Women and the Cost of Living

Debate between Tom Blenkinsop and Jim Shannon

Tuesday 19th November 2013 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I agree with the hon. Member for West Worcestershire (Harriett Baldwin) that the Chancellor is a Goldilocks Chancellor—he goes around people’s houses nicking all their porridge. He and his colleague the Prime Minister are very much the brothers Grimm of Parliament at the moment.

I want to talk about the unquestionably disproportionate impact many of the Government’s policies are having on women. The north-east region, which includes my constituency, is particularly hard hit. I hope that Ministers take our points onboard and take the necessary steps to rectify the many issues in the region. I will focus on three areas: first, the unemployment rate among women, particularly the rate of long-term unemployment—those claiming for more than 12 months; secondly, pay equality; and lastly, the broader issue of the cost of living crisis currently facing women.

In May 2010, there were 20,657 female unemployed benefit claimants in the north-east. Last month, that figure was 25,973. That is a 25.7% increase. In my constituency, long-term unemployment among women has increased by 144% since the general election in May 2010. That is a shockingly huge amount and one that I am sure my colleagues would agree is completely disgraceful. The picture across neighbouring Teesside seats is no better. In Redcar, the figure is almost 157% worse, but worse still, in Stockton South, the increase has been a mammoth 205%. That is the increase in long-term female unemployment between May 2010 and October 2013.

While the Government might be able to present figures that show a small increase in employment, the jobs have tended to be in the south-east and clearly are not helping those unfortunately in long-term unemployment. More broadly, historically, the north-east economy has been built largely on male-dominated heavy industry, and while the more traditional industries, such as chemicals and steel, have had tough times recently, under the previous Labour Government, the area saw an increase in smaller scale, but highly-skilled industries and a diversification into other industries.

[Jim Shannon]

Is it not time perhaps that big industry, particularly the STEM industries—science, technology, engineering and maths—offered more job opportunities to ladies rather than men to make it equal?

[Tom Blenkinsop]

The hon. Gentleman makes an excellent point. I will come to that later.

Women, particularly young women, are more likely to find themselves in low-paid work, such as customer services, retail, care work and the leisure industry—sectors offering fewer progression opportunities and lower pay.

Fuel Prices

Debate between Tom Blenkinsop and Jim Shannon

Tuesday 15th November 2011 Commons Chamber

[Tom Blenkinsop]

That is precisely the point I am making. The lack of a Government growth strategy is making it even more difficult for women to exist within or get into the labour market.

Those women and other workers, particularly in my constituency, need affordable transport, and the Chancellor’s 20% VAT rate is counter-intuitive to that requirement. The economic climate is such that growth in private sector jobs is flatlining, and such jobs are mainly part-time and low paid. The problem is that people who want to work full-time can only get part-time jobs. Part-time employment cannot fund the everyday necessity of a car, and part-time workers are increasingly reliant on a diminishing—

[Jim Shannon]

Is the hon. Gentleman aware that over the past 50 years car ownership has increased from 5% to some 51%, and that those in a lower income bracket are most affected? Does he not think that that clearly underlines the case that we need lower prices?

[Tom Blenkinsop]

Yes. We have heard today the very good arguments about the differences between rural and urban areas, but in certain rural communities in my constituency there is less than 30% car ownership, so there are also class and income issues, as well as a diminishing public transport system that is becoming more and more expensive because of Tory cuts and rising fuel prices.

Female part-time workers often visit two or three workplaces. I used to cover, as a community trade union official, Teesside Cast Products, a steelworks in Redcar. I also represented those in OCS, who worked not only as cleaners and canteen staff but elsewhere as carers on a part-time basis. One of the women I knew did a total round trip of approximately 40 miles a day between two or three work sites. Her employers frequently attempted to remove or decrease her company subsidised fuel costs through unilateral variations in terms and conditions. The Government’s attack on her tax credits and their policy of 20% VAT made it almost impossible for her to work on a day-to-day basis. If it were not for the union fighting for her terms and conditions on fuel payments from her employers, she would undoubtedly have become a Department for Work and Pensions statistic and have been downgraded into a burden on the state rather than the hard-working unionised woman I know her to be.

