Finance Bill

Rushanara Ali Excerpts

Tuesday 3rd July 2012 Commons Chamber

[Graeme Morrice]

I agree. I am sure that many Members have been contacted by SMEs based in their constituencies who are desperate because they cannot attract as much lending from the banks and other financial institutions as they enjoyed a number of years ago. While many are critical of the lending banks, they are also critical of Government policy. Members on the Government Benches may not agree with that, but it is the reality, and that is why people are approaching us with these complaints and concerns.

The continued failure on lending is making a mockery of the Chancellor’s promise to link the pay of the chief executives of each bank with performance against SME lending targets, but there is now another chance for Members on the Government Benches to demonstrate to their constituents that they are genuine about making bankers pay their fair share. Labour’s bank bonus tax raised about £3.5 billion, as confirmed by the independent Office for Budget Responsibility. As my hon. Friend the Member for Wansbeck (Ian Lavery) said, even on a cautious estimate, we believe that this year alone it could raise at least £2 billion, over and above what is already in place. The Government could use those funds to introduce the real jobs guarantee for young people who are long-term unemployed, potentially helping 100,000 into work. It could also be used to build thousands of much-needed new affordable homes.

In conclusion, by supporting the new clause hon. Members can show that we are serious about holding bankers to account and ensuring that they pay their fair share, while also raising additional funds to address the people’s priorities—youth jobs and affordable homes—and make a real contribution to turning around our ailing economy.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I support the new clause because today more than 1 million of our young people—one in five of them—have no job. That is not because they are not trying to find work and it is not because they are not working hard to get experience and skills; it is because in this flagging economy—in this double-dip recession created by this Government’s failed economic policies—the jobs just are not there. Yet, at the same time, we see the banks paying out huge bonuses to some of those responsible for the economic mess we are in. Britain is now bottom of the pile for social mobility, and that is due to this Government’s failures. The top 1% of our society now control a greater share of the national income than at any time since the 1930s. Despite these crippling inequalities, this Government’s priority has been to give tax breaks to millionaires while building their austerity programme on the backs of some of the poorest in this country.

The current labour market is a bleak place. The hardest hit by unemployment remain women and older people, who face discrimination in the labour market, and of course young people. Long-term unemployment is at its highest since 1996. As my hon. Friends have already said, youth unemployment has increased by more than 100% in the past year. That is a travesty, because it means that we have failed to help young people live up to their ambitions and find the jobs they want—or, indeed, find any jobs at all. It also means that a great wealth of talent and productivity is being lost. That is a travesty, too, and one this Government should be ashamed of. According to a recent Association of Chief Executives of Voluntary Organisations report, that will cost the Treasury £4.8 billion this year and it will cost the economy £10.7 billion in lost output. I support the new clause because the Government’s plans are driving a wedge through our society, leaving too many people behind.

Social mobility in this country has ground to a halt, and as I represent one of the most deprived areas of London, I see that all too clearly; it has always been hard, but now we are moving backwards. Every week, I meet young people in my constituency who are losing out. My area has one of the highest rates of youth unemployment, at more than 8%. The loss of the education maintenance allowance is making it harder for these young people to stay on in school. The lack of jobs makes it seem like the rising cost of university or education is just not worth it. Georgia Rowe, a student at one of the colleges in Tower Hamlets, recently said to me:

“I thought about university but it doesn’t guarantee a better job. You might as well not be in debt.”

This is the generation of young people who are being left behind.

That is why Labour has proposed the real jobs guarantee to help give our young people a chance, as we know the scarring effects that long periods of unemployment can have. People need work experience, training and to learn the skills that make them more employable in today’s difficult labour market. I know what a massive difference it can make to a young person’s chances if they get a little experience. Programmes such as Job Ready, which is hosted by Futureversity in my constituency, and Skillsmatch, and those of the Adab Trust and City Gateway, along with access to a job, can help people overcome the psychological barriers to economic opportunity, and build ambition and confidence. They connect business and young people, opening up new opportunities and partnerships, but those programmes are all struggling without adequate support.

