Jobs and Work

Tom Clarke Excerpts

Wednesday 11th June 2014 Commons Chamber

[Vince Cable]

I accept the point that there are regional differences in the pace at which the recovery is happening. As it happens, of the four nations in the UK, Scotland and Wales are growing more rapidly than the UK average. However, Northern Ireland is not. I know that there is a debate about corporation tax. I do not think that is the central issue. The problem in Northern Ireland, as the hon. Gentleman well knows, is that two major banks are bad banks and are seriously contracting lending to small business. I am trying to work with the Northern Ireland authorities to assist with that.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

The right hon. Gentleman has not so far given the figures on zero-hours contracts. He will know that the Office for National Statistics has said that 1.4 million people are on those contracts, but the Government say that only 250,000 are. What is the reason for the difference?

[Vince Cable]

I was going to talk about zero-hours contracts later, but since the right hon. Gentleman has asked me the question, I will try to explain. There are very different estimates of zero-hours contracts. The ONS gives very different figures from other surveys. They range from roughly 2% to 4% of all jobs. It is worth mentioning this in passing. The shadow Secretary of State has been quite modest about his own contribution. He has been in correspondence with the statistical authority, which rebuked him for being misleading in terms of the trend in zero-hours contracts. It is a significant problem, and in a few moments, I will come to how we want to address it.

Let me move on to the underlying question in relation to zero-hours contracts and to what the Opposition are trying to say about living standards. What has always surprised me in these debates is that people are surprised that living standards fell in the wake of the financial crisis. Let me rehearse some basic facts. In the 2008-09 crisis, the British economy contracted by over 7%—more than any other major economy. It was the worst shock to our country—worse than in the 1930s. It was only after the first world war that we had a comparable hit to our economy. It was an enormous disruption, with massive implications for people’s jobs and living standards. It did happen under the last Government. It was not entirely their mistake, but it was on their watch and they had a substantial responsibility for it.

That contraction of output inevitably translated into people’s living standards, and median wages in real terms contracted by about 7% as a result of the crisis. That has been the impact on living standards. It is clear. What is different from previous recessions is that the people at the bottom end of the scale have been protected by two things: first, the minimum wage—there is cross-party consensus on that, which I welcome—and, secondly, tax policies that led us to lift large numbers of low earners out of tax altogether.

Let us look at what the combination of those factors has meant and the work of the Institute for Fiscal Studies. It makes the point that the contraction in real take-home pay for people in the bottom 10% was 2.5%. For the people in the middle, it was 6% and for the people in the top 10%, it was 8.7%. That was an essentially progressive response to a major economic crisis. Of course there are still major inequalities of income and wealth. We acknowledge that, but that relates to the top 1%, rather than the top 10%.

How do we strengthen the minimum wage system, which my colleagues and I fully buy into? We decided earlier this year to increase the minimum wage faster than inflation—a 3% increase, the biggest cash increase since before the recession. The Low Pay Commission has issued guidance to secure improvements to the real minimum wage. We accept that one of the main challenges—which the last Government did absolutely nothing about—was enforcement. We inherited a system in which the maximum fine per company was £5,000. Under this legislation, we will strengthen it to £20,000 per worker—a big step up in taking seriously sanctions in respect of the minimum wage. We now have a naming and shaming regime in place, and 30 companies have been named since it was initiated a few months ago, and as a result of much more active intervention by Her Majesty’s Revenue and Customs, we have increased by a factor of 38% the amount of arrears identified and paid to employees. All the things that the shadow Secretary of State is calling for are now being done.

Let me address the specific issue of zero-hours contacts. It is a problem, but let us get it into perspective. Although there are wide variations in the estimated number of zero-hours contracts, we are talking probably about between 2% and 4% of jobs. Of course we do not want people in that type of employment to be disadvantaged, but many take up such employment voluntarily, and particularly for students and older workers, it is an attractive system. For some, however, it is exploitative and as a result of our consultation—one of the biggest that the Government have undertaken, with over 36,000 people responding—it was very clear that there were some points on which action needed to be taken, and we are going to take action on exclusivity.

--- Later in debate ---

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

In March 2014, the Chancellor of the Exchequer said that

“while unemployment has come down, there are still over 2 million looking for a job. It will take time to fix that. But we will not rest while we still have so much wasted potential in some parts of our country.”

I could not agree more, but in the fifth year of this Government I would offer an alternative recipe to the one that has so far been provided.

The fact is that there is greater insecurity in the workplace, not as a consequence of the Government’s economy strategy but because it is at the heart of that strategy. As we have heard today, competition on low wages and low-skilled jobs will not lead individuals or families out of impoverishment. People face the insecurity of zero-hours contracts, which we have rightly discussed, with the Office for National Statistics estimating that 1.4 million are involved. It is shameful that nobody can say with any certainty the precise number of people who are forced to work on these contracts. I welcome the Secretary of State’s saying in response to my intervention that this is “a significant problem”—it is indeed, and I hope he will accept that now is the time to lift the lid on what is going on, to remove the veil of secrecy and to provide some transparency so that we can be told exactly what is going on.

Earlier this year, I asked the Chancellor a question about unemployment in my constituency, but his reply skated over the reality. Setting aside part-time, zero-hours and low-paid jobs, I will tell the House the reality. Since the global crisis, the unemployment figures for my constituency have rocketed from 2,800 in 2008 to 5,300 in 2014—that is a staggering increase of 89.3%. What about the future? Youth unemployment has increased by 53.5% in the same period. And all this has happened as the rich have become wealthier while under this Government millions of people—many of them in my constituency—have barely had an increase in pay.

Is it any wonder that these policies are leading to extremes? “Get us out of Britain”, says the Scottish National party in Scotland. “Get us out of Europe”, screams the United Kingdom Independence party. “Let’s become inward-looking and introspective in response to global challenges”, it says, while 3.1 million jobs are at risk over Europe. The media would have us believe that in the recent European elections, people voted principally against Europe and against immigration. Neither I nor the polls agree. As Nye Bevan once said:

“Such a naive belief in the rational conduct of human beings would wipe out the whole of modern psychology.”

Is it any wonder that, out of frustration, people looking for jobs can be duped or beguiled into believing the propaganda from both UKIP and the SNP? They are responding to their own experiences of declining standards of living and austerity. Therein lies my deepest worry, which is reflected in what is going on in France. I am talking about the challenge to freedom itself.

As we emerged from the second world war, we had to deal with greater economic challenges and a far bigger deficit problem than we have now. Sir William Beveridge in his book “Full Employment in a Free Society,” wrote:

“If full employment is not won and kept, no liberties are secure, for to many they will not seem worthwhile.”

There is an immense responsibility on this House, at this period in our history, to respond to the real concerns of ordinary people, who know, despite the statistics and propaganda, that life for them is very difficult. There are difficulties in dealing with the cost of living; difficulties in dealing with energy prices; and difficulties in finding jobs and in keeping them. In the interests of all our people throughout the United Kingdom, we should ensure that there are real, well-paid jobs and a good future for our young people based on proper apprenticeship and training. We should seize the opportunity, even in the short time between now and the election, to respond to the British people and ensure that we aim to help the many and not just the few.

[Several hon. Members]

rose—