Fairness and Inequality

Sheila Gilmore Excerpts

Tuesday 11th February 2014 Commons Chamber

[Jonathan Edwards]

I shall endeavour to answer that very valid question in my speech.

The electoral system plays a large part in creating the distortion. Using a small number of so-called swing seats, predominantly in more affluent areas, political strategists base their politics on the philosophy of triangulation, ignoring those on the periphery. Anyone interested in changing the course of Westminster politics should embrace the cause of a more proportional electoral system, which would immediately lead to a wider realignment. It is no wonder that the Tories would die in a ditch rather than reform the first-past-the-post system. More disappointing is the position of some on the Opposition Benches, who would torpedo any such reform. The only explanation I can offer is that the self-interest of super-safe majorities and a job for life trump the desire to achieve worthy political objectives such as a fairer society.

[Sheila Gilmore (Edinburgh East) (Lab)]

The hon. Gentleman’s assertion that a change in the voting system would do away with jobs for life is not borne out by the way in which things have worked out in practice. In Scotland, for example, there is concern that someone can go from being a list MSP to a constituency MSP then back to being a list MSP without ever feeling that their job is unsafe. Also, people can be in a similar position in local government for a long time. So doing away with jobs for life is not inherent in getting rid of first past the post.

[Jonathan Edwards]

The answer to that is to have openness rather than party-controlled lists. I am sorry that the hon. Lady does not share my ambition for wider political realignment in the United Kingdom, and that she prefers a system in which priority is always given to the affluent areas in the south-east of England.

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[Jonathan Edwards]

I am grateful for those insightful remarks. In Scotland, we are seeing the same stories as were used in other parts of the British empire when they endeavoured to seek their political independence. That approach will fail in Scotland and it will fail in Wales when our turn comes.

By the end of Labour’s time in office, child poverty had increased, with 32% of children in Wales living in poverty, according to the Joseph Rowntree Foundation. The number fell in 2012, but only because wages had fallen across the board. That technicality in the way child poverty is calculated ignores the fact that falling wages mean even less resources with which to feed hungry young mouths. The recent rapid rise of food banks is yet another symptom of growing inequality. The Labour Welsh Government had set the target of eradicating child poverty by 2020, but they cannot and will never achieve that if they do not stand up for Wales. It cannot be achieved while their masters in London refuse to confront the widening gulf in equality that has been emerging over the past 30 years and even accelerated under their watch.

[Sheila Gilmore]

Constantly saying that there is no difference between the Labour Governments and the Conservative Government is not helpful. Does the hon. Gentleman have no memory of the reduction in pensioner poverty and the reductions in child poverty achieved under the Labour Government? Do those things not matter in the story that he wants to tell?

[Jonathan Edwards]

As the former head of policy for Citizens Advice in Wales, I have some expertise in this matter; the Labour party achieved its reduction in the child poverty figures by changing the way in which the statistics were calculated, thus removing 1 million children from child poverty overnight.

Last summer, the TUC produced a report that concluded that workers’ pay had fallen by 8% in real terms between 2007 and 2012 in Wales—the sharpest fall in any of the nations and regions of the UK. That is the level of the drop in living standards that Labour and the Tories have presided over. The UK is badly damaged and corroded, if not completely broken. The old pillars of the British establishment—banking, media and politics—have crumbled one by one, leaving an unrestrained crony capitalism which is not about good business or genuine wealth creation, but about monopoly, oligopoly and corporate self-interest.

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[Sheila Gilmore]

The Minister is very quick to talk about taxation issues, but surely the net effect of the Government’s policies on tax, on payments of benefits and tax credits, is that people on lower incomes have suffered a loss.

[Stephen Crabb]

I simply disagree with the hon. Lady’s argument. The Government are determined that, as the economic recovery emerges throughout the country, people on the lowest incomes should be at the front of the queue to benefit from that recovery.

We recognise that for those on the lowest pay things remain challenging. Wage levels are not where we want them to be. That is why we need a strong minimum wage. I am proud that the coalition Government have not only implemented the recommendations of the Low Pay Commission in full, but that last year we were able to go beyond its recommendations and increase the apprentice rate too. We can afford that only because we have taken difficult and responsible financial decisions.

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[Mr Weir]

I have never heard of that one; perhaps the hon. Gentleman should ask the doctors why they are doing that. We have made it clear that free prescriptions are an important policy for pensioners throughout Scotland. Too often, pensioners and those with multiple prescriptions had to choose whether to buy their prescription or eat, and they do not have to make that choice any more. This is a really progressive policy, despite what his leader may say.

We are investing in skills, training and education for our young people to make sure that they all have an opportunity in life. I recently visited the Angus training group in my constituency, where tremendous work is being done to train youngsters who are leaving school and have got apprenticeships in engineering. While the Chancellor may talk about the march of the makers, we are making sure that that actually happens and there is power behind it. We are protecting the education maintenance allowance for 16 and 19-year-olds while the Westminster Government have scrapped it. These are just a few of the things that we have already done.

We are committed to ensuring, where we can, that people get paid a decent wage. Since 2011-12, the SNP Government have paid all staff covered by Scottish Government pay policy a living wage, and that includes NHS staff. No compulsory redundancy policy has been in place since 2007, helping to protect about 10,000 jobs a year. We are funding the Poverty Alliance to deliver the living wage accreditation scheme to promote the living wage and increase the number of private companies that pay it.

We have done a lot to deal with inequality in Scotland, but what holds us back so much is the fact that the Scottish Parliament has to depend on and fit within a block grant determined by Westminster that has been steadily cut in the past few years. The Chancellor has said that another £25 billion of cuts is coming round the corner, so we can only imagine what will happen to the Scottish block grant in that event.

[Sheila Gilmore]

The hon. Gentleman made a great deal of issues such as free personal care. Does he not accept that there are still major problems in Scotland, and if we do not address them but simply say, “We’ve cracked it, we’ve solved it”, we are not helping the people who give and who need care? When care workers have very poor conditions and people are getting 15-minute visits, if that, we have not really solved the problems. Should we not be talking about them instead of being so complacent about somehow having solved them all?

[Mr Weir]

I cannot believe what I am hearing from the hon. Lady. What I said is that the Scottish Government have taken action on and invested money in those matters. We have not claimed that we have solved every problem under the sun—we cannot possibly do that—but what we have said is that we have done all we can with the powers we have and that with the powers of independence we will be able to do so much more.

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[Richard Fuller]

I appreciate my hon. Friend’s intervention. He is drawing our attention to the Government part of the debt, but I have to tell him that the stewardship of the economy by the Government was worse even before then. We, as people who can vote in Governments and as citizens, have to take that responsibility ourselves, too. We are responsible for what this generation does, whether it is our Government, our corporations or any other aspect of society, but we pass on those consequences to our children and grandchildren and they will inherit either a more equal and more prosperous society or a less equal and less prosperous society because of the decisions that we make as individuals and the way in which we hold our Government to account.

[Sheila Gilmore]

rose—

[Richard Fuller]

With respect, others wish to speak, so I will move on now to specific parts of the motion.

Let me address the issue of austerity measures and why they are in place. First, there is the fact that we have accumulated too much debt. Another issue is the ripple effects of that debt crisis. As the Government deal with the overriding debt, individual families, especially those in vulnerable circumstances, are pushed to the edge and need to go to payday lenders and other high interest rate lenders to deal with the consequences of that macro-financial situation. The individual circumstances of individual households have to be taken into account.

The other issue—again, it is the legacy of what occurred in preceding years—is the way in which house prices have become detached from incomes. Shelter is running a campaign on the issue, and although it is an interesting point to raise, I think that it is about 10 years too late. In the Living Wage Commission report, to which many hon. Members have referred, there is an interesting chart—figure 1.21—which looks at the ratio of house prices to earnings for the years 1952, 1975, 1997 and 2012. For the entire period from 1952 to 1997, the ratio of house prices to income fell. In 1952, it was five times the average income, but by 1997, it was 4.1 times. In the period from 1997 to 2012, it rose from 4.1 times to 6.7 times; 100% of that increase took place in the period to 2007. If we look at the cost of living and the cost of housing—part of enabling people to own their own home, get on the property ladder and pay their rent—we see that the issue of inequality will take time to resolve, because it took us a long time to get into that mess in the first place.