The Office for National Statistics has demonstrated that in 2010 the poorest 20% of households spent 3.5% of their disposable income on petrol and diesel, compared with 1.8% in the case of the richest fifth of the population. Meanwhile, in the same period, Shell’s profits more than doubled to £4.3 billion, Exxon Mobil made £6.5 billion, and BP made £3.2 billion. We must take note that the squeeze caused by the Chancellor increasing VAT from 17.5% to 20% has added 3p to the price of a litre of petrol. Diesel keeps industry, and the vital service sector that it requires, flowing, much like capital and skills. More than this, public services, including Royal Mail, such as it is—it is going to be fractured and regionalised by privatisation—police vehicle response units, ambulances, fire services and councils incur increased costs via the 3% VAT increase.

Department for Business, Innovation and Skills (Performance)

Debate between Tom Blenkinsop and Jim Shannon

Wednesday 2nd February 2011 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I am sure that the Minister is aware of the great success story of the North East of England Process Industry Cluster: it made £1 billion, gross value added, in six years with just £3 million of public support. It was set up by One North East, the local regional development agency, and has an ongoing portfolio of 62 projects worth £8 million. One particular project, the Tenergis project, which is worth $5 billion, could rejuvenate the local economy and, in turn, attract further world-scale investment.

Chemicals contribute to more than 30% of the nation’s industrial economy, and the sector attracts some of the chemical and process industry’s world leaders. Teesside’s process industry contributes about £10 billion to the north-east’s economy—almost a third of regional GDP—but has seen a series of job cuts and plant closure announcements in recent months, despite having grown in the past five years.

What has that sector seen from the Department since May? The Government have put much emphasis on export-led growth—pretty much a statement of the bleeding obvious. A friendly voice from the Government Benches will no doubt state that manufacturing growth in general has increased amidst a sea of GDP decline, but such statements will not be followed with the caveat that the majority of that growth is in inventory spending, meaning the restocking of raw materials for production. It is a restocking at a time when raw material and commodity prices are at a real high, inflating the costs per measure of materials purchased. I fear that that will be demonstrated in the second and third quarters of this year as domestic demand unfortunately wanes, especially if domestic interest rates are raised. That is combined with the VAT increase, the increased national insurance contributions, wage cuts, fuel costs and the fact that although the world function is based on the retail prices index, the Government function is based on the consumer prices index. We are looking for a domestic multiplier here.

Any policy that is reliant on export-led growth ignores reality as the EU’s internal problems continue and Asian markets become increasingly protectionist and insular in their dissemination of vital raw materials. NEPIC’s vision in its industrial plan is to seek out other clusters like itself and send its industrialists there to win the crucial research and development contracts that will hugely benefit our economy. Getting £l billion in six years from £3 million is good business in anyone’s book. It is a clear example of how public investment can and does attract private investment, both domestic and from abroad.

As well as the scrapping of One North East, the body that helped set up and support NEPIC, we have now seen the abrupt end to the emergency package devised for Teesside in the wake of steel job losses. It targeted jobs growth in the chemicals sector as an alternative to steel jobs. That scheme has been axed, even though it is still allocating work and has £18 million in uncommitted funds that could have been used to support and enhance the objectives of NEPIC member companies.

Now we hear that a long-standing and successful job-creation fund, which over the past decade has helped to create many hundreds of thousands of jobs in areas such as the north-east, is to be axed by stealth. That fund, the grants for business investment scheme, has been—under its own name of regional selective assistance—responsible in the north-east for pumping £112 million into poorer parts of the region and for helping to create 25,000 jobs.

[Jim Shannon]

Does the hon. Gentleman agree that we need to foster opportunities for young people, especially when unemployment among young people has reached 951,000, the highest it has ever been? One in four people between 16 and 25 years old are out of work, and there is a need to create opportunity for young people.

[Tom Blenkinsop]

I wholeheartedly agree. Indeed, the grants for business investment scheme helped deal with that problem.

In various forms and under successive Governments, the scheme has been in place since the late 1960s. It survived the Heath years, the 1970s Labour Governments and even the Thatcher and Major years and the most recent round of Labour Government. Despite differences on economic policy, all those Administrations recognised the value of regional selective assistance. It was a genuine central-local partnership, handled by the Department for Trade and Industry and then by Department for Business, Innovation and Skills’ offices in London, but its decisions were guided by a regional evaluation board made up of regional businessmen and women. A measure of its success was its crucial role in bringing Nissan to the north-east in the 1970s. More recently, it helped Teesside to secure jobs in the offshore engineering sector and underpinned the decision to rebuild the SABIC Wilton site catalytic kraken, currently the single-most important plant on the Wilton site.

