all right because there is going to be a Work programme. But where is it? The soonest the Secretary of State will be able to deliver it is next summer, but what about the people in the meantime who need support and help? What about the young people leaving school, college or university this summer who need help? What about the people who have been unemployed for six months and who need support now? Yet now is the time when he is cutting future jobs fund opportunities in favour of a Work programme that cannot be in place for at least another 12 months.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

rose—

[Yvette Cooper]

I shall give way. Perhaps the hon. Gentleman can provide some clarity on that point.

[Nadhim Zahawi]

The right hon. Lady talks about the young people coming out of schools and colleges. Did she think about them when she was in government and borrowing £500 million a day? Did she think about their future while the Government were borrowing £100 for every £300 they were spending?

[Yvette Cooper]

Had we not increased borrowing during the recession, we would have seen recession turn into slump, millions of people on the dole being scarred for life, and huge increases in repossessions. Unless the hon. Gentleman is prepared to support the economy and growth, he will never see the deficit come down. The best way to get the deficit down is to keep the economy growing, and the only way to get us through the recession was to support the economy at a very difficult time. He seems to want to return to the madness of the 1930s when economies across the world were pushed into depression and slump as a result of the kind of narrow-minded, short-term policies that he is now advocating.

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[Nadhim Zahawi]

I have to come back on that point. Your policies have mortgaged and remortgaged the future of those young children, so for you to stand up and say that without borrowing you cannot sustain the recovery is inaccurate. You have to admit that borrowing £500 million a day—not a week or a month—is unsustainable.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. May I remind Members to use the third person? When Members refer to “you”, it means me. I have just been accused of a few things that I do not own up to.

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[Catherine McKinnell]

Absolutely, and I thank my hon. Friend for his intervention. It is notable that, since the emergency Budget that we debated yesterday was announced, the growth forecasts have reduced as a result of that Budget.

I return to the subject that I want to address today: the impact of the Budget on the north-east. Approximately 266,000 people in the north-east are employed as public servants—almost one in three workers—and many of those individuals, and the families they support, live in Newcastle and the surrounding areas. Large-scale redundancies in the public sector, which are now certain, will be disastrous for the city’s economy, which is, in turn, an engine for regional growth. The likely result will be lasting unemployment and an enforced exodus of talented professionals from what, during the past decade, has been a rapidly emerging region.

That is not the full picture, however. The public sector is so economically vital that it is not hard to imagine the impact of large-scale redundancies on private firms in the region. Simply throwing public sector workers out of their jobs will mean not only a loss of direct employment, but the devastation of private firms. More than in other areas of the country, such firms in my region depend upon revenue from public sector organisations.

That is directly linked to my next point, which is my deeply held opposition to the abolition of my region’s very popular and highly respected development agency, One NorthEast, which is located in my constituency on Newburn Riverside park. Owing to massive cuts in Government spending on regional development, combined with the Liberal-Conservative pledge to transfer RDAs’ functions to local authorities, the Government have announced, after damaging indecision and backtracking, that One NorthEast is to be abolished. Its closure will remove a vital local driver for recovery and eliminate a key means of building a stronger local private economy.

In March, the National Audit Office published its report on RDAs and concluded that £3.30 had been generated for every pound of Government funding given to them. A year ago, another investigation into RDA effectiveness, this time carried out by PricewaterhouseCoopers, showed that for every public pound invested there had been a return of £4.50 to the private sector. The ill-thought-out shunting and transfer of some of the RDAs’ roles—I presume not all of them—to under-resourced local authorities will be totally unworkable.

[Nadhim Zahawi]

The hon. Lady cites the PricewaterhouseCoopers report, but the Institute of Directors also produced a report on the RDAs, which showed that only 18% of directors thought that they made a contribution, and 60% thought that development would have taken place in the regions without the RDAs being in place. To cite selectively from PricewaterhouseCoopers is slightly misleading.

[Catherine McKinnell]

I thank the hon. Gentleman for his intervention, because it highlights my point that these issues cannot be examined as a whole across the UK. The situation in each region is incredibly different and unique, which is why the RDAs were so successful in particular parts of the country and why the removal of the north-east’s RDA, which is successful and which business leaders across the region accept as a major driving force in the private economy, is a travesty.

