Oral Answers to Questions
Vince Cable Excerpts(5 years, 2 months ago)
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Justin Tomlinson
I pay tribute to the hon. Gentleman for his work as chairman of the APPG. We do take things seriously, which is why we are doing this thorough evaluation. We are already working with organisations such as Marie Curie, the MND Association, the Royal College of Nursing, the British Medical Association, Hospice UK, the Association for Palliative Medicine, Macmillan, the Queen’s Nursing Institute and Sue Ryder. We must get the balance right so that those who should be getting fast-track access to support are always prioritised, and we will be doing a thorough evaluation to ensure that we get that right.
Sir Vince Cable (Twickenham) (LD)
Justin Tomlinson
Part of the evaluation is about looking at the whole process, including not only the six-month rule but the process before and after. I believe that there has been a case in the right hon. Gentleman’ constituency, so it would be helpful to have further information on that as part of the evaluation.
Oral Answers to Questions
Vince Cable Excerpts(5 years, 5 months ago)
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Justin Tomlinson
I thank the hon. Lady for raising that important point. I recognise the points that she made, but it is a balance. The decision to do this has been in place for a long time, to allow for everything in be in place for when they get to 18, but I am happy to meet her to discuss this further.
Sir Vince Cable (Twickenham) (LD)
Can the Minister explain the very long delays in the limited work capability assessment to qualify for the working element of universal credit, and why disabled people who are trying to work are being penalised because of the apparent inefficiency of the contractor, Maximus?
Justin Tomlinson
Under universal credit, from the initial conversation with a work coach, individual claimants—including those with disabilities—can get support. We continue to make improvements to the work capability assessment, following the five independent reviews. Over 100 different recommendations have been taken on board. I work very closely with stakeholders, as do all the ministerial team. We look to continue to improve the process.
Oral Answers to Questions
Vince Cable Excerpts(5 years, 7 months ago)
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Amber Rudd
That is another very sad case. I have got the right hon. Gentleman’s letter and will be replying to it, and we will be looking very carefully at what can be learned from that example
Sir Vince Cable (Twickenham) (LD)
I have a constituent who has now waited a year for a DLA appeal, having previously waited a year for a successful appeal. She is a chronically disabled teenage girl and faces endless errors in the Department and constant demands for more information and more signatures, and she has come to the conclusion that the Department has engaged in deliberate foot-dragging, not merely incompetence. What assurance will she have that thousands of cases like this, including the ones we have just heard, will be dealt with more expeditiously in the future?
Amber Rudd
I can reassure the right hon. Gentleman that we are spending more money and investing more effort to make sure we get the decision right first time. I am working very closely with the Ministry of Justice, which is recruiting additional people to make sure there is less of a wait for the tribunal. I know how distressing that wait can be, and I am determined to reduce that time.
Personal Independence Payments
Vince Cable Excerpts(6 years, 6 months ago)
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Ms McVey
I can tell my hon. Friend that the expenditure has continued to go up and will go up every year until 2022; it has increased from 2010. For PIP, DLA and attendance allowance alone, expenditure is £5.4 billion higher than it was in 2010. There will be future announcements on the continuous improvements for PIP, but I can say now that we want to introduce video recording—that is key—and when we do we will start with pilots to make sure it is right. We want a modern benefit that looks after and reaches out to disabled people and gives them the money they should be getting.
Sir Vince Cable (Twickenham) (LD)
The Secretary of State has acknowledged that the new benefits are available for a wider range of conditions, including neurological conditions and mental illness. What steps is she taking to ensure that the assessors are fully competent to make these judgments on the wider range of conditions?
Jobs and Work
Vince Cable Excerpts(10 years, 6 months ago)
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The Secretary of State for Business, Innovation and Skills (Vince Cable)
It is a pleasure to respond to the Opposition amendment, and to introduce a debate on the general topic of jobs and the world of work on what is a very good day for jobs. I was struck by the fact that, in something over half an hour, the shadow Secretary of State—the hon. Member for Streatham (Mr Umunna)—did not make even a passing reference to today’s unemployment figures.