The motion refers to women and relative pay. I want to draw to the attention of the House, not by way of answer but by way of contribution to the argument, the House of Commons economic indicators report for February 2014. It looks at the gender pay gap and it makes the broad point that the overall pay gap between men and women has decreased steadily from 1997, but in considering whether the gap will be perpetuated in the future, it examines the gender pay gap by age range. For women and men between 18 and 39, the pay gap oscillates between 1.4% and 0.3%. For women over 40, it oscillates between 12% and 18%, which raises a question for policy makers such as the Minister: is that issue to do with career breaks and will it persist over time, or is it the result of a fairly good news story, with younger women and younger men on average having access to the same sort of jobs and pay, so that in about 20 years’ time the differential will go down? I do not put that forward as an answer, because I do not know the answer, but as a contribution to the debate and to broaden understanding.

There have been a number of contributions about the working poor, poverty and the living wage. We have discussed raising wages from the minimum wage level to living wage levels, but too frequently that would result in a small pay increase for the individuals concerned. It is a transaction between the employer and the Government in terms of the interaction of benefits and compensation. To contradict my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who discussed the free market in wages—it is a small difference—I would argue that if in the low-pay sector Government are topping up wages to the tune of £10,000 on a £13,000 wage, which is the case for a married person with two children earning the minimum wage, the free market is far from working. There could be a strong argument, not only from the point of view of public finances but in order to have a freer market, for urging the Government to increase the pressure on companies by removing that subsidy, which is supporting labour. However, I should be interested to hear more from my hon. Friend.

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[Richard Fuller]

I have not seen that report, but I have seen the data on those using the food bank in Bedford. For a large proportion of people the causes are related to benefit changes. I do not have the statistics, but within that group some people have been sanctioned for not complying with the benefit rules. Would the hon. Gentleman support policies that sanction people for not conforming with the benefit rules, or does he believe that they should not be sanctioned?

[Sheila Gilmore]

My constituents are not being sanctioned for not looking for a job, but for one-off incidents. One constituent rearranged an interview with the Work programme provider because of difficulties with her child’s school start times and was told that that was okay, but she was subsequently sanctioned. People are being sanctioned for minor infringements, almost on a whim.

[Richard Fuller]

I do not want the hon. Lady to conflate two things. If the 42% figure reflects the situation in Bedford, it is to do with the broader issues of benefits, which includes sanctions, changes to benefits and the specific examples that the hon. Lady mentioned, where the reason is fairly spurious or there is just a plain error. I do not believe such cases make up the 42% proportion, but they are part of it. But I am a Tory, so I understand that large bureaucracies forget the individual and people are caught by that. In my constituency—as I am sure the hon. Lady is in her constituency—I am creating a form with the local food bank provider so that when circumstances such as she describes occur, my office can be informed straight away. It is important that we as Members of Parliament use our power, when such spurious changes to benefits are made, to shorten the time that they take to resolve. For some of my constituents that can take six, seven, eight weeks or more, which is not correct if a sanction has been inappropriately applied.

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[Sheila Gilmore (Edinburgh East) (Lab)]

In some ways this is a triangular debate, because there so many different views across the House.

We were treated to what I can only call a reprise of the 1930s from the hon. Member for North East Somerset (Jacob Rees-Mogg), who is no longer in his seat. Many of his arguments were made in this place in the 1930s on issues such as unemployment benefit. Many people said then that unemployment benefit, such as it was, was holding people back from working because it made them lazy and they did not try very hard to get jobs, and it was a very bad thing. Indeed, we could probably go back even beyond the 1930s. I suspect that the hon. Gentleman’s great, great, great, great ancestor in the early 19th century was probably saying something similar about the poor law—that provisions had to be made really tough and that people should not get out-relief but in-workhouse relief, because it was making them lazy and unwilling to work for low wages. This argument is constantly reproduced. Nobody—I think nobody—would say now that high unemployment went on for so long in the 1930s because unemployment benefit was too generous. Blaming the problem of unemployment on the unemployed is no new thing, but it is, frankly, wrong, and it is too simple an explanation.

At the other extreme, we have the “wouldn’t it be nice if we could do everything” brigade, which is how much of the yes to independence campaign is being waged in Scotland. This is the idea that we can do it all and can have everything: a lower retirement age, better social security benefits and lower taxes all at one and the same time, and that this is the solution to all our problems. Back in the real world—which, I have to say, will be the world facing a Scottish Government whether under independence or not—there are real challenges and we have to consider how we can deal with them properly.

Other myths have been perpetrated. The hon. Member for Bedford (Richard Fuller) wanted us to feel that he and many of his colleagues would like to reduce inequality, too, and that the way to do it is to get the economy back on its feet; there would be no reason why inequality would not then be reduced. The problem—he is no longer in his place to intervene to tell me I am wrong—is that I suspect he thinks that the Conservative Government in the years between 1979 and 1997 were right in the way they ran the economy. The trouble is that during those years inequality rose at a very fast rate. In these debates, Members frequently say that it continued to rise under the Labour Government, but it rose far less and the big rises in inequality came during the years of Conservative government. During those years—when, in the view of Members such as the hon. Member for Bedford, the economy was getting back on the right path—inequality rose substantially, so if some of us are less than convinced that this Government want genuinely to deal with inequality, we have historical precedents on which to base that opinion.

[Stephen Crabb]

We have had some discussion about income inequality. Let me put it on the record once again that income inequality reached record levels during the previous Parliament and under the previous Labour Government. Income inequality is falling under this Government.

[Sheila Gilmore]

The big increase in income inequality was clearly between 1979 and 1997. Any graph will make that quite clear.

There is a danger in perpetuating the myth mentioned by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). I apologise to the House for missing some speeches, including the one by the Member who represents the Western Isles—I am sorry, but as a lowland Scot I genuinely find it difficult to pronounce the name of his constituency in Gaelic so I shall just call it the Western Isles. I missed his virtuoso performance because I was sitting on a Public Bill Committee, not because I did not want to hear what he had to say.

The hon. Member for Carmarthen East and Dinefwr said that there was no difference between a Labour Government and the current Government. As I have said in some of my interventions, that is not correct. It is dangerous to say so, too, because it makes a lot of people think that there is no point in voting or trying to change things because Governments do not make any difference and because there is no difference between the parties.

For example, the reduction in pensioner poverty during the years of Labour government should not be forgotten. Many pensioners will not forget that. A lot of what that Government did created the base on which this Government propose to build with the single-tier pension. As I have said before, it was not the triple lock that produced the highest cash payment to pensioners but inflation—an inflationary rise made necessary by the Government’s own—[Interruption.] I apologise to the Chair of the Select Committee on Work and Pensions, of which I am a member, for not seeing her try to intervene.

[Dame Anne Begg (Aberdeen South) (Lab)]

Does my hon. Friend agree that one of the great achievements of the previous Labour Government on pensioner income, in particular, was the introduction of pension credit, which took every single pensioner out of absolute poverty? Not one was left in absolute poverty at the end of that Labour Government.

[Sheila Gilmore]

I entirely agree. That was a hugely important step forward, but we also addressed the issue of getting people back to work. One myth is that we are not at all interested in getting people back to work, but the tax credit system did a lot to help people to get into work, particularly single parents—350,000 of them were helped into work as a result of that policy—and that is important.

I accept that employment for those who are fit and able to work is an important prerequisite of increasing their income—remaining on benefits is not the way to increase one’s income and has not been under any Government—but that is not always sufficient as a marker that people can become better off. It is a necessary beginning, but it has not been sufficient and we must consider the hours of work that people are doing and the low wages that many receive. If we do not tackle that, people in work will still be very poor, as they are now. That is why the child poverty measures show that 60% of those in child poverty have members of their families in work.