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[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I want to talk about one of the biggest challenges that the coalition Government, the House and the country face: jobs and unemployment in our country, and what the Government can do to tackle them. The Opposition motion would be hard to support in any circumstances, but it would be more credible if it had started with an apology. Nearly 2.5 million people are now unemployed. To put that in perspective, that is 500,000 more than the entire population of Slovenia, a nation that we recently played in the World cup. That is a terrible figure, and also a terrible legacy to have inherited from the previous Government.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Will the hon. Gentleman give way?

[Nadhim Zahawi]

I will not, as I would like to make some headway in my speech.

Following the election of the new Government, it immediately became clear to us that we faced a series of immense challenges in tackling unemployment and worklessness. Let us be honest—those problems have not come about purely because of the recession. Over the past decade, the very fabric of this nation has been altered. This is now a nation of huge government and huge inefficiency, and one that does not do much for those looking for work. Instead, it seems to encourage those who do not want to work. Those factors have undermined this country’s competitiveness, its efficiency and—perhaps most importantly—its social fabric.

This is a self-aggravating situation. Those who are brought up in workless households are themselves more likely to experience worklessness, welfare dependency and poverty in later life. This is not an issue we can ignore. It is vital that we address the causes and begin to secure solutions to these enormous problems. That can be done by making changes to the way in which the welfare state is operated. My right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), the Secretary of State for Work and Pensions, alongside the right hon. Member for Birkenhead (Mr Field) and John Hutton, the former Member for Barrow and Furness, have the historical credibility and experience to make a real difference. Focusing on key issues such as the long-term unemployed and the high level of youth unemployment is critical.

Business is another key area in which a real impact can be made. Supporting our businesses and reducing the regulation that strangles them will lead to more opportunity and more jobs. That is a tried and tested solution and one that I, as a business man, will address shortly, but for now I feel that I cannot ignore the record of those sitting opposite me. After 13 years of a Labour Government, huge numbers of people are living off the welfare state. A whole swathe of society has been led to believe that the culture of aspiration and hard work on which Britain has long prided itself can be ignored in favour of welfare and idleness. Yet I do not blame those people, because it is the last Government who allowed that culture to become ingrained in the British psyche. It is the last Government who bloated not only the welfare state but the public sector. I would never accuse them of doing that for reasons of self-interest, but the questions have to be asked: why was it allowed to happen, and what can we do to rectify it?

Let me turn briefly to the figures, for they do not lie. As I mentioned earlier, unemployment is now just shy of 2.5 million, with nearly 1.5 million people claiming jobseeker’s allowance. We also have 1.7 million people who are long-term unemployed, having been without a job for at least 12 months. Of those, 1.4 million have been on out-of-work benefit for nine or more years; that is a deep rut that is hard to climb out of. I should also make it clear that that does not take account of the 2.6 million people in receipt of incapacity benefit and employment and support allowance. Ours is the nation with the highest number of workless households in Europe. There were 5.9 million working-age benefit claimants in November 2009, and we have an incapacity benefit system that makes it more likely that those on it will die or reach pension age, rather than getting another job after two years of claiming. That is the legacy we have been left.

The last Government have clearly failed. They led this great nation for 13 years, and that is the record that has been left. They may point to and blame the recession; they may claim that factors out of their control led to this situation; but I say no, they cannot so easily shirk the responsibility that the people of Britain placed on them in 1997. They claimed that they would take “Britain forward not back”, yet it is backwards that we have gone: back to the dole queue, back to unemployment, and back to poverty. It is now up to us, the coalition Government, to rectify the mistakes of the past and ensure that once again we “Get Britain working”.

Of course, an enormous number of areas must be discussed if we are both to understand and to begin to deal with this problem: the welfare system and what we can do to change and streamline it, the huge problem of youth unemployment, and what we can do to help lone parents back into work. But as a business man myself and a keen believer in the power that enterprise in the UK has in job creation, I intend to focus on that area. I am a firm believer in creating real jobs in the real economy. We have made it clear that a key element of our programme is boosting economic growth and, as a direct result, creating jobs to ensure that Britain has an economic climate in which private enterprise can compete and invest with confidence. It is vital that we ensure that jobs are available both for those looking for work, and for those whom we will try to get into work.

