Steel Industry
Debate between Sajid Javid and David Anderson
Sajid Javid
My hon. Friend makes an important point. We have excellent protection for pensions when things go wrong in this country. We can all be proud of that. I think that we all agree that this is a unique situation. The Government said that we would look at all options and it is right that we have this consultation.
Mr David Anderson (Blaydon) (Lab)
The Secretary of State said in response to my hon. Friend the Member for Bolsover (Mr Skinner) that this issue was not related to the mineworkers pension scheme, but there are lessons to be learned from it. Members need to understand that in 1994 it was estimated that the Treasury would get £2 billion out of the scheme over 25 years, but it looks like it will get £8 billion over 25 years, when retired miners and miners’ widows are struggling to survive. That is the lesson. What is the Treasury going to take out of the proposal if it is involved? Let us not let what happened in 1994 happen again.
Sajid Javid
I reassure the hon. Gentleman that the options that may have been used in the past are not being considered. The consultation document is clear and relates specifically to the British Steel pension scheme.
UK Steel Industry
Debate between Sajid Javid and David Anderson
The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
The whole House will have been deeply concerned by the crisis that has affected the global steel industry over the past year. The facts are familiar, but they bear repetition. Around the world, steelmaking capacity is about 35% higher than demand. In China alone, excess steel capacity is 25 times the United Kingdom’s entire annual production. Demand has slumped in China as its economy grows, and demand here in Europe has yet to return to pre-crash levels.
That surge in supply, coupled with a fall in demand, has inevitably led to a large fall in prices, and the knock-on effect for steelworkers around the world has been, quite simply, devastating. Here in the UK, we have sadly seen the closure of the SSI plant in Redcar after its Thai parent company ran up unsustainable losses. Across Europe, some 70,000 steelworkers have been laid off since 2008. Last week we heard that the United States Steel Corporation, the biggest steelmaker in the United States, was laying off a quarter of its non-union workforce, and earlier this month, the owner of one of the two heavy steel mills left in Australia went into voluntary administration.
This is, of course, about more than just numbers. It is a human tragedy. When we talk about job losses in the abstract, it is easy to forget that each of them represents a person: a hard-working, highly skilled man or woman. Many of those men and women will have husbands, wives, children and other dependants to support, or there will be local businesses that rely on their custom, and the same pattern will be repeated throughout the supply chain. That is why, when job losses have happened in Britain, we have done everything we can to support the communities affected.
Mr Anderson
The Secretary of State said that we must not forget. I assure him that there are people in this House who do not forget. I am one of the people whom his Government did this to some 30 years ago, when they closed the coal mines. They looked at the economics, and they did not care about the social cost, which destroyed areas like mine. The Secretary of State needs to bear that in mind during this debate.
Budget Resolutions and Economic Situation
Debate between Sajid Javid and David Anderson(8 years, 9 months ago)
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The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
Last Wednesday, the Chancellor unveiled a one nation Budget with one aim in mind: security—the economic security of a country that lives within its means; the financial security of lower taxes and higher wages; and the national security of a Britain that defends itself and its values. Since then we have had almost a week of debate—a week of the Opposition trying and failing to pick holes and a week in which we have had the usual predictions of doom and disaster. It is a familiar story from Budget debates past. In June 2010, the then shadow Chancellor called our approach “a profound mistake” that ran the risk of “derailing the recovery”. Two years later, another shadow Chancellor said that our long-term economic plan had “failed”, although I should add that in the same speech, the former Member representing Morley and Outwood also warned that “after hubris comes nemesis”—a lesson he apparently failed to learn himself. Let us fast forward to 2015, and yet another shadow Chancellor said last week that
“this Budget made the wrong choices for working people”.—[Official Report, 9 July 2015; Vol. 598, c. 481.]
We have heard it all before.
Every year, the Opposition warn of catastrophe around the corner, yet every year Britain’s economy has got stronger. They said our policies would lead to mass unemployment, yet today more people are in work than ever before. They said that economic growth would be strangled; today, our economy is growing faster than any other in the G7. They said we could not bring down the deficit, yet today we are on course to have a surplus by the end of this Parliament. Even the most partisan critics can see that our economic plan is working. That is why, in May, the British people gave us a mandate to finish what we started, which is exactly what this Budget delivers.
Mr David Anderson (Blaydon) (Lab)
While I accept that it is part of political knockabout that the Government say one thing and the Opposition say another, does the Secretary of State agree with external groups such as Parkinson’s UK, which said that the change to welfare benefits will have a debilitating impact on people with Parkinson’s and will do them real harm? Does he think that is part of the political knockabout, or does he accept what it is saying?
