Employment in Wales

Owen Smith Excerpts

Tuesday 27th January 2015 Westminster Hall

[Guto Bebb]

I am constantly amazed at Labour Members’ hatred of the entrepreneurial spirit. The simple fact of the matter is that we need a successful economy to pay for the public services we need. The Labour party has always believed that money derives from thin air; it does not understand how the economy actually works. To have a strong health service, we need a strong economy. To have employment growth, we need a strong economy. To have a strong economy, we need a strong entrepreneurial spirit. This Government understand that simple fact; the Labour party clearly does not.

The key issue we need to look at is employment rates. Employment rates in Wales are notoriously low by UK standards, but they are going in the right direction. I was interested to note from the debate pack that the hon. Member for Vale of Clwyd once tabled a question requesting employment figures for north Wales constituencies. Remarkably, in comparison with the glory days of the Labour Government, the employment numbers for all of them are higher than they were when Labour was in power. We hear rhetoric from the Opposition, but when they are in power we always see failure. Everyone in UK politics knows that not once has a failed Labour Administration left government with unemployment lower than it was when they came to power. That has always been true—[Interruption.] The hon. Member for Pontypridd (Owen Smith) suggests that that is an old chestnut, but he knows that where there is unemployment, there are Labour Members. The eight constituencies represented by the Conservative party in Wales have a lower unemployment rate than the Welsh average. Suffice it to say, the areas of hard-core unemployment are typically represented by the Labour party, which despises enterprise and is not willing to recognise the work that the self-employed do. Labour Members say that they will change things, but vote for exactly the same fiscal position as the Government.

[Owen Smith (Pontypridd) (Lab)]

Will the hon. Gentleman give way?

[Guto Bebb]

I will not give way to the hon. Gentleman, but I will ask him a question. We heard of a litany of cuts that are unacceptable to the hon. Member for Vale of Glamorgan—[Hon. Members: “Vale of Clwyd.”] I apologise. I would not have expected any such nonsense from the Minister, my hon. Friend the Member for Vale of Glamorgan (Alun Cairns).

The hon. Member for Vale of Clwyd gave a litany of complaints about cuts, but I want the shadow Secretary of State to tell us which of the cuts Labour would reverse, because I understand that the Labour party is conducting a zero-sum spending review. That means that there will be no additional spending, and that any cuts that are reversed will be achieved by making cuts to another area of activity. We have been told that local government cuts were the wrong decision—the hon. Member for Vale of Clwyd made that very clear—so where, in the zero-sum spending review, would be the right place to cut to make right the local government cuts that he believes were too great?

Alternatively, is all that we are getting from Labour rhetoric? The truth is that when there was a vote last week on spending plans for the forthcoming Parliament, the official Opposition—fair play to them—recognised the reality and voted to support the Chancellor’s view that £30 billion of additional cuts are needed. Labour Members can claim to represent people who are typically of the view that they have been served by that party, but all their rhetoric is trumped by the reality of their support for the Government changing the economy in the right way.

We should be proud of our record on employment and the re-emergence of entrepreneurial spirit in north Wales. We need a continuity of purpose. The dead hand of Labour has damaged Wales time and again and should not be allowed to derail the economic recovery, which is giving hope of full employment in Wales for the first time in a generation.

--- Later in debate ---

[Owen Smith (Pontypridd) (Lab)]

It is a great pleasure to serve under your chairmanship for the first or second time, Mr Hollobone. I congratulate my great and hon. Friend the Member for Vale of Clwyd (Chris Ruane) on securing this vital debate and on the clarity and passion with which he laid out his case.

This has been a very good debate so far. It has been slightly ill-tempered on occasion, but we have heard an excellent speech from my hon. Friend the Member for Islwyn (Chris Evans) and excellent interventions from my hon. Friends the Members for Caerphilly (Wayne David), for Clwyd South (Susan Elan Jones), for Wrexham (Ian Lucas) and for Alyn and Deeside (Mark Tami). We have also heard equally passionate, albeit slightly misguided, speeches from the hon. Members for Carmarthen West and South Pembrokeshire (Simon Hart), for Aberconwy (Guto Bebb) and for Arfon (Hywel Williams).