What is worse, and what puts us at even more of a disadvantage, is that the scheme will close only in England; Scotland and Wales will keep it and be able therefore to compete directly with the north-east for a position of advantage. It is tragic that the scheme will go, because it will only put more pressure on the hopelessly oversubscribed and underfunded regional growth fund, which seems to be the Government’s sole contribution to regional economic growth. The RGF, which has about £300 million to allocate, has already had bids from throughout the region, from Berwick in the north to Boulby in the south, topping £3 billion.

The Government cannot keep relying on a weak pound or ignore industry’s need for direct investment in research and development and for partnership with them. I asked the Secretary of State where his influence on the feted local enterprise partnerships is in the Localism Bill. Why has he handed the European regional development fund over to the Secretary of State for Communities and Local Government?

Does the Business Secretary not acknowledge that the Office for Budget Responsibility told him explicitly that unemployment would increase as a result of his policies? Only 3% of people who have achieved work since the recession have gained full-time work. Could he not have reformed RDAs rather than destroy them, or at least asked industrialists in the north-east what they thought? Does he not find it bizarre that more money will be spent on post offices than on the entire English RGF? Why is he allowing long-term timber deals between biomass generation plants and the Forestry Commission to be undermined by Ministers in the Department for Environment, Food and Rural Affairs, who want to sell off cash-crop forests?

The Department for Business, Innovation and Skills and its Secretary of State are summed up by his magical mystery tour last year of the beam mill at Tata’s Redcar plant, which is part of the long products division, not of Teesside Cast Products, the actual plant in question. His party and his Government promised that they would not stand by while steel jobs were lost. In fact, they did more than that. At Forgemasters in Sheffield, a site where I was the union official, Labour put pen to paper when money was requested to help industry. The Secretary of State’s Government ripped it up.

When my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), the Business Minister in the previous Labour Government, contacted the former chief executive officer of Corus Europe, Kirby Adams, a personal friend of the Prime Minister and much mentioned in the leaders’ television debates, he literally put the phone down on a Labour Minister offering help.

The Secretary of State has metaphorically put the phone down on Teesside’s manufacturing, cutting almost one third of the funds set aside for the Tees valley industrial aid package. Standing idly by? No, I could not accuse him of that. Turning his back on Teesside? Yes, I could certainly say that. It was again evident when he was dictated to by his colleagues in DCLG, the Treasury and the Departments of Energy and Climate Change and for Environment, Food and Rural Affairs.

The Secretary of State’s colleagues at DECC refer to high-energy manufacturing as sunset industries. Why on earth is he allowing a rammed-through consultation on carbon price support and energy market reform with no impact assessment on energy-intensive industry in either case? Why does the consultation have a short time scale? He says he wants to take away regulation. That is utter nonsense: he is allowing far more complex and damaging regulation through that programme; and he is attacking workers, particularly those in the steel industry, who kept their patience over two and a half years when they had more than a few good reasons to take industrial action. I know, because I led them alongside colleagues, but we restrained ourselves to ensure that we had an industry in Teesside and an industry for this country.

Independent Financial Advisers (Regulation)

Debate between Tom Blenkinsop and Jim Shannon

Monday 29th November 2010 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I congratulate the hon. Member for Wyre Forest (Mark Garnier) on securing this important debate. I am pleased that the hon. Member for West Worcestershire (Harriett Baldwin) referred to the Kensington Friendly Collecting Society, which is a very good organisation in my area.

As a Co-operative Member, I represent the interests of some people on low incomes who have been denied access to financial advice and products provided by friendly societies and mutuals as a result of the qualification requirements contained in the retail distribution review. The Kensington is a friendly society that has existed in Middlesbrough for 106 years. Mark Brooks, who is the chairman of its committee of management and a constituent of mine, and James Lancaster and Phil Carey wrote to me from the Kensington to raise their situation. The Kensington has 10,000 members throughout the Teesside postcode area. It provides savings and insurance products to those members for as little as £1 per week and a maximum of £5.70 per week. It provides opportunities for its members to obtain basic financial products. Without this provision, members of the society would largely be excluded from financial services and have to go to more expensive services, namely the banks, or to loan sharks.