Sajid Javid
What I accept is that we need a welfare system that protects the vulnerable and is affordable and sustainable for the long term. As we deal with excessive welfare spending, we are able to strengthen the economy, which means higher wages for working people. I hope that the hon. Gentleman can support that.
Sajid Javid
People will be receiving the new national living wage, as set out by the Chancellor in his Budget. That is a huge step forward, raising the incomes of millions of people throughout Britain. At least 2.6 million people will benefit directly, and a further 6 million will also benefit. I am sure that the hon. Gentleman will join me in welcoming that.
Mr Anderson
The Secretary of State is being very generous. May I ask him what will be the living wage—his living wage—for under-25s and for under-21s?
Sajid Javid
As the hon. Gentleman may know, the new national living wage applies to those aged 25 or older. The statutory wages for younger age groups are already being set by the Low Pay Commission.
The economic challenge of our time is boosting Britain’s productivity. Britain is home to some of the world’s most dynamic businesses, staffed by incredibly talented, hard-working individuals, yet our productivity—the rate of output per hour worked—is well below its potential. Let me put this in stark terms. It now takes a worker in the United Kingdom five days to produce what his or her counterpart in France can deliver in four. There is encouraging news—the British automotive industry is among the most productive in the developed world, with a vehicle rolling off the production lines every 20 seconds—but by and large, in a situation familiar to fans of the England men’s football team, the country that invented modern industry has fallen behind its competitors, and the Germans in particular.
Public Service Pensions Bill
Debate between Sajid Javid and David Anderson(11 years ago)
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Sajid Javid
I can tell the hon. Lady that I am not the only Minister in the Treasury working on this issue, as there is a whole team of Ministers, including my noble Friend Lord Newby. Treasury Ministers have had meetings with representatives of the respective work forces and other stakeholders. I would like to plough on—
Sajid Javid
I promise that I will in a few moments.
It is our duty as parliamentarians to look at the whole picture of pensions, which are only one part of the remuneration and employment packages for these particular work forces. We should not simplify the issue by making stark comparisons out of context. Simply comparing these forces to their local authority counterparts achieves no useful purpose beyond critical grandstanding. Differences between these forces’ terms of employment are of long standing. If these issues are to be reopened, they should be considered in the round, with proper consultation between employer and employees.
As well as having different retirement ages from local authority, fire and police personnel, the MOD employees have different contribution rates and levels of pay. Unlike their local authority counterparts, they also have access to benefits such as the civil service compensation scheme. To pluck out their pensions from the wider package would be short-sighted, and potentially damaging to the efforts of both employers and employees to get the package right.
Mr Anderson
I thank the Minister for giving way. He is being very generous.
We are not just legislating on people’s terms and conditions, and it is important for us not to legislate and get it wrong. What about people’s capability to do the job? Are people over 60 expected to go into a burning building in the same way as they did when they were 26? John Hutton clearly does not think that they should do so if they work for a local authority, and the same should apply in this context. We should think not only about the person who is running into the building, but about the person who is inside waiting for him. That is why the Minister should change his mind.
Sajid Javid
The hon. Gentleman has made a good point, and made it well. It is important to consider the capability of each work force, especially in view of increased longevity, and to ensure that the retirement age is appropriate. That is what I expect the MOD to do, and that is what it is doing, but it should do it in the context of the particular scheme for each work force, rather than by becoming involved in the details of each work force that are affected by the broad changes introduced by the Bill.
We have a responsibility to look rationally at the costs of the proposed changes. The additional costs may appear small in comparison with the savings that the Government are making through their overall programme of pension reforms, but the Government consider them to be both unnecessary and significant. They are unnecessary because those concerned will continue to have access to the civil service pension scheme, which is an excellent scheme that many in the private sector, including those doing the most arduous or specialist work, would envy. They are significant because some early indications suggest that they could be as high as £10 million a year for the lifetime of the schemes. This expenditure would take money away from front-line servicemen and women, and from other important defence priorities.
Those who support the amendments may believe that the members should pay the cost of the reduced retirement age themselves. That would imply increased employee contributions and a potential average take-home pay cut of over 8%—although it would depend on the exact terms—which might not necessarily be welcomed by members of the forces.
As politicians, we should not be trying to set the fine detail of public servants' pension schemes on the Floor of the House. Rushing at it might lead to mistakes. As I hope I have made clear, I acknowledge that the issue deserves further consideration allowing time for discussions between employer and employee. We owe it to the DFRS and the MDP to get this right.
Sajid Javid
What I can confirm is that the Treasury and the MOD are in exactly the same place. The MOD agrees with the terms that I am presenting today, and, as I have said, has made it clear that it will think about the issue. It has already written about it to members of the forces, as I would expect it to do in its capacity as the employer of these vital groups of workers.