The Work Foundation has rightly called the Government’s approach to youth unemployment “piecemeal” and “fragmented”. The Government’s headline plan to get young people back into work through the Work programme and youth contract is failing. They have managed to get only about a third of those on the programme into jobs, and in this age of austerity that is not good enough. Recent figures in my constituency showed that at least 15 people were chasing every job vacancy. The Government should be looking for real ways to help solve these problems and not continuing to kill off jobs and growth prospects through their draconian austerity measures.

Young people in my constituency can see the opportunities a short distance away in Canary Wharf and the City of London. They want to know how to get jobs there. They see bankers in the city getting tens of thousands of pounds in bonuses while unemployment soars. This is what happens when social mobility grinds to a halt. Those kids in my constituency, who are as talented and aspirational as any others, simply do not have the same opportunities, so it does not seem like such a bad idea to ask those who have so much to pay a little more.

When I consider the behaviour of the banks and some of their employees, I do not always see shining examples of socially responsible companies. The finance sector is a vital part of our economy and many companies and their staff behave responsibly, but too many of the highest paid behave the worst, as we have seen with the Barclays bank scandal. Such behaviour is at best reprehensible and at worst criminal and requires inquiries and investigations as soon as possible, yet those people are some of the highest paid in the country. Bob Diamond earned 600 times more than the average income in my constituency, so a tax on the excessive bonuses received by people such as him is only too fair. But instead the Government are reducing the tax paid by banks, with the bank levy raising just over half as much in 2011-12 as Labour’s bank bonus tax would have raised this year.

[Mark Lazarowicz]

I was interested to hear my hon. Friend say that Bob Diamond’s bonus and salary were 600 times the average wage in her constituency and want to highlight that point. Most of us understand that top bankers will probably be paid a lot more than most people in the country under any system, but such a discrepancy is obscene. That is what people find so disgusting and what they want to see tackled.

[Rushanara Ali]

I thank my hon. Friend for his intervention and hope that the Government are listening. They must understand how serious the matter is and the deep resentment and anger that are felt in constituencies such as mine. The borough that contains my constituency is also the borough in which Canary Wharf is based and the injustice of some of the behaviour and the worst abuses in the banking sector must be addressed. The Government must take responsibility.

[Bob Stewart]

It is very decent of the hon. Lady to give way. When she refers to figures that are 600 times a normal wage or to huge bonuses, at least there is compensation. If those sums are declared, quite a lot—perhaps 40%—will come back to HMRC, which we could then redistribute. It is better that way than if it is hidden offshore.

[Rushanara Ali]

The hon. Gentleman should perhaps look at the tax records of Barclays bank, as he will find that it has not paid the taxation that it should have paid. His Government should do more to ensure that the taxes that should be paid are paid. I also think that his Government has a poverty of ambition in not accepting our amendment to make a massive difference to unemployment in constituencies such as mine. I urge the Government to think hard about the impact on the 1 million young people—a sizable number of whom are in my constituency—and consider what could be done to address the problem rather than trying to defend bankers’ bonuses.

[Bob Stewart]

I am not trying to defend them.

[Rushanara Ali]

The hon. Gentleman’s party is.

[Mel Stride (Central Devon) (Con)]

The hon. Lady is being very generous in giving way. The notion of very high bankers’ bonuses is nothing new, of course, as it has been going on for an awfully long time. Her party was in office for 13 years. Could she explain exactly what it did about that?

[Rushanara Ali]

After the financial crisis, as part of the deal, my party introduced the bankers’ bonus tax and we raised £3.5 billion that went towards the attempt to get people back into work that was so successful in constituencies such as mine. I urge the hon. Gentleman’s party to consider what works, and that did work. Instead of being partisan and ideological, his party should look at what works and enforce it. The people of this country will not forgive his Government for not acting, for creating a double-dip recession and for leaving so many people out of work. It is a disgrace and he should apologise, with his party, for presiding over two years of being in government in which they have caused a double-dip recession and much more unemployment. That is what his party should be focused on and addressing, not trying to score party political points. You are in government. Do something.

[Mel Stride]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Has the hon. Lady given way or has she concluded?