I shall take a three-pronged approach to this debate. I shall deal first with the creation of jobs. Job creation depends on enterprise and business, and a key element of the Queen’s Speech is support for business through the small business Bill, which covers issues such as access to finance, Government procurement, prompt payment and, of course, pubs.
Secondly, I shall make it clear that as our economy recovers—and the recovery is now very firmly embedded —we want to ensure that that recovery is translated into higher-paid jobs and more secure employment. The small business Bill contains measures relating to zero-hours contracts and the minimum wage. It will also ensure that people have decent pensions when they retire, which is another thing that the shadow Secretary of State did not mention. Over a long period, for demographic and economic reasons and as a result of policy failures, there has been a gradual decline in the defined-benefit system, but my right hon. Friend the Secretary of State for Work and Pensions and my hon. Friend the Member for Thornbury and Yate (Steve Webb), the Pensions Minister, are reconstructing a sensible, durable environment for pensioners.
Thirdly, I shall talk about the issue of trust in business. One of the blows to our economy, and many other western economies, during the financial crisis has been a loss of trust. The Bill contains a serious of measures—to which the shadow Secretary of State did not refer—relating to transparency of ownership and the duty of directors, which will be important to the reconstruction of that trust.
Let me begin, however, by commenting on the Opposition amendment. I try to be polite, but the amendment is not exactly bulging with creative policy initiatives. It contains only one recommendation, which relates to a
“target to raise the National Minimum Wage faster than average earnings”.
The shadow Secretary of State seems to be telling me to do what I am already doing, which is giving guidance to the Low Pay Commission so that it can do exactly that; but I am not entirely sure what the Opposition’s policy is. Is the target to be mandated? If so, that undermines the autonomy of the Low Pay Commission. If not, what the shadow Secretary of State recommends is exactly what we are doing at present, which is giving forward guidance.
I should like to clarify another point. Two or three weeks ago, the Opposition had another policy on the national minimum wage, namely that it should be indexed to earnings. There is no reference to that in the amendment. Is it still the Opposition’s policy? I suspect that, when they did the sums, they discovered that indexing the minimum wage in that way would make it lower than it is now, and quietly dropped it, but may I ask what is the current status of the proposal?
In the amendment, the shadow Secretary of State sensibly acknowledges that the Low Pay Commission must
“take account of shocks to the economy.”
However, he does not mention whether the commission should take account of the impact on employment. That has been at the heart of its work. If it is indeed to take account of the impact on employment, why—as my hon. Friend the Member for City of Chester (Stephen Mosley) asked earlier—are the shadow Secretary of State and his colleagues now promoting the idea of higher taxes on employers through national insurance? If this is to be the major theme of the Opposition’s attack on the Queen’s Speech, their approach will require a great deal more clarity and a great deal more consistency.
Let me now say something about today’s figures, because they are important, even if the shadow Secretary of State did not think it worth his while to talk about them.
Sheila Gilmore (Edinburgh East) (Lab)
Will the Secretary of State give way?
Vince Cable
May I finish this point first? As the hon. Lady knows, I am happy to take interventions.
In the last quarter, 340,000 new jobs have been created; 780,000 have been created in the last year, and 2 million have been created since the Government came to office. The level of unemployment is now 6.6%, and is one of the lowest in the developed world. We are approaching German levels, and our figure is significantly better than those in almost all the other European countries. We have 600,000 job vacancies, and if the shadow Secretary of State goes around the country talking to businesses, as I do, he will know that the talk is increasingly of job shortages rather than unemployment. In many key categories— those aged 65 and over, women, disabled people, and lone parents—more people are in work than before the recession began. Of course there are serious unemployment problems among young people —we acknowledge that—but youth unemployment is 100,000 down over the year, while long-term unemployment is down by 108,000.