The Government have not dismissed the claims of the DFRS or the MDP; far from it. The MOD has acknowledged in writing that there is a case for looking at their pension age to check that it is still appropriate.
Finally, there is a technical reason why the Government cannot accept these amendments as they currently stand. They would—unintentionally, I assume—confer powers on the Scottish Parliament and Welsh Assembly to make schemes for these civil servants. That would give new functions to devolved Administrations, without any proper consultation or consideration of whether that is the appropriate framework for managing the interests of these specialised work forces.
In summary, this is a complicated and inevitably emotive issue, and one that we have discussed at some length. I am sure I will not have persuaded all Members present today.
Mr Anderson
The Minister has made two clear points: this issue has not been resolved and needs to be resolved; and there is an issue to do with the Welsh and Scottish Parliaments. Therefore, is not the genuine thing to do to withdraw the Bill today, until those points can be put right?
Sajid Javid
I have to disagree. Of course that is not the right thing to do. This Bill is about 12 million workers in the public sector and their pensions, and about the settlement between those employees, their employers and the taxpayer, and it is vital that we make this reform so we can get the public finances on a sounder footing. I think the hon. Gentleman knows that, but I do not blame him for trying.
I hope hon. Members at least understand why we are taking this position on these amendments. I have explained why we have to resist the amendments, citing the financial privileges of this House on this occasion. I therefore urge hon. Members to disagree with this group of amendments.
Sajid Javid
I thank all who have spoken during the past hour. I also thank my right hon. Friend the Member for East Yorkshire (Mr Knight), who could not speak in the debate, but who has an interest in the issue and has made representations to me on behalf of his constituents. I hope that I shall be able to respond to the points that have been made in the time that is available to me.
Both my hon. Friend the Member for Argyll and Bute (Mr Reid) and the hon. Member for Banff and Buchan (Dr Whiteford) made a number of points. As they will understand, I could not agree with everything that they said, but they both made the sensible point that the Treasury and the MOD should take account of those who retire early on health grounds when considering the potential cost implications of the changes that we are discussing. I agree that we must bear in mind all the impacts on costs that the amendments might have.
My hon. Friend the Member for Stevenage (Stephen McPartland) also raised a number of issues, including the important issue of the Opposition’s credibility in this regard. Some MOD firefighters and police officers who are listening to the debate will already have a retirement age of 65 rather than 60 because of the changes made by the last Government in 2007. When the hon. Member for Nottingham East (Chris Leslie) speaks about such matters, his own credibility becomes somewhat shallow.
I do not often agree with the hon. Member for Blaydon (Mr Anderson). I again did not agree with much of what he said, but I know he believes passionately in what he says, and I respect fully what he had to say. He is a great advocate for his constituents, but he, too, did not address the issue of the change that was made in 2007, and nor did his party colleague, the hon. Member for Hayes and Harlington (John McDonnell). For the purposes of this debate, it would be useful to know whether the hon. Members who have spoken up today also did so when the retirement age was changed in 2007.
Mr Anderson
If the Minister checks the record tomorrow, he will see that I specifically said I made a mistake, and I also made a point about the Liberal Democrats not raising this issue at that time. The Minister is therefore wrong if he is saying I did not deal with the issue.
The Economy
Debate between Sajid Javid and David Anderson(12 years, 10 months ago)
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Sajid Javid
My hon. Friend is absolutely right. There are some very reliable estimates of unfunded liabilities of central Government standing at over £1 trillion, which would more than double the national debt—not to mention private finance initiative liabilities potentially worth £300 billion.
How can we prevent this from happening again once this Government have brought down our debt? There is a possibility that some time in the future, the public may, against their better wisdom, elect another Labour Government. Perhaps we should consider capping the national debt at a percentage of GDP, so that future Governments who think that they can spend like there is no tomorrow are held back. I am pleased to announce that on 12 July, I will present a ten-minute rule Bill, provisionally titled the national debt cap Bill, to suggest just such a measure.
We have heard a lot from the Labour party about the cuts being savage and reckless. It is easy to make those accusations without looking at the facts. The fact is that the cuts have not even started yet. The first fiscal year of cuts will be this year. It is important to go into the specific numbers. There will be cuts of 0.6% in real terms this year, 1.1% next year, 1.3% the year after and 0.8% in 2014-15. That averages out as a cut of about 0.9% in real terms each year. That is a total cut of 3.7% in real terms. Although such a cut cannot be dismissed, that is the absolute minimum that is necessary to bring sanity back to our public finances.