[Mr Stewart Jackson]

Does my hon. Friend agree with my comparison between what the Conservative party did in government in the 1980s, when they brought about a real transfer of wealth and capital to working people through shared ownership and the right to buy, and what the Labour Government did, which was to ossify social mobility and widen the gap between the richest and the poorest 10% in our country?

[Nadhim Zahawi]

My hon. Friend is right. One example is the way in which the gap between the south-east and the rest of the country has grown. Labour Members just do not seem to understand what it takes to create an enterprise economy.

[Mr Anderson]

Further to the point made by the hon. Member for Peterborough (Mr Jackson), a lot of people were made wealthy in the 1980s, and 200,000 coal miners got £20,000 to go on the dole queue—paid out of the public purse.

[Nadhim Zahawi]

And your point is? At the end of the day, you only have to look at the facts. The facts are that you have left us with a legacy of £500 million a day—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I did not leave anybody with a legacy of anything.

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[Nadhim Zahawi]

It is not sustainable to follow the path of the previous Government and bloat the public sector. Business needs confidence to invest. Our first Budget last month has laid the groundwork for these aims. We will drop the headline rate of corporation tax by 1% each year for the next four years, lowering it to 24%. We have ended the disastrous jobs tax that the last Government tried to introduce for employers, a key policy in ensuring that our businesses once again begin to hire people.

The measures in this Budget are intended to give businesses the confidence to invest for the long term, and to reduce the burden of tax and regulation. One area where we need to, and can, do more, is in funding for business. If we expect business to take up the slack of the reduction in the size of government, we must send it a clear message on funding. There is a disconnect between what the banks are telling us regarding the amount they are lending and what businesses are experiencing and telling us about the access they have to funding. I hope that in my new role as a member of the Business, Innovation and Skills Committee we can spend some of our time inquiring as to how we can alter that dynamic.

[Nick de Bois]

Will my hon. Friend add to that the outrageous attack on many SMEs, with banks inflating margins for captive customers with nowhere else to go? Does he welcome the opportunity for competition in that marketplace?

[Nadhim Zahawi]

My hon. Friend is right, and that is one of the areas I am passionate about.

[Thomas Docherty]

I am deeply puzzled that the hon. Gentleman argues, on the one hand, for less intervention and regulation, and on the other that the privately owned banks have to be instructed to lend more money. Which argument is he making this evening?

[Nadhim Zahawi]

That is not the point I was making. If the hon. Gentleman had been listening carefully, he would have realised that my point is that we have to inquire into what is happening. I am not talking about instructions, but about understanding the dynamic so that we can create a similar environment to that in Silicon valley, for example, where people can get access to funding more easily than in our country.

As a business man, I also know first hand the damaging effects that over-burdening business with regulation has on British companies. It is imperative that we reduce regulation. The coalition Government aim to do just that. The level of regulation in this country is simply staggering, and another example of the top-down bureaucratic approach taken by the last Government. The Institute of Directors has estimated the annual cost of regulation to UK business at £80 billion, and has stated that the ever-increasing burden of paperwork hinders business from growing and, ultimately, creating jobs. That is why we have announced plans fundamentally to review all regulations scheduled for introduction over the coming year. We will put in place a system of sunset clauses so that regulations cease to be law after seven years, and we have also created the one in, one out rule to reduce for ever the regulation created in Whitehall. All of these are key measures in ensuring that our businesses have the opportunity to thrive and, more importantly, to hire.

The level of unemployment in this country is a huge problem, but I am confident that, with the new coalition Government in power, we can address and reduce it. This issue requires a complete set of solutions, all of which need to be implemented together in an effective and decisive manner.

If we balance the books of Government, hold down interest rates, encourage business to invest and reduce the regulation that strangles business, I believe that, at the very least, we will ensure that there are jobs available for those who want them and an economy that can support them.

I support the amendment to the motion.

[Several hon. Members]

rose—