Sheila Gilmore
Does the Secretary of State share my concern about the growing gap between the unemployment figures and the claimant count? More than 2 million people are still unemployed. It is clear that many of those people are not receiving benefits of any kind, and they seem to have disappeared from the statistics. Is the Secretary of State, perhaps in partnership with his colleagues, trying to find out why that is and what we can do to help those people?
Vince Cable
I have been quoting the figures from the International Labour Organisation, which provides the international accepted definition, and they include the people whom the hon. Lady has described. Of course, many people are self-employed, and many of those are potential entrepreneurs. I am sure that she would not want to diminish their contribution.
Opposition Members often say “The job figures are fine as far as they go, but are those jobs full time?” As a result of the strengthening of the labour market within the last year, three quarters of all new jobs have been full-time. Moreover, some interesting information has emerged during the last few weeks. People who are doing part-time work, which is often criticised, have been questioned to establish how many of them wish to do full-time work. The current figure is about 20%, and it is useful to compare that with the figures for the European Union as a whole, for France and for southern Europe, which are 30%, 40% and 60% respectively. The underlying trends in the labour market—not just the top-line figures—are significantly healthier in this country than they are in almost every other part of the European Union.
Fiona O’Donnell (East Lothian) (Lab)
The Secretary of State has not yet mentioned young unemployed people. I know that he is always keen to look for ways in which the Liberal Democrats are making a difference in government. Will he tell us about his leader’s youth contract, which, it was claimed, would help 160,000 young people into work by incentivising employers? How many young people have benefited so far?
Vince Cable
The fact that youth unemployment has fallen by 100,000 in the last year is significantly owing to the youth contract, as is the advance in apprenticeships—and the shadow Secretary of State’s comments on apprenticeships were an absolute travesty. We know that there has been a big increase in terms of both quantity and quality, and, of course, the support given to employers so that they can take on young people has been an important and extremely positive element of the youth contract.
Mr Steve Reed (Croydon North) (Lab)
One of the problems is that all too often under this Government work simply does not pay enough. Does the Secretary of State accept any responsibility for the fact that since the Government came to power, the number of working people claiming housing benefit in Croydon has increased by 1,100%?
Vince Cable
Quite a lot of those people have moved from unemployment to work, which explains the change in the definition. However, we want to ensure that people are in work and are properly paid in work, rather than being dependent on benefits.
Rushanara Ali (Bethnal Green and Bow) (Lab)
What are the Government doing to deal with the fact that people under 25 are four times more likely to be unemployed than those over 25? He has talked about youth unemployment, but that group really is not benefiting from any of the Government’s policies.
Vince Cable
The hon. Lady makes a valid point. I know that in her constituency there is a particular problem with graduate unemployment, which we have discussed. Youth unemployment is a long-standing problem. It was very substantial even before we got into this major recession and financial crisis. We need to deal with it in a variety of ways: job training, apprenticeships and by providing a better-working market.
Mark Pawsey (Rugby) (Con)
I ran a business before coming into this place and the Secretary of State will know that what businesses need is confidence that they will be rewarded for making the right decisions. That will encourage businesses to take on more people and deal with many of the issues raised by the Labour party. This Government have given businesses confidence and that is why we are seeing significant reductions in unemployment.
Vince Cable
That is why I started my speech by saying that the most important thing we are doing is encouraging small businesses to grow. That is where the jobs come from. That is what I am keen to get to, but as the Opposition amendment was couched solely in terms of the second element of the Bill, that is what I am now trying to address.
Charlie Elphicke
Does my right hon. Friend agree that the Opposition’s stance, which is to pick out any poor statistic or position, highlights that they are completely in denial about the recovery’s strength? It exposes their lack of any vision to secure economic growth for this country.
Vince Cable
I was going to go on shortly to what is underpinning labour market growth, which is strong and balanced economic growth. I will come back to that.
Gordon Birtwistle (Burnley) (LD)
Is the Secretary of State as disappointed as I am by the constant deriding of manufacturing and the growth in the economy by the shadow Secretary of State, who, every time he gets up, runs the economy down? Is that the right way to give confidence to businesses to drag us out of the recession that Labour left behind?