Mr David Anderson (Blaydon) (Lab)
The hon. Gentleman has gone through the figures. Will he say what they will mean in reality for public sector workers in Bromsgrove? How many will lose their jobs?
Sajid Javid
What it will mean for all workers in Bromsgrove, including public sector and private sector workers, is that there will be more jobs. They are essential to restore economic credibility. As a result of the announcement of the Government’s credible plan, interest rates are lower in Britain than they were before. Importantly, despite the deficit still being at 10% of GDP, which is higher than in Spain and many other European countries that are facing problems, our interest rates are almost on a par with Germany’s.
If hon. Members want to talk about savage cuts, why do we not consider the great example of Denis Healey? The country was brought to its knees and a bankrupt Britain was ordered by the International Monetary Fund to make cuts that amounted to 3.9%, not over three or four years, but in one year. If that is not a good enough example, let us consider what is happening in the United States, which failed to put its house in order when it had the opportunity and did not introduce a credible plan to tackle its deficit. As a proportion of GDP, its deficit and its national debt are not too different from ours. It is now being forced to introduce cuts in one year of 3.8% in real terms. It is no wonder that the IMF, the CBI, the Federation of Small Businesses and the OECD are all behind us.
Industry (Government Support)
Debate between Sajid Javid and David Anderson(13 years, 10 months ago)
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Sajid Javid (Bromsgrove) (Con)
I congratulate Members who have made their maiden speech today—my hon. Friend the Member for Bracknell (Dr Lee) and the hon. Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery). I am glad I made my maiden speech last week, because they have raised the bar even higher. I wish them all the very best in their future careers in the House.
I am glad to be speaking in this debate on the best way for the Government to support industry. There is one thing on which I think all Members will agree, and it is the most important factor—that the recovery of our industrial sector is linked to the recovery of every other part of our economy. That will repair the broken economy bequeathed to us by the former Administration.
To help industry, before considering anything else, we have to fix the fundamentals of the economy. Britain’s prosperity has traditionally been built on the foundations of sound public finances, low and simple taxation and light, flexible regulation. Over the past 13 years, Labour progressively shredded each of those principles. The previous Government saddled our country with a budget deficit of more than 12% of gross domestic product—the largest in Europe—and a national debt approaching £900 billion, a staggering increase of more than 160% in 13 years.
As a result, we have no choice but to make cuts in both public borrowing and public spending. If we do not, we shall no longer be able to sell enough Government bonds to fund the deficit, resulting in a catastrophic economic crisis. It really is that simple. At this point, we cannot even plan to reduce our total debt stock; at best, we can only hope to add to it less fast.
Let us be clear: these are Labour’s cuts. As we make them, we must of course make sure that we protect the most vulnerable in society.
Mr David Anderson (Blaydon) (Lab)
The hon. Gentleman makes the point that the cuts are Labour’s. Earlier this year, the OECD said that only the action of the previous Government prevented a recession from becoming a depression. Does he disagree?
Sajid Javid
A few weeks ago, the OECD, the G7 and the International Monetary Fund said that we had no choice but to make the cuts, so I think they would agree with what I have just said.
We cannot rely on a benign global economic outlook as we approach the cuts. I believe that the international financial markets are at their most fragile since the collapse of Lehman Brothers in 2008; the euro’s troubles are only just beginning; the largest emerging economies in the world are about to raise interest rates, so demand will fall, which will affect global demand; and investor appetite for sovereign debt, including our own, is rapidly diminishing.
If we are to get our economy moving again we have no time to lose, so I look forward to the emergency Budget statement that my right hon. Friend the Chancellor will make next week.
To help industry, we need to get the banks lending again. I have met many people in Bromsgrove who tell me that it has never been so difficult to get a loan. Drawing on my 19 years’ experience of working in the City, I believe that bank lending will not recover until the banks are forced to admit the true state of their balance sheets. Right now, the markets just do not believe that our banks are being truthful about the problems that they face. In turn, the banks are not getting the capital that they need, so they are instead squeezing existing customers, as well as not lending.
As well as a thorough review of financial regulation and regulators, we need an independent audit or a stress test of each British bank, eventually leading to a private sector recapitalisation of weaker institutions that are identified. In that regard, the report that was recently issued by the Future of Banking Commission—of which, I believe, my right hon. Friend the Secretary of State for Business, Innovation and Skills was a member—has made some worthy suggestions.
Also to help industry, we need a dramatically different approach to business regulation, as many of my hon. Friends have said today—an approach that is radically different from that of the previous Government. Many business men and women say that the sheer cumulative volume of regulation makes their lives so difficult. People who need to be dealing with customers and products are instead too busy complying with regulators, and many regulations are simply not necessary to keep businesses honest and safe.