We should look at what is happening in places such as Scotland, instead of assuming that these problems have been magically addressed, because there are still problems, some of which, in relation to social care, I alluded to earlier. I am not saying that free social care should not be looked at—it was introduced not by the current Scottish Government, but by the previous Administration—but it does present severe challenges, and if we do not discuss those honestly, we will confuse people about what we can achieve, and then no wonder they become cynical. Those in Scotland struggling with poor quality care know that. In addition, there are issues in Scotland in the education field. Universities give free tuition, but as a result the colleges, which are hugely important for social mobility—they give people a second chance in education—have been starved of finance. That is important.

To sum up, we have to be somewhere in the middle and make real changes in people’s lives, not pontificate about what might be possible in some wonderful place where the sun always shines and no one is ever poor.

Oral Answers to Questions

Sheila Gilmore Excerpts

Tuesday 28th January 2014 Commons Chamber

[Mr Osborne]

I absolutely agree with my hon. Friend, and I congratulate Melissa on her business and her expansion plans. We are there to provide advice and support for women who want to grow their businesses. We are there to provide help, as I have set out, with tax-free child care. Above all, we are there to provide economic conditions in which businesses can grow and our long-term plan is, as the numbers show today, delivering that.

[Sheila Gilmore (Edinburgh East) (Lab)]

Of course, 0.7% is lower than 0.8% in the previous quarter, but leaving that aside—[Interruption.] With construction—[Interruption.]

[Mr Speaker]

Order. The hon. Member for Rochford and Southend East (James Duddridge) should go and lie down in a dark room. Take a tablet and restore your health—I am very anxious about your condition, and I suspect that the House will be too.

[Sheila Gilmore]

Construction is down as well, but to return to the question—[Interruption.] Well, the Chancellor did not return to it. Support through tax credits and child care tax credits has been crucial for many women going into self-employment for the first time. Proposed universal credit rules will make it a lot more difficult for self-employed people. Will the Chancellor speak to the Secretary of State for Work and Pensions to help him to get this right for women entrepreneurs?

[Mr Osborne]

First, the economy shrank by 7% of GDP when the Opposition were in office. It is striking that no Labour MP has yet got up to welcome the good economic news today. They cannot bring themselves to welcome the news that jobs are being created and the economy is growing and, yes, we are reforming our welfare system with universal credit to make sure that work always pays.

Consumer Rights Bill

Sheila Gilmore Excerpts

Tuesday 28th January 2014 Commons Chamber

[Adam Afriyie (Windsor) (Con)]

I support the Bill because the principles that guided it are exactly what the country needs in order to get back on its feet after 13 years of what could be described as misappropriation of the public purse by the Labour Government.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am utterly astounded that the hon. Gentleman should believe that this is the legislation that will put the country back on its feet. The Bill is a consolidating measure. Surely we need something a bit more dramatic.

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[Sheila Gilmore (Edinburgh East) (Lab)]

The hon. Member for South Thanet (Laura Sandys) said that she had previously worked for the Consumers Association. Earlier in my career I worked for the Scottish Consumer Council. It is important to recognise that Governments of all colours have wanted to strengthen in various ways the rights of consumers. The National Consumer Council and its Scottish and Welsh equivalents were set up by the Labour Government of the 1970s, so everyone has aspired to putting the consumer at the heart of things. The problem sometimes is how to make that a reality for those consumers. How can we ensure that people understand how to use the rights that they are given?

People often encounter the greatest difficulty when dealing with smaller retailers, because in larger companies staff are generally better trained and so better able to respond. Indeed, some larger retailers would rather allow the consumer to go away happy, even if that means going beyond the basic statutory minimum. Many smaller retailers, however, either seem unaware of what the law states or deliberately obfuscate when a consumer complains. They say, “You have to go to the manufacturer for that,” even though that has not been the case for many years.

Citizens Advice has suggested amending the Bill—perhaps the Minister will consider this—to make it a requirement that information on consumer rights is provided at the point of sale. It has made some suggestions on how such information could be presented, because it is aware that it could be quite difficult to convey simply. I think that that information, whether it is on a notice in the shop or on the till receipt, would be helpful, as consumers would be clear about what to do if something goes wrong.

Another relatively minor amendment that Citizens Advice proposes is including a time limit for repairs and replacements. I remember what things used to be like, when I had to try to explain to people what was going on with repairs, when they could get a refund and whether accepting a repair put them in a difficult position. The simplification is to be welcomed. However, the question remains whether there should be a limit on the time a company can take to repair and return a product. Citizens Advice suggests a 30-day limit. I would like to know whether the Minister will consider such a change.

Services have always been more difficult to regulate than goods—when we buy an object, it is much clearer what we are buying. The relevant legal wording, which effectively requires one to make a judgment on whether reasonable care and skill has been used in the performance of the service, has always been quite difficult. It is good to have that made explicit, rather than implicit. It is not an implied term; it is to be taken as an expressed term in the provision of services. However, that still leaves open the question of precisely what that means. Could it be measured in some way?

I was interested to hear what the Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), had to say on that and about the Committee’s recommendation. I hope that it can be explored more fully to see whether other measures could be used, at least in relation to some services, to give a clearer and more explicit measure of whether a service has been performed in the way it should have been, rather than having to rely on a debate on what is a reasonable level of skill.

Ultimately, we must also look at how people exercise their rights. Ideally, they should be able to exercise them face to face with the person providing the service or selling the goods. Things should be sufficiently clear that the consumer can go back, exercise their rights and get a good response, but we know that that does not always happen. We must therefore look at the means by which people can get redress.

Citizens Advice also wants the Government to consider the question of collective redress in relation to competition cases—if there is a particular kind of mis-selling or product or service failure—that affect not just individuals, but people in particular localities or up and down the country, and on which a collective response is available, because there is strength in numbers.

Although allowing an individual consumer to have all their rights and choices is clearly important, they are sometimes a small cog in the wheel, and it can be very difficult for them to push a case. Many people simply give up, because it is not worth the effort: if they are rebuffed at first, they will not necessarily pursue their case further, because they do not know how to do so or find the whole process so difficult.

Even for people who contemplate going to court, the process can be quite expensive. Other hon. Members have spoken about the difficulty of getting legal aid to go to court or even for legal advice. A court fee can be a considerable block to people’s ability to exercise their right. For example, in Scotland, an action for a small claim can be made for something worth more than £200, which is not a huge amount in relation to various consumer purchases, but it costs £71, which is quite a lot for someone to risk if they feel that they might not win the case. We therefore have to consider the whole idea of redress.

When I was involved with the Scottish Consumer Council, we did much work on developing proper small claims courts to which people could easily go, be represented and get a lot of help. There is still merit in trying to develop such an approach, rather than people feeling that their case cannot be taken forward. That is where the collective becomes important. For one individual, the cost and effort of pursuing a case will be great. As my hon. Friend the Member for Inverclyde (Mr McKenzie) said, even in relation to what seem very small amounts—less than a fiver—such amounts add up and, collectively, it should be possible to put such cases together.

I share the concern expressed by my hon. Friend the Member for Walthamstow (Stella Creasy) that no one wants a book of law of huge size, as was suggested by the hon. Member for Eastleigh (Mike Thornton), but this is an opportunity to legislate on some of the issues that hon. Members raise time and again because of their constituents’ experiences. Various people are campaigning on many of the issues, because they understand the detriment that people are suffering. This seems to be an opportunity to legislate, and it is sometimes important to legislate. Rather than end up with smaller pieces of legislation in future, which would recreate the difficulty that we now have in consumer legislation, we could take the opportunity of having this Bill to consider some of the issues.

My geographical, if not adjacent neighbour or political colleague, the hon. Member for Edinburgh West (Mike Crockart), has pursued the issue of nuisance calls. With other hon. Members, he has made some progress in highlighting that important subject. Nuisance calls are an irritant to those of us who thought that we were on the Telephone Preference Service, but still get calls that we are told are for research or some other spurious reason, or calls where only one in 20 people who have been rung is spoken to when they answer.