The RDR is currently being finalised by the FSA. Its most likely outcome will be that the society will close down, which will mean that 10,000 members will lose their ability to save small sums of money for their funeral or for a rainy day. The reason is that the FSA is proposing a blanket qualification for any person offering financial advice—a qualification that is considerably higher than the current requirement. The FSA will not permit exemptions to this qualification structure, and it will not permit a gradual increase in qualifications vis-à-vis the risk and complexity of the product being advised on. The advisers at the Kensington and other societies will be required to obtain degree-level qualifications to sell a simple endowment or whole-of-life policy for a maximum premium of £5.70 per week. This is the only type of product that they sell, and the level of qualification required is disproportionate to the advice that they give.

The syllabuses of the proposed qualifications are irrelevant to the needs of those on low incomes. The exams focus on trusts, inheritance tax, capital gains tax and portfolio management. Those on low incomes may aspire to require this level of financial planning, but in the here and now they need advice on issues such as debt and benefits. The qualification requirements will mean that members of this society and others will be denied access to financial advice after 2012. The society will be unable to recruit new members because its advisers will be unable to offer advice to prospective members. A lack of new members will mean that this society and others will close. As a result, their members will lose access to financial products that they can afford and, in all likelihood, will be excluded from financial services thereafter.

That outcome seems to contradict the aims of the FSA and the Government in tackling financial exclusion. The RDR, while seeking to protect the interests of high net worth consumers, is by default taking away one of the few opportunities that those on low and insecure incomes have to obtain financial products. If the Government and the FSA are keen on promoting financial inclusion and financial literacy, then the existence of friendly societies like the Kensington is essential in delivering such benefits to those on low incomes. The concept of mutuality appears central to the idea of the big society, yet the consequences of the RDR would be to remove the remaining friendly societies that promote this notion.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Gentleman agree that the reduction in IFA numbers would also have an impact on the volume of new insurance policies and the work that would come from that?

[Tom Blenkinsop]

Yes, I certainly agree. We would lose skills and experience, as well as putting people out of jobs for no good reason whatsoever.

The qualification requirements would deliver no discernable benefit to the vast majority of consumers beyond the wealthiest few. Let me assure hon. Members that by arguing against the proposed qualifications, I am not saying that such members deserve less than the better-off, but merely stating that they require different things.

The Kensington has increased its premium income by over 40% in the past seven years despite the fact that tax-exempt premium limits have not been increased during this period. That indicates that there is a demand for the service and the products. The Kensington delivers products that fulfil real needs for those on low incomes. For example, in the Teesside area, owing to bad debt difficulties, undertakers will not proceed with a funeral unless the deceased’s relatives can provide a deposit of £750. The Kensington, among others, can fulfil that need because its minimum premium is £1 per week, which is enough to generate £1,000 of death cover. It has a local presence, which means that the agent can deliver a death claim cheque to the family directly within two working days of the member dying, and the whole process is conducted by someone whom the family knows.

The majority of members of the Kensington and other friendly societies in Teesside live in the poorest and most socially deprived council wards in the UK. Our people require honest and appropriately qualified agents who understand the benefits system, can provide advice on debt issues, and can generally assist in all forms of financial planning for those with limited disposable incomes. It is difficult to imagine that any such member would ever require advice on IHT planning, trusts, corporate financial planning, portfolio management or CGT.

The QCF level 4 is a disproportionate qualification for the home service market operating within tax exempt limits. It will not add value to consumers, nor improve the service that they receive. It will make home service sales forces even more expensive to run and will generate further financial exclusion. A more considered qualification that focused on the real, everyday financial issues that affect those on low incomes would be welcome. Current academic thinking reinforces my view, which I assume is shared by other hon. Members, that the only effective method of accessing and engaging those on low incomes in savings and protection products is a direct sales force. Indeed, the Department for Work and Pensions website states that tenant engagement teams are being piloted to increase take-up of home contents insurance,

“particularly as all other traditional methods of promotion (leaflets, flyers, competitions, prizes etc) have not resulted in large scale increases in the number of policy holders.”