[Rushanara Ali]

I have given way.

[Madam Deputy Speaker]

Good. May I remind everybody that I am not in government?

[Mel Stride]

It is a great shame that you are not, Madam Deputy Speaker.

Will the hon. Member for Bethnal Green and Bow (Rushanara Ali), by the same token, apologise for the doubling of unemployment under the previous Government?

[Rushanara Ali]

When my party was in government, we cut unemployment. We got a million young people into work. After the financial crisis, when unemployment started to increase, we did something about it. I urge the hon. Gentleman’s Government to do something about unemployment, instead of looking backwards. Do something about the unemployment rate which is causing so much damage to our country, instead of doing what his party did when it was in power in the 1980s, which was to go around telling people that unemployment was a price worth paying.

The hon. Gentleman’s party is demonstrating that the nasty party is back with a vengeance. That is devastating for people in constituencies such as mine. They do not want to see the nastiness of the party. They want jobs. I suggest that his party focuses on creating jobs and growth. That is what people want.

[Gordon Birtwistle (Burnley) (LD)]

rose—

[Rushanara Ali]

I should like to conclude my speech. I have given way enough, but if the hon. Gentleman wants to hear more about the issues affecting our country and my constituents—[Interruption.] I give way.

[Gordon Birtwistle]

I am very grateful to the hon. Lady. Would she concur with the noble Lord Mandelson when he said that the Labour party was intensely relaxed about people being filthy rich?

[Rushanara Ali]

The noble Lord Mandelson said that those people should pay taxes, and when my party was in power we brought unemployment down. That is what I urge the hon. Gentleman’s party to act on. I urge the Government, instead of defending bankers’ bonuses, to think about the 3 million people who are out of work. That is the responsibility of his party and his Government. He should talk to them about solving the current problems, instead of looking backwards.

[Mark Durkan (Foyle) (SDLP)]

When we are talking about banksters—to use a term that was coined as far back as 1932 by an Irish-American radio priest—we are talking not just about people who are filthy rich, but about people who are filthy rich by foul means. They have engaged in rackets, they get paid in packets. Why do they deserve a cut in their taxes?

[Rushanara Ali]

They do not deserve a cut in taxes. I hope the Government will take serious action, otherwise the public, who already feel this way, will rightly believe that this Government are not for them but for the vested interests and the millionaires who make so much money and are not willing to pay their dues or to make the appropriate contribution. I am sure the Government do not want to be on the side of people who are milking the system and making so much money and not making the appropriate contribution.

I call on the Government to pay attention, to listen not just to my party, but to the millions of young people who want a job and an opportunity to make a contribution to this country. We have a plan that could help get them get into real work and would reward those who work hard—a plan that is costed and paid for by asking some of the wealthiest in our society to contribute just a little more. With the economy back in a double-dip recession and economic confidence so low that investment growth has virtually ground to a halt, job opportunities for these young people desperate to find work will not appear without help. I hope the Government will see sense and give young people in Britain the much-needed support that they deserve, by supporting the new clause.

[Alison McGovern]

I would like to begin my remarks on new clause 13 by agreeing with much of what has been said today by Opposition colleagues. I want briefly to take the House back a couple of years to 2010, when I was lucky enough to secure an Adjournment debate on young people and unemployment, the first such debate I led in the House. For me, it could not have been on a more important subject than the position of young people in the labour market in my constituency. I do not wish to put myself forward as some kind of Cassandra or some awful foreseer of what has come about, but I warned the Minister then that the swift withdrawal of some of the more successful things the Labour Government had been doing to tackle young people’s unemployment would lead to more young people being on the dole. Sadly, that is what has happened. In fact, two years later the ONS tells us that an extra 65,000 16 to 24-year-olds are now without work. That is not just a waste of talent and funds, but a moral shame.

I want to say a few words on that subject and why new clause 13 is so important to young people facing that difficult situation. The Government have had two years to tackle the problem, yet all of us here have to admit that the problem is getting worse, not better, and that action is needed more today than it was in 2010. The Government would not listen then; I beg them to listen now.