That is an irritant for those of us who cope with that sort of thing very or reasonably well, but it can be worse than an irritant for others. My father, who is now in his 90s, has got to the stage where he hardly ever answers the phone, which is not particularly practical. He certainly will not answer the phone if it is an unknown number. As Members will know, if somebody phones from an institution, such as this place, it comes up as an unknown number. He is not only exasperated by such phone calls, but anxious about answering the phone. It is highly harmful that nuisance calls are being made and it is important that we legislate to deal with them.

[Chris Kelly]

Has the hon. Lady found, as I have, that this matter is of particular concern to our older constituents because they tend to rely more on landlines than any other age group? Many young people do not have a landline or have one only for broadband services and use their mobile phone for incoming calls. They are therefore not affected in the same way as many older people.

[Sheila Gilmore]

That is correct. I suspect that that may be a reason why older people get so many nuisance calls.

A related concern, particularly for less well-off consumers, is the phone numbers that are used. When I tried to pay my electricity bill by calling from my mobile phone, because that was the most convenient way for me to call, there was a message to say that I would be charged if I called that kind of number. I put the phone down and made a mental note to call from a landline. That probably led to a delay in the bill being paid. However, some people would find it very difficult to call from a landline and so would be charged a premium.

Government Departments are not immune from the problem of premium rate numbers. It is a major issue for many people that the Department for Work and Pensions still uses numbers that cost them a lot of money when they phone in for information, to report changes in circumstances or to change an appointment because they cannot attend. We need to look at that problem. People should not be charged—sometimes they do not even realise that they are being charged—to engage with a private firm that is selling them goods or services, or with a public agency.

I hope that the Bill has room to cover the problem that less well-off consumers and older consumers often pay more for their utilities than the rest of us, which the hon. Member for Harlow (Robert Halfon) and I have raised. I think that he was planning to seek a debate on that issue at the Backbench Business Committee this afternoon, because he has approached various Members for support. It is one thing for companies to say that direct debits are so much more convenient and cheaper to process than other forms of payment that they will give direct debit consumers a discount and everybody else will pay a standard charge, but companies have gone beyond that and are making other customers pay an additional charge. Not only energy companies but organisations such as BT are charging people a £6 fee to pay via PayPoint.

The constituent who brought that issue to my attention did so on behalf of her elderly uncle, who was insistent that he wanted to pay in that way. He had always managed his finances in cash and was going to go on doing so. He could no longer use certain methods that he had used before and the only way in which he could pay by cash was to use PayPoint. It is not only people on low incomes who are affected, but such people are more likely to use the cash economy and can be wary of banks.

I was talking recently to one of the housing associations that took part in the pilots set up by the Department for Work and Pensions for the direct payment of housing benefit. The DWP would like people to get bank accounts and pay by direct debit, and that would certainly help housing associations as well, because it would help people to be responsible for their own payments. The problem that the housing association found was that a lot of its tenants were not comfortable with doing that, either because they had had bad experiences of being charged because their direct debit went out at the wrong time of the month or because they knew people who had. They preferred to pay when they wanted to pay, preferably in cash or through some other payment mechanism. They were not keen on banks and direct debits, even if they could get a bank account, which still not everybody can. We must think about the aspects of the system that harm the least well-off consumers as well as competent and able consumers. It would be helpful if room could be found in the Bill for some of those issues.

[Mr David Hamilton]

More and more people are coming to my surgeries and indicating that, because of the type of contract they have—zero-hours contracts, for example—they cannot use direct debits. They pay when they can pay. That is a major issue that is beginning to develop in my area.

[Sheila Gilmore]

I thank my hon. Friend for that intervention. We must examine that issue more carefully, because there is an assumption that people will have bank accounts. The Government have stated that they want to make that assumption in relation to universal credit payments, for example. People who are working will be affected as well as those who are not. People are naturally wary of that, because they do not want to be caught up in the payment of high charges. There has been talk of trying to find some form of bank account that would avoid that happening, which would be all the better. I am sure that Members of all parties have had cases come up, whether localised or not, that have made them realise the need for legislative change to protect people. The Bill provides us with an opportunity to make that change. I do not want to rewrite “War and Peace” or create a huge doorstop of a Bill, but we could take this opportunity, perhaps in Committee, to improve the Bill and improve the lives of many of our constituents.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

This has been a wide-ranging debate with many useful and, on occasion, entertaining contributions from Members of all parties. I thank Members for their considered views.

I agree with the hon. Member for West Bromwich West (Mr Bailey) that this is an important area of work. When something goes wrong for a consumer, it can be devastating, as he said. The Bill will provide remedies for consumers with a wide range of problems, from a broken toaster to a dodgy kitchen installation and for things worth from a few quid to thousands of pounds. The wide range of matters encompassed by the Bill shows how complex an area this is.

I shall try to address as many of the points that have been raised as I can, but as a number of Members have said, we will have further opportunities to discuss the detail in Committee. Contrary to what the Opposition have argued, the Bill will provide a substantial improvement to consumers’ rights, remedies and protections. It is true that it consolidates the current law, which, as a number of Members have said, is spread across eight pieces of legislation and more than 60 sets of regulations. It also brings in major new rights for consumers, however, particularly in digital goods and services, although they have been completely overlooked by some Opposition Members.

It is important to note that the Bill has widespread support among consumer and business groups. The economic benefit is estimated to be more than £4 billion over 10 years. It is more than just minor tinkering, as some Members have suggested; it is an important piece of legislation.

I found the speech made by the hon. Member for Walthamstow (Stella Creasy) rather disappointing. She seems not to have read the Bill in detail as she seems to have rather a poor grasp of what it does and does not do. She barely mentioned much of what is in the Bill and I hope that she has a chance to read it in detail before Committee.

I am proud that the Government are taking such important action to improve the rights of consumers, when the previous Labour Government did very little over 13 years. For example, as a number of Members mentioned today, the issue of cowboy builders was raised repeatedly during the previous Parliament but no action was taken. The coalition Government are doing something for consumers rather than just carping from the sidelines.

As I said, the hon. Member for Walthamstow did not talk about a lot of the issues in the Bill. She laid out an extremely long wish list of things that she wanted to add to the Bill rather than engaging with what was already there. I appreciate that this is the sort of Bill that many people spot gaps in and want to add to, but there is more to it than that.

Hon. Members raised a number of issues that they want included in the Bill, including banking, utilities, telecoms and ticket touting. At the risk of disappointing them, I do not propose to go into much detail on those issues as they do not fall within the remit of the Bill. Although I have sympathy for many of today’s speakers and with a lot of the issues, many are issues for other Ministers and Departments to tackle.

The hon. Member for Walthamstow and a number of others mentioned concerns about consumers having access to their own data. We agreed that that information can be key to empowering consumers to take well-informed action. The hon. Lady mentioned midata and the voluntary approach the Government have taken to it has already had success, with all the major energy companies now providing midata downloads so that their customers can access their data in a consistent and machine readable format. My Department is reviewing progress on the voluntary programme and we wrote to chief executives of companies about that in November. The review, which will be completed in March, will help us to decide whether to use the power in the Enterprise and Regulatory Reform Act 2013 to require companies to release the data they hold on consumers, but we hope that the voluntary approach will make progress. There is progress and I hope that the hon. Lady welcomes that.

Members on both sides of the House expressed concern about lookalike websites. As they will know, misleading information and advertising has long been the subject of consumer protection legislation, which was substantially updated and extended in 2008. Under the Consumer Protection from Unfair Trading Regulations 2008, it is illegal for a trader to mislead consumers to the extent that the average consumer is likely to make a decision that they would not otherwise make. That is slightly wordy, but it includes giving a false impression of cost, such as charging for something that would otherwise be free. That encompasses the example given by the hon. Member for Walthamstow of fake HMRC websites. We accept that there is a problem, but further legislation is not required. The Department for Business, Innovation and Skills has written to public enforcers to draw the issue of copycat websites to their attention and to ensure that the law is enforced appropriately.