In conclusion, the RDR qualification requirements for advisers selling tax-exempt, small premium assurance products are disproportionate and irrelevant to the needs of those on low incomes. The RDR will reduce the access of those on low incomes to basic assurance products at a time when significant amounts of energy and money are being invested in promoting financial inclusion in that area.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Members for West Worcestershire (Harriett Baldwin) and for Wyre Forest (Mark Garnier) on introducing this apt motion. It has certainly galvanised a lot of interest in my constituency. Like all hon. Members, I have received e-mails, letters and phone calls, and I have held personal interviews, so I have had lots of information. My constituents have made it clear to me from the outset that this is not just about advisers who provide help to wealthy people who can stay at home and watch their money work and grow. I am speaking tonight on behalf of people who have a small sum of disposable income and who wish to enhance their small pensions at retirement age and seek help and advice from financial advisers. They have asked me to speak on their behalf, and I happen to know that some of them are watching the Parliament channel to see that I say what I said I would say.

One constituent sent me some background information, which sets out the situation very clearly. The retail distribution review appears to offer solutions—at least on paper—to matters which the FSA has identified as problematic within the industry. I am not aware of those problems, which concerns me. The FSA believes that the measures set out in the RDR proposals will provide for greater consumer confidence and engagement within the industry. It is planned that all advisers attain the qualifications and credit framework level 4 qualification by 31 December 2012.

A constituent of mine wrote:

“I have attended seminars at which RDR and the future of Independent Financial Advisers are discussed. They all have the same line…segment your client base…they give guidelines how to do this so that we have an income stream from a fee base structure. If I were to follow this suggestion I would have 3 clients left. When I question this approach, on every occasion the reply is…I need to change my market.”

Did anyone ever hear such advice in all their life? Goodness me!

[Tom Blenkinsop]

Building society closures and the exodus of the large phone service companies have reduced almost to nil the supply of premium products for those on low incomes, particular the 4 million who still feel disengaged. What do the hon. Gentleman’s constituents think about that?

[Jim Shannon]

I thank the hon. Gentleman for his comments. I have the same concerns.

It is estimated that it takes 400 hours to do the exams. That is approximately 10 weeks when people do not have the opportunity to earn money or do what they normally do. Advisers in Strangford have painted a different picture to that painted by the retail distribution review. Most of the customers of advisers in my constituency are working class. I have been informed by many financial advisers that they have spent time with people without receiving any financial reward—we have heard that from hon. Members on both sides of the House tonight.

One adviser offered advice to a female client who was about to go through a separation. She was stressed out about her finances, but the adviser spent a lot of his time on the phone to her. For all his work, he earned not a penny. The road that the regulator is pushing advisers down will mean that they will be unable to afford time if they do not get paid. Will we therefore end up with people being unable to afford sound financial advice, exactly as the hon. Gentleman said?

I represent a rural area, as do many hon. Members, including the hon. Member for Aberconwy (Guto Bebb). We are aware how the proposals will affect and impact on people in rural areas. Consumers will suffer substantial and unprecedented detriment owing to the unintended consequences of the proposals. Would it not be wiser or better to protect grandparent rights, as at least two or three hon. Members have intimated? Doing so would give the protection that many need. A substantial portion of the adviser population will leave the industry. Various surveys have been conducted and although there is no consensus on the figures, it is obvious that adviser numbers will fall drastically.

One of my constituents in Strangford wrote:

“I am 54 years of age…the heavy regulation is taking its toll. I am ¾ of the way through the new exam structure. Many advisers are finding it impossible to pass these exams as many are over 55 and are finding the stress unbearable.”

Another hon. Member referred to a 63-year-old adviser for whom contemplating exams will put him away in the head. The result will be anxiety, depression and stress. My constituent predicted a drastic fall over the next three years in the number of independent financial advisers. He continued:

“Advisers are finding the regulations unbearable, and many are having problems due to”

what is taking place. He made a statement that I found moving and honest:

“We are all starting to swallow the negativity thrown at us by the regulator over the past numbers of years, which is trying to kill us off”.

Now IFAs are facing another obstacle and barrier. We cannot afford for any businesses to be lost, especially ones that will take the financial burden off the state by enabling people to supplement their pensions and not need state aid and benefit. They are the people in my constituency and across Northern Ireland on whose behalf I wish to speak.

Robin Stoakley, head of intermediary business at Schroders, said:

“I do see up to 30 per cent of the IFA market leaving”.

How on earth could we support something that would take away 30% of the IFA market? Furthermore, Aviva UK Life marketing director, David Barral, said the firm predicts that by 2013, IFA numbers will fall to 10,000, leaving middle market consumers unserviced.