I wanted to respond personally to this debate, not only because it was secured by my hon. Friend the Member for Vale of Clwyd but because work and employment are at the heart of our debate in this Parliament, our politics and our economy. The success of working people, what they do with their time and how they exchange their finite time for reward, are, of course, at the heart of not only our economy in Wales but all economies.

Our growth, productivity and dynamism are reliant not on innovation, entrepreneurialism or capital investment—all words that one often hears from Ministers of all Governments—but on the sweat from people’s brows. Hard work and hard graft underpin our economy, and they are key to a successful and stable society. More than an economic driver, work is the key to people’s dignity, security and, indeed, identity. In Wales we know that more than in many other parts of the UK. In Wales, whether it has been colliers and quarrymen, women working in service or people working in steelworks or on the land, our work has been how we have defined ourselves.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend agree that what has been ignored by Conservative Members throughout this debate—yes, there is a welcome rise in the number of people in work—is the huge rise in the number of people in temporary employment and the lack of full-time jobs? Underemployment affects 70,000 people in Wales, and a similar number are on zero-hours contracts. The Conservative party is ignoring just how precarious the employment situation is for many people who do not have a guaranteed income.

[Owen Smith]

I agree. That has been the yawning hole at the heart of what we have heard so far from Conservative Members, and I suspect it will not be filled by the Minister. In the past, our work has defined us in Wales, and work is in danger of defining us once more as a low-wage, low-security economy. That is becoming the reality of the world of work for people in Wales, which frankly is not good enough.

I do not expect the Minister to recognise that picture, and I am sure he will talk to us in a moment about the recovery and the extra jobs that his Government have created, but unfortunately the facts do not bear out his arguments or the arguments of the hon. Member for Aberconwy because the statistics are relatively clear. Despite all the rhetoric, the truth is that in May 2010, when the last Labour Government left office, there were in total 1,471,000 economically active people in Wales. Today, on the latest numbers, there are 1,471,000 economically active people in Wales. That is the reality. We have not seen a surge in new jobs in Wales; we have seen a displacement of jobs, often from the public sector to the private sector and absolutely from more secure, more stable, better paying jobs to worse jobs.

The other statistics are even more damning. In Wales, according to the Office for National Statistics labour force survey, the number of economically inactive people has gone up from 989,000 to 1,039,000; the economic activity rate has gone down as a percentage; the employment rate has remained absolutely static at 54.4%; and the economic inactivity rate has gone up from 40.2% to 41.4%, which is in part a reflection of the offsetting effects of public sector job losses in Wales over the period. Some 351,000 people were employed in the public sector at the beginning of the Government’s term; the figure is now 315,000. That is a reduction of 36,000, part of the 1 million public sector jobs that have been lost.

That is the truth of the headline statistics, but let us look a little deeper at the nature of the jobs that people are currently enjoying. There are perhaps more jobs in the private sector, but the truth is that productivity in Wales and in Britain is down; corporate and personal tax receipts in Wales and in Britain are down; investment in Wales and in Britain is down; and consumption in Wales has flatlined.

My hon. Friend the Member for Vale of Clwyd made the point earlier in relation to the respected leader of the CBI, John Cridland, who says that, if we have a low-wage economy with increasing numbers of people who are unable to pay for white goods or even basic services, we will have lower consumption, less productivity and less growth in Britain. Those are the basic economic facts in Wales, and the reason for that is simple: the Conservative party set out to create and—let us give it its due—has succeeded in creating a low-wage, low-security economy in Wales and in the rest of the UK. That has been the Conservative party’s objective—greater flexibility but, unfortunately, at the expense of working people.

It is a reality that wages are down on average by £1,600 per family over this Parliament. It is also a reality that Wales already has the lowest disposable incomes of any part of the UK—just £14,623 versus an average in England of £17,066. The Conservatives have succeeded in overseeing a shift in the nature of our employment from a relatively secure, better paid work force to a less secure, worse paid work force. The facts do not lie. Total temporary employment across Wales has increased by 28%, and in the same period the number of people on permanent contracts in Wales has decreased by 25,000, more than 2%.