[Sheila Gilmore]

If the law is there to deal with this problem, why is it still happening? A constituent contacted me about this only the other day. He was not uneducated or stupid in any way, but he was taken in by one of these websites. What should he do?

[Jenny Willott]

If the hon. Lady would listen, I just said that the Department has written to public enforcers to ask them to enforce the law properly. The problem is clearly still happening, and we are all aware of instances of it. Recently, there were reports about the issue on the radio, particularly about the fake HMRC websites. There are lots of things that are illegal that still go on until there is a crackdown. This is one such thing, and we are doing what we can to encourage public enforcers to take action to close down websites that are clearly in breach of the law.

On a technical point, the issue of devolution was raised by a number of Members from Northern Ireland, and I should like to clarify the situation. The issues covered in the Bill are reserved to Westminster with regard to Scotland and Wales, but they are devolved to the Northern Ireland Assembly. The devolved Administrations in all three nations were consulted throughout the drafting process, and both Cardiff and Edinburgh are perfectly satisfied with the measures and are happy for them to be implemented across England, Wales and Scotland. I completely agree with the hon. Member for Strangford (Jim Shannon) that we are all part of one country and that it is important to be consistent across it. I am glad to be able to tell him that the Northern Ireland Assembly has agreed to a legislative competence order so that the Bill will apply across the board to the whole of England, Scotland, Wales and Northern Ireland. There will be consistency in the application of all the measures to the whole of the UK.

Payday Loan Companies

Sheila Gilmore Excerpts

Monday 20th January 2014 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to follow the hon. Member for Makerfield (Yvonne Fovargue), who, as always, speaks not only with great passion but expertise and first-hand experience. This is an important debate, and not just because of the widespread detriment that is acknowledged to result from the payday loan market and the huge growth in it, which is not new but continues to happen and is set in the context of a much wider high-cost sub-prime market in this country. We cannot consider one without thinking about the interaction with the others.

The debate is also timely. This is debt awareness week and this Friday, the 24th, has been dubbed payday loan danger day as apparently it is the day of the year on which, as a result of Christmas and so on, people are most likely to take out a payday loan. To look at the more positive side, we are also in a period of regulatory change and an evolving FCA regime. This is Parliament’s opportunity to have some input into that and, I hope, to shape it.

We should also acknowledge what has already been done and welcome it: the enhanced enforcement from the OFT; the referral of the entire sector to the Competition Commission; and the FCA’s announcements on its regime, including the affordability checks, measures on roll-overs, advertising restrictions and what is being done on the continuous payment authorities, which the hon. Member for Makerfield mentioned. It is also worth acknowledging some of the wider things the Government have done, such as putting financial education on the national curriculum and providing great support for credit unions, putting £38 million behind the credit union expansion project and liberalising that sector.

[Sheila Gilmore (Edinburgh East) (Lab)]

On credit unions, does the hon. Gentleman agree that we need to put a lot more effort in if the system is going to work? The credit union in my constituency is run by volunteers and operates from an upstairs office, without a shop front. The payday lenders and the like are in glossy high street operations. Perhaps local councils could help credit unions to get out on the high street.

[Damian Hinds]

The hon. Lady is right. Of course, many local councils do that, providing premises and soft support in all sorts of ways. What the Government are doing, which is key, is trying to help the sector get to a point where it stands on its own two feet. Although subsidy and direct support have a role, we eventually want the sector to thrive, to be self-sustaining and to be able to take on the other lenders. That will include brand awareness and a product range that is right and that attracts people, but essentially we want the sector to be a bigger, professional operation that provides a real alternative. I think that we are moving in that direction, both through the Government’s support and through the liberalisation of the sector, with the legislative reform order and the move from a 2% cap to a 3% cap on interest a month. That puts credit unions a little closer to being able to compete with payday lenders, although it is still very hard to break even at 3% per calendar month on a payday loan.

The biggest change by far that the Government are putting in place is the duty to have a cap on the cost of credit. That is an enormous change—not just for a Conservative or coalition Government, but even for a Labour Government. I was reluctant about such an idea, but a couple of years ago I finally concluded that we needed to cap total costs in this market.

Why was I reluctant and why did I change my mind? I was reluctant because, in this country, with the exception of natural monopolies and a few other very specific examples, we do not do price control. It goes against the philosophy of our economy and of our politics. We—by which I mean most people in this House, not just those on the Government Benches—tend to believe in the efficacy of markets, in consumer sovereignty and in the beneficial impact of price competition. Why did I change my mind? I was trying to reconcile all those beliefs about what markets do with what we see in this market, and in many ways the normal laws of economics do not seem to apply to high-cost sub-prime credit.

The hon. Member for Makerfield talked about how pessimistic some people can be, but in some ways people are incredibly over-optimistic, even about their ability to pay back a loan. They feel that they are not the type of person who will get into difficulties. The hon. Member for West Bromwich West (Mr Bailey) set out very clearly how consumers in this market tend not to buy on the basis of price, so, unlike in other markets, bringing in more competitors does not tend to bear down on price.

If the normal rules do not apply, in many ways the normal remedies that one might apply to a market that was not working well do not apply either. Of course we want clarity about what a product offers, disclosure, health warnings and so on, but there is a limit to their effectiveness. Warnings quickly become part of the wallpaper of life, just like that thing that goes, “Your home is at risk if you do not…blah, blah, blah.” People stop paying attention and, as I say, borrowers do not anticipate that they are the ones who will end up with a problem.

As for sound financial education, of course we want educated, empowered consumers but there are limits here too. There is a big time lag. If we educate the next generation, we will have to wait quite a long time before they are in a position to need to use that education—and I can guarantee that by the time they do need it, everything will have changed. If we had had financial education when we are at school, we would have learned about clearing houses and endowment mortgages. They would have said, “Don’t worry—at least a final salary pension will see you safe,” and we probably would have been told that payment protection insurance was a damn good idea and we should get as much of it as we could.

Of course competition is a good thing, but if it does not affect prices there is a danger that more competition can mean more ubiquity, more advertising about speed and convenience and more proposals of instant solutions that do not really exist—and, I am afraid, more people believing in those things.

Micro-interventions are another suggested solution. We think that if we find an abuse in a market we should stamp it out, but there are limitations in that regard. If we restrict roll-overs, I can guarantee that the industry will find a different way to make money. That even applies to the real-time database that people are setting such store by—we should always beware when people think that one solution will solve a lot of problems. Quite apart from the other problems caused by the creation of mega-databases, there is also the issue of scope. In Florida, for example, there is no home credit market on the same scale as ours. If a real-time database is to be really effective, it must include the other parts of the market too.

If we believe that the current levels of payday lending are a social ill, that it will not go away as the economy improves, as there is growth and real wages increase, and that to some extent the market creates its own demand through advertising and supply, we should ultimately conclude that we must make the market less attractive. We must reduce its ubiquity so that we reduce both supply and demand. Not only do we want to make the market work better, we want less of a market. A cap on the cost of credit is a fundamental part of that, not only in ensuring that consumers are not ripped off but in making it less attractive to players coming into the market. We do not want to make it unattractive, because, as the hon. Member for Makerfield said, there are of course times when the short-term borrowing of relatively small sums of money makes perfect financial sense, but we want to make it less attractive.

A cap is, of course, not a panacea either. First, stimulation, whether big or small, at the margin of the illegal market will definitely be a problem. Of course, firms will find other ways to make money. When people hear that, they say, “Oh, but I’m not talking just about a cap on interest. I mean a cap on the total cost of credit,” but what do they mean by that? I suggest that people mean different things and think that everyone else is using the same definition. Sometimes, people mean restricting behavioural charges or penalties. That is a perfectly legitimate goal, but it is not the same as reducing the overall cost of credit. Such a cap would have to be really rather high to tackle the real abuses.

Some people say, “Ah, but we’re talking not about penalties, but the overall cost and the hidden fees.” Well, that is what annual percentage rates cover. If a fee is paid by everyone, it is already included in the APR. Because people do not understand percentages very well, they could be presented with a cash number for the total cost of credit, but I suggest that there is a big difference between using a cash number for disclosure where it makes perfect sense—“You will pay x per £100”—and using it for a limit where it can be generalised. That probably explains why most usury caps use APRs, and I suggest that the twin caps approach now used in Australia is probably the most effective.

Banking

Sheila Gilmore Excerpts

Wednesday 15th January 2014 Commons Chamber

[Chris Leslie]

The hon. Gentleman and I differ in our analysis of what happened—I will explain why in a moment—and that says a lot about where we need to take policy. I do not believe that we have finished the job of banking reform, which seems to be the impression we are getting from the Government Front Bench. He and I might agree that more is needed—I will talk a bit about that in a moment—but stopping short of those reforms will not prevent another bank failure or protect the interests of normal customers and society so that they, not the high remuneration of those senior bankers, come first.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does my hon. Friend share my incredulity that the Conservative party, which in opposition accused the then Government of over-regulation, should now suggest it was previously in favour of more regulation?

[Chris Leslie]

There is a touch of revisionism from Government Members, but perhaps that is a bit generous; their attempt to rewrite history is breathtaking. I have no doubt that when the Minister speaks my hon. Friends will hear a complacent desire just to move on from banking reform and a desperation to make party political points about the history of the banking crisis. They will try, with all their might, to pretend that it was Labour’s spending on schools and hospitals that caused a global recession in dozens of countries worldwide, but my hon. Friends will not hear from him about how the banks must still be made to pay for their egregious and scandalous abuses and over-leveraged trades in sub-prime mortgage securities.

All sense that the banks must be held accountable for the state we are in has been airbrushed from the Government’s narrative, because they want to blame their political opponents rather than upset their corporate friends. Perhaps the Minister likes to turn a blind eye, in the knowledge that it really was the banks that were responsible for the global financial crisis, or perhaps he has now genuinely convinced himself that it was primarily the fault of Governments and that the banks were only a little bit to blame. Either way, they have the wrong analysis, which explains why they have the wrong policies. By failing to tackle the root causes of recent economic devastation and the deficit that built up as a result, they are maintaining the risk that banks could once again turn to the taxpayer to bail them out, should they fail again. Never again must the taxpayer pick up the losses for the reckless behaviour of banks, and never again must our economy and public services be thrown into such turmoil because of the negligence and monumental greed of banking executives and traders.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

The hon. Member for Redcar (Ian Swales) suggested that there was a pattern to these debates. The pattern I am increasingly seeing is rather like the schoolchild saying to the teacher, “I didn’t do my homework today because he didn’t do his homework yesterday.” The answer to virtually everything in the Financial Secretary’s opening speech seemed to be, “If Labour didn’t do it in 13 years, that lets us off the hook.” Regardless of whether his accusations about what the Labour Government did or did not do are accurate, for the Government to say, “Well, we don’t have to bother” is not the answer. There were other aspects of the Minister’s opening speech that I really have to pick up on for the record.

The Minister gave the impression that under the previous Labour Government income inequality mushroomed as never before. By saying something confidently enough, he hopes that nobody will ever question it, but what actually did happen? Using the Gini coefficient, the recognised measure, there was indeed an increase in inequality from 37 to 40 from 1997 to 2009. I am not happy about that—I would have preferred the Labour Government to have done more to close the inequality gap—but the real mushrooming of income inequality was from 1979 to 1997, when it sprang up from 26—a low number, which means there was less inequality—to 37. The Labour Government did not turn it around, despite several measures to help those at the lower income level—for example, addressing pensioner poverty, which most people recognise was done—but it is simply not correct to convey the impression that our record on inequality was particularly bad.

I represent a constituency in a city where the financial services industry is particularly important. In the last census, the industry accounted for 11% of all employment in the city. Many of my constituents work at some level in the financial services industry. I was talking to a constituent recently about the bonus culture. In his field of work, bonuses historically formed a substantial part of earnings. They were expected and taken for granted. However, they were deemed to be increasingly unfair to groups of employees who did not have the opportunity to earn them. After much negotiation, the solution was to modernise pay by ending the award of bonuses. My constituent lost £7,000 a year in that process, which was nearly a quarter of his previous annual earnings.

I am sure that everyone will have grasped that my constituent does not work in the financial services industry. He is not a banker; he is a joiner who works for the council’s building services department. A bonus that is paid every week or every year, with little or no reference to performance, was, it was argued in the negotiation process, a distortion of earnings. Why is that argument not applicable to the banking sector? My constituent claims that morale has been affected by the changes—turnover and sick leave have increased—but that made no difference to the view that was taken on the bonus culture.

Does it matter to a country if there are vast differences in income and inequality? I think it does matter. This is not simply the politics of envy. We risk increasing social disconnect in our society. People feel that nothing changes. As politicians, we spend a lot of time being angsting about why people engage less with politics and why, when we go to their doors, they say to us, “You’re all the same. Nothing ever changes. My life never changes. It’s not worth my while voting. Everything will just be the same. The rich will still be rich and I’ll still be the same as I am.” We worry about how we can do something about that.

I submit that one reason for that is that people see great unfairness and great inequality, and they would like something done about it. If we do not make some changes, we risk seeing the gap between average voters—or non-voters, as they are more likely to be—and the elite running the country get even bigger. Average voters feel that the elite have nothing to do with them.

There are other issues relating to banking. I am glad that the hon. Member for Hexham (Guy Opperman) spoke about banking for the less well-off. Increasingly, and for all sorts of reasons, we would like those who are less well-off to be banked. For example, those paying for energy bills through PayPoint usually end up paying an extra charge on top of their bill, so that the poorest people without bank accounts pay the most. We want people to be banked so that they can get employment—it is often a prerequisite because money needs to be paid into a bank account—and so that they can receive their benefits payments.

The previous Government took up the question of the unbanked, through the introduction of basic bank accounts and putting pressure on banks to do something about it. It was their intention to make it compulsory for banks to offer basic bank accounts, but the incoming coalition Government chose specifically not to go ahead with them, and now only one of the major banks offers basic banks accounts; all the others have stopped. This is important if people are to have the widest possible choice, and much as I support the credit unions in my area and much as I think they have a valuable role to play, they are in their present incarnation—and will remain so without a lot more investment—very far from being able to substitute for proper basic bank accounts and provide for the least well-off. Banks need to do something about that. It is another important aspect of what they should be doing for the country.

Annuities for Pensioners

Sheila Gilmore Excerpts

Tuesday 7th January 2014 Westminster Hall

[Sheila Gilmore (Edinburgh East) (Lab)]

I apologise for missing the initial part of the debate because I was in a Select Committee.

The market is not completely free. The Government have already intervened to say that people should be contributing to pensions. People do not have a choice or increasingly will not have a choice not to take part. The Government have a responsibility to the people they have placed in that position.

[David Mowat]

That is absolutely the point that I am making. It is not a free market, and it behoves Government to do more than they have done so far to get it right.

One approach is to try to make the market work better—that was the subject of some of the points that have been made already. The other way of dealing with it is more dramatic. I believe it is reasonable that the Government think very hard and seriously about providing products that would compete in the market with the industry guys, because, in any event, the principal thing that annuity providers do is match Government bonds. One reason why QE has been an issue is that the industry is buying Government bonds in order to match income and liability. It is a classic middleman thing. It is entirely reasonable for the Government—a Government of either complexion—to look long and hard at that suggestion. I believe that will happen, because we cannot continue with the market abuse that has occurred over the past two decades.

Financial Services (Banking Reform) Bill

Sheila Gilmore Excerpts

Wednesday 11th December 2013 Commons Chamber

[Cathy Jamieson]

My hon. Friend makes valuable points, which I will come on to address.