There is a direct transfer of people from being full-time employees to effectively being part-time employees. Some of those people are calculated and recorded as FTEs, but that is because of the nature of their zero-hours contracts. There are 300,000 people in Wales on less than a living wage, and far too many of those people—more than 40,000—are currently on zero-hours contracts, which have been the great explosion and change in our economy. That shift from permanent, properly contracted work, in which people have rights to maternity pay, paternity pay and sick leave, towards a low-wage, insecure, zero-hours-driven culture is unparalleled in any other period of modern economic history.

I will give one illustration, involving a young woman in my constituency whom I met a fortnight ago. She is 17, just about to turn 18, and she works in a local pizza restaurant. She goes in to work at 10 o’clock, when she is expected to be there. She has no guarantee of how many hours she will work that day: it might be six, eight or two. The nature of her contract is such that she can be laid off by the company for a period of its choosing during her working day if demand in the pizza restaurant drops below a certain level. She cannot afford to go home and wait for the company to call her to bring her back in, so she sits in the back room of the pizza restaurant for up to four or five hours in the middle of the day, waiting for the volume of customers to pick up later in the evening so she can be taken on.

It is an utter scandal that that sort of practice is going on in Britain—and not just occasionally; it is becoming the norm, just as minimum-wage jobs in Britain are becoming the norm, not the exception. The minimum wage in this country is becoming a ceiling on wages, not a safety net. Governments of all colours must recognise that, and the fact that we must do something about it.

[Jonathan Edwards]

I agree with everything that the hon. Gentleman is saying about the situation in Wales. It is true not least of the care sector in Carmarthenshire, where the Labour council has privatised social care by outsourcing it to private contractors, and many workers are in the same scenario. They are not paid for travelling between calls, so in very rural areas, such as some parts of Carmarthenshire, they can travel for half an hour and not be paid for that working time.

During the recent passage of the Social Services and Well-being (Wales) Bill in the National Assembly, Plaid Cymru tried to deal with that situation by outlawing zero-hours contracts in the social care sector. Can the hon. Gentleman explain why the Labour Government in Wales refused to support that amendment?

[Owen Smith]

As the hon. Gentleman will know, the situation is far more complex than he allows, although I will say straightforwardly that I do not believe that we should have 15-minute calls. One of the areas on which we will absolutely need to concentrate when Labour wins in May is the care sector, in which women are exploited all the time. More than 60% of the women in Gower, Ogmore and the Vale of Glamorgan who work part-time contracts, many of them zero-hours, are paid less than the living wage. That is the truth for many people in this country.

Equally, House of Commons figures show that areas of Wales, including the Rhondda and Dwyfor Meirionnydd, account for the nearly 40% rise under this Government in people shifting into working for the minimum wage or less than the living wage. Those are sea changes in the nature of the economy experienced by working people. Not all those changes started under this Government; we must be honest about that—the stagnation in wages started around 2007-08—but the unprecedented pace of change and the shift to low-wage, high-insecurity work has been exacerbated and compounded under this Government. In my view, that is scandalous.

The Welsh Labour Government have done their best to mitigate those trends. Initiatives such as Jobs Growth Wales have created 12,000 job opportunities for people in Wales, and tuition fees have been capped in order to hold open the door to advancement and social mobility through education. The Welsh Government have stood up for the lowest-paid workers against this Government—by maintaining the Agricultural Wages Board, for instance.

However, the truth is that we still have a significant problem in Wales, and it will take a Government in Westminster with the right policies—and, frankly, the right ideology—to change that. That is what we will see in this country when the Labour party wins in May: a rise in the minimum wage, intervention in our markets to freeze consumer prices for people suffering under high energy bills and the backing of small business through a reduction in tax cuts to large corporations and an increase in benefit to smaller companies.

Crucially, we will deal with zero-hours contracts and scrap the bedroom tax, which perniciously affects the most vulnerable in our society. That is the sort of Government programme that we need to deal with the issues in Wales. It is not what I anticipate we will hear from the Minister, which is why I hope we will see a Labour Government preside over Glamorgan, as well as the rest of Wales, come 8 May.