The Government opposed the proposals initially, but eventually gave in and passed their own amendments in the other place. The FCA has so far failed to use its powers to introduce a cap. There were concerns that unless pressure was applied it would not necessarily have been able to speed up new powers, and we could have seen a further delay in real-time monitoring across the high-cost loan sector. That is why, some months ago, the Leader of the Opposition promised to introduce a cap. He also suggested an extension to a levy on payday lenders’ profits, which would be used to double the level of Government funding for alternative low-cost providers, such as credit unions, for those struggling with the cost of living crisis.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am sure my hon. Friend agrees that, had there been an agreement earlier, some of the people still waiting for protection that will not appear until early 2015 would be protected by now. I share the view of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) that the sector’s visible expansion in recent years is remarkable. In many years of living in my city, I have never before seen such proliferation of this kind of lending, let alone the advertising on television.

[Cathy Jamieson]

My hon. Friend makes a valid point. Members in all parties will have seen the sector’s expansion on their high streets. I do not normally refer to the Daily Mail, but it published an article on the increase in payday loan advertising, which is a concern. I am cautious about the process of normalisation, particularly children and young people seeing these businesses on our high streets and in advertising.

We must remember the extent of the problem of payday lenders charging interest rates of up to 4,000%, for example, on temporary loans taken out by desperate families who often have nowhere else to turn. Someone commented earlier that so-called legal loan sharks did not break the legs of those who borrowed from them like illegal loan sharks perhaps would, but we have to understand that the many desperate families who turn to these services to borrow, sometimes for the basic necessities of life, often end up broken in different ways.

Up to 5 million families plan to borrow money from payday lenders in the next six months; as we have heard, between 2009 and 2012 the market more than doubled to about £2.2 billion; more than one third of those who take out a payday loan do so to pay household bills, such as gas and electricity; 1.5 million households spend more than 30% of their income on unsecured credit repayments; and personal debt is expected to rise to 175% of household income by 2015—that is the concern about what is happening to families in the real world.

National Insurance (Contributions) Bill

Sheila Gilmore Excerpts

Tuesday 10th December 2013 Commons Chamber

[Mr Gauke]

Yes; this will not make any change in that regard. It is worth bearing in mind that the changes relate to employers’ national insurance contributions, and that employees’ contributions will remain unchanged. There is no change in terms of contributory benefits.

The new clause contains regulation-making powers to vary the age group and the rate of secondary class 1 NICs for that group, and to reduce the rate of secondary class 1 contributions for a previously specified age group. For example, the Government could allow for an increase in the age bracket of employees falling into the zero-rate band of secondary class 1 contributions. I want to reassure hon. Members that that power is capable of placing an employee only in a lower percentage bracket, and that it is therefore a relieving power only.

There is also a regulation-making power to ensure that the benefit of the zero rate or reduced rate of secondary class 1 NICs will be enjoyed only in respect of earnings below a certain level. In other words, the power will provide a means of introducing an earnings limit. As the Chancellor announced in the autumn statement, this will be set initially at the level of the upper earnings limit, which is expected to be the equivalent of about £42,000 a year in 2015-16. I would be happy to take the House through the new clause, subsection by subsection, although all that information is provided in the explanatory notes. Perhaps, instead, I will respond to any questions on those subsections that arise during the debate.

Let me turn to the Opposition’s amendment (a) to the new clause. It proposes:

“The Treasury shall publish a review of the level of youth unemployment as at December 2013 and the effect on the level of youth unemployment if the amendments made in this section were required to be brought into force on 6 April 2014”—

rather than in April 2015. I hope that the hon. Member for Birmingham, Ladywood (Shabana Mahmood) will not mind my anticipating some of her remarks, but I want to take this opportunity to explain why the amendment is unnecessary.

The Government are committed to increasing employment levels for all, and employment is now at its highest ever level, while unemployment is lower than when we came to power. I recognise the challenges posed by youth unemployment, and dealing with them has long been a priority for the Government. For example, about 370,000 young people have been supported through the Work programme since June 2011. Furthermore, the Youth Contract provides almost £1 billion in funding to support up to 500,000 young people into employment and education opportunities. The autumn statement announcement on abolishing employer NICs for under-21s builds on those policies and has been widely welcomed by industry. Indeed, the director-general of the CBI, John Cridland, has said that the policy

“will make a real difference and help tackle the scourge of youth unemployment.”

[Sheila Gilmore (Edinburgh East) (Lab)]

There has been considerable criticism that there has not been a significant take-up of the wage incentive attached to the Youth Contract. To what degree has that influenced this decision to try to achieve the same thing through national insurance measures?

[Mr Gauke]

Our motivation—and, I am sure, that of any sensible Government—is to do everything we can to address the issue of youth unemployment. That means trying a number of approaches and adopting a number of policies. It is difficult to quantify the number of jobs that will be created as a consequence of the measure, because many factors will come into play, but we believe that it will be helpful none the less. As I said, the director-general of the CBI also believes that it will make a real difference in tackling the scourge of youth unemployment.

--- Later in debate ---

[Shabana Mahmood]

I am grateful to my hon. Friend for her intervention and agree with her entirely. I was going to move on to that point. We disagree with the Government’s approach because we do not think that the proposal is bold enough, but we are also concerned about the timing—I will return to this later—because it has a direct impact on our proposed amendment to the new clause.

Youth unemployment is nearly 1 million—around 940,000 young people are unemployed—and the most recent figures, published in November, show that long-term youth unemployment has increased. Given the scale of the problem and the impact that every single day of unemployment has on a young person’s overall life chances, I believe that the Government should have come back with a much bolder offer in the autumn statement. It was a missed opportunity to go further and faster.

The Minister will not be surprised to hear that I think the Government should have adopted our alternative proposal for a compulsory jobs guarantee for every young person under the age of 25 who is out of work, funded by a tax on bank bonuses. [Interruption.] It has been spent only once—Government Members should look at the detail. The young person would have to take up the job or risk losing their benefits.

[Sheila Gilmore]

I am sure that my hon. Friend will agree that the idea of a jobs guarantee has been proposed not only by the Labour party; it was also a recommendation of the Government’s recent social mobility commission, which criticised the impact of the Youth Contract and suggested that a jobs guarantee would be a much better approach.

[Shabana Mahmood]

My hon. Friend is absolutely right. The Government’s Youth Contract has been branded a failure by their own advisers. It is also worth noting that the Work programme is finding work for only one in six long-term unemployed people. The House heard earlier, when the Secretary of State for Work and Pensions was called to answer an urgent question, about the other difficulties with the Work programme.

The scale of the problem we face in relation to youth unemployment is stark. I speak as the Member who represents the constituency with the highest rate of unemployment in the country. I meet many young people every day in my constituency who are themselves the children of people who found themselves unemployed in the last great recession in the 1980s. They are having the same problems that their parents’ generation had. Every day that a young person tries hard but fails to get a job increases their desperation and depression. I recently held a youth jobs fair in my constituency, along with my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) and my hon. Friend the Member for Birmingham, Erdington (Jack Dromey). More than 2,000 young people attended, and every one of them spoke of their desperation and their desire to find work and the difficulties of finding work in the current climate.

In those circumstances, knowing how much of a knock a young person’s life chances take when they find themselves unemployed for a long period, I think that it is right for the Government to consider taking much bolder action. The fact that they have failed to do so shows that they have failed to meet the scale of the challenge of our times. I fear that we are storing up a much bigger problem for the future.

In the absence of such action, my point to the Minister is that we hope the new clause will stimulate more employment for young people and encourage employers to consider taking on a young person, and that it therefore helps to get to grips with some of the problems. It is a good proposal. It does not go as far as we would like and perhaps it will not have the impact that a compulsory jobs guarantee would have, but on its own terms it is a good proposal, so why not do it now? Nothing the Minister mentioned seemed to be an insurmountable problem. He said that the IT situation would be a little difficult, but we should not let IT difficulties at HMRC stop us getting to grips with the scourge of youth unemployment. He has failed to introduce the employment allowance as soon as we believe it should have been introduced. He also decided not to scrap the regional national insurance employers holiday, so letting it run for three years, yet he knows that it fell far short of the targets that were set for it at the beginning.

The Minister said that the problem with the April 2014 date is that the Government wanted to wait until real-time information was all online and working properly. However, I have interrogated others on this point, and it was apparently not impossible or too difficult for the Government to amend the IT situation so as to enable the employment allowance to be brought in earlier than April next year. I am afraid that the same point applies to the proposal on national insurance for under-21s. The Minister has said nothing that suggests that it should not be brought in as early as possible, April 2014 being the best date on offer.

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[Mr Brooks Newmark (Braintree) (Con)]

I am someone who looks at a glass of milk as being half full, not half empty, and I think that the Government have done much to help young people back into work. The hon. Member for Birmingham, Ladywood (Shabana Mahmood) may wish to mock the Youth Contract, but it has encouraged businesses to offer over 21,000 jobs to people at risk of long-term unemployment. Those 21,000 people appreciate the youth contract and want the job that it has enabled them to have.

We have over 1 million young people in apprenticeships, which are also getting young people back on to the jobs ladder. Indeed, the latest Office for National Statistics labour statistics indicate a significant rise—of about 50,000 in the past three months alone—in the number of young people in work. The number of young people seeking jobseeker’s allowance has fallen by 13,000—the 17th consecutive monthly fall. That is good news indeed. Many constituencies, of Members throughout the House, have benefited, as has Braintree, which has seen a fall in long-term unemployment, regular unemployment and youth unemployment.

On top of all that, I was absolutely delighted to hear the Chancellor supporting the Million Jobs campaign manifesto, which, I hasten to add, I helped to draft, by abolishing the jobs tax for under-21s. It is extremely important that if we are cutting taxes we do it to help those in society we really want to help. As a father of five children between the ages of 16 and 25, I am extremely sensitive to that age group. It is important that we get young people into work, and the new Government initiative does just that. It will enable even more young people to get a foothold on the employment ladder by providing a highly attractive incentive for businesses to hire a young person under 21. I thank Lottie Dexter, the director of the Million Jobs campaign, who has worked extremely hard not only in running it but ensuring that the draft manifesto that we put out only six weeks ago caught the Chancellor’s attention so much that he decided to support it in his autumn statement. I am delighted to support the new clause.

[Sheila Gilmore]

Our debate in Committee on the wider aspects of the Bill made it clear that employers may well use the allowance, which was originally the major part of the Bill, in a number of ways and that job creation would not necessarily be the only result. Some employers, for example, might choose to provide higher wages, while others might choose to provide more training for the upskilling of their work force.

The Minister did not touch on this, but I presume the same might be said for the current proposal, because it is not, as I understand it, tied to taking on a new employee; rather, it relates to anyone who employs a young person, which, obviously, simplifies the issue in many ways. It would be useful to consider and, indeed, encourage not just the take-up of new jobs—although that is very important—but the issue of upskilling.

As Members of all parties have said—Government Members often throw this at us—structural issues relating to youth unemployment have been around for some considerable time. Many things have been written about the causes, including whether there is a problem with a lack of entry-level jobs and whether people are skilled enough.

[Mr Newmark]

Would the hon. Lady at least like to join me in welcoming the fact that youth unemployment in her constituency over the past year has dropped by 19.8%?

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[Sheila Gilmore]

I believe that relates to the claimant count, which is not always the same as youth unemployment, because some people in the 18-to-25 age group will have run out of contributory benefits and fallen off the claimant count. I still see an issue when I look around me, even in a city that, in comparison with the rest of Scotland, has always done better with regard to employment.

Of course, it is a good thing. [Hon. Members: “Hear, hear!”] No one is going to say that it is a bad thing. That would be ridiculous.

[Mr Newmark]

Just give the Government some credit.

[Sheila Gilmore]

I have two things to say to that. Is it a good thing that youth unemployment—or the claimant count at least—has fallen in my constituency? Yes, it is. Do I give the Government credit for that? Well, I am not sure whether it is down to the Government or not, so we should put that to one side.

We would not be debating the proposal, and it would not have been included in the autumn statement, if the Government did not believe that youth unemployment is still an issue and a problem. Many statements are being made about how wonderful it is that youth unemployment is coming down, but the Government clearly believe, like us, that there is still a problem. If there was no problem, I doubt the proposal would have been made.

Although many young people are not necessarily unemployed for long periods, there are groups of young people who find themselves unemployed for a year or even two years, which, as we know, is of huge consequence to people’s future life, health, well-being and income.

[Mr Newmark]

I am sorry to hear that the hon. Lady’s approach to what the Government are doing is one of, “Bah, humbug!” Given that it is Christmas, will she at least acknowledge, first, that the Government are doing a good job by bringing youth unemployment down in her constituency and throughout the country and, secondly, that this particular initiative of abolishing the jobs tax for under-21s is a good one? It is Christmas.

[Sheila Gilmore]

It is indeed Christmas and, given that many families up and down this country will be struggling through Christmas, I do not think the Government will receive much thanks. For example, a rising number of people are having to resort to food banks this Christmas and, indeed, throughout the year. We could trade these issues backwards and forwards.

The point I was making was about giving young people who are in employment the opportunity to be trained and to upskill because, while it is very important to get a first job, being able to progress is also extremely important. Will the Minister consider monitoring—in future or even when the proposal is implemented—what happens in practice? Perhaps the Government should tie the proposal to certain beneficial outcomes, such as making the provision available to employers who agree to use it either for the creation of a job or for the upskilling of an existing worker. It would be highly desirable not to encourage practices such as zero-hours contracts, which Members on both sides of the House said were bad when we debated them, so perhaps the allowance should be tied to employers who do not provide young people with zero-hours contracts.

Oral Answers to Questions

Sheila Gilmore Excerpts

Tuesday 10th December 2013 Commons Chamber

[Danny Alexander]

I think that is rather a good idea and I will take it up in the Treasury.

[Sheila Gilmore (Edinburgh East) (Lab)]

What does the Chief Secretary intend to do to help low-paid workers who are below the tax threshold? They will not gain from a further increase in the tax threshold and have seen previous gains wiped out by the loss of tax credits. How will it help low-paid workers?

[Danny Alexander]

I intend to stick to our economic plan, which is leading to economic growth, job creation and a sustainable economic recovery matched by rising productivity. That is the only way to raise living standards and that is what we intend to do.

Autumn Statement

Sheila Gilmore Excerpts

Thursday 5th December 2013 Commons Chamber

[Mr Osborne]

My right hon. Friend is absolutely right. Some excellent housing associations have used private money and sold off some of the most expensive social homes in order to provide more resource for building more homes, which is precisely what we want to encourage. On the additional money in the housing revenue grant, which I know has been of particular interest to his party, we have said that that money should be available on a competitive basis to those councils that are going to work with housing associations, for example, to deliver the sort of innovative schemes that he champions.

[Sheila Gilmore (Edinburgh East) (Lab)]

Some of the predictions in the OBR report have not been mentioned today. One is an upgraded prediction on how much is going to be spent on certain benefits, such as employment support allowance, which by 2017-18 is going to be £2.1 billion higher than in the last prediction, and housing benefit, which is going up by £1.8 billion—again, higher than the previous estimate. Quite apart from the misery caused by things like the bedroom tax, these welfare reforms are simply not working. When is the Chancellor going to ensure that his Government get a grip on that problem, rather than let those bills spiral? Given these predicted rises in spending, it is going to be very difficult to put a cap on welfare.

[Mr Osborne]

Although the hon. Lady put her question in quite a partisan way, she hits on a very good point. There are sometimes big increases in welfare spending that are not subject to the kind of control that we in this House exercise on much smaller sums in Government Departments. Precisely because of the forecast increases in employment support allowance and housing benefit, it is right for us to bring those issues to the House and discuss them. It is a bit wrong-headed to complain on the one hand that housing benefit is going up too much while on the other hand campaigning to increase housing benefit. No doubt we will be able to have a fuller debate when we introduce the welfare cap.