Vince Cable
I will take more interventions later, if hon. Members will let me make a little progress. That intervention prompts me to remind the House where we are with the economy. We are the strongest growing of the major G7 countries. Major forecasts by the IMF and the OECD suggest that this year growth will be between 2.7% and 3.5%, which is quite exceptional in current circumstances, with the trend continuing in 2015.
What is more important is the fact that that has been achieved in a balanced way. In the last three quarters, manufacturing has been growing faster than the economy as a whole. Business investment, which was seriously depressed through the recession, is now experiencing double-digit growth on an annualised basis. I was taken aback when the hon. Member for Streatham started to tell me about the industrial strategy. I was in the House for the 13 years of the last Labour Government. Throughout that period, any suggestion that we have the kind of industrial strategy that we are now leading was regarded with utter ridicule by—
Vince Cable
I will in a moment. The hon. Gentleman has reminded us of some genuinely useful things that were left by my predecessor, including the Automotive Council. Of course no money or long-term investment was attached. We are now doing work with the high-value manufacturing sector through the Catapult centres. There has been a billion-pound co-investment in new automotive propulsion systems. That did not exist. However, some things left by my predecessor were useful. They were small, but they did contribute to what is now a valued industrial strategy supported on both sides of industry. I am glad that the Opposition have bought into it, albeit rather belatedly.
Vince Cable
My Department is now very different. It now includes universities, science and many other things. In one period during the last Labour Government—the hon. Gentleman may remember it; I think that the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) was the Minister who started the change—there were about 186 different systems of industrial support, the cumulative effect of which was largely negative because we had large-scale deindustrialisation. We are pursuing the strategy in a much more concerted way, in partnership with business and on a long-term basis. That is what we are achieving.
Sammy Wilson (East Antrim) (DUP)
The right hon. Gentleman talks about how the policy is seeking to grow the economy in a balanced way, but does he accept that many regions of the UK are not growing at the same rate as the south-east of England, for example? Places such as Northern Ireland are suffering from that. Why in the Queen’s Speech is there no reference, for example, to the devolution of corporation tax to the Northern Ireland Executive, which would help them to grow the economy in Northern Ireland by more than is happening at present?
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.
Geraint Davies
Does the Secretary of State accept in principle that if the Government converted a £20,000 a year job into two £10,000 a year jobs, with the higher tax threshold, he would be moving from tax payment to zero tax payment, and that this inflexibility and zero-hours and part-time work are contributing massively towards the increasing debt we face under his Government?
Vince Cable
That is attributing a slightly sinister train of argument to employers, which is not the case. There are many industries that have flexible working arrangements—and zero-hours contracts are only one form of flexible working—which the work force accept. The shadow Secretary of State talked proudly about his membership of Unite. I engage with the car trade unions, which accept that zero-hours contracts have quite an important part to play in the flexible working in the automobile industry.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
In the Government’s response to the debate that we held on zero-hours contracts last October, the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), said that it was perfectly reasonable for Opposition Members to ask whether the consultation would also address problems with short-time working and agency working. What conclusions did the consultation come to on those aspects of employment practice?
Vince Cable
I am not sure precisely what the hon. Gentleman is driving at. As he knows, there is an agency workers directive, which we have transposed into British law. It is not terribly popular with many parts of business, but it was agreed between employers and employees. I am not sure what else he is referring to.
Barbara Keeley
I want to refer back to the points made about the quality of jobs and whether jobs are full time or part time, and how people feel about that. Will the Secretary of State comment on a recruitment exercise that an agency has just done in my constituency for jobs in a warehouse that start at 3 in the morning, when there is no public transport? A very large number of people were put through a week-long recruitment exercise for that, and only a very small number were offered jobs. They were offered four hours of work a day, starting at 3 or 4 in the morning at a warehouse. People were mandated to attend that training. This is the kind of thing that is happening. Does the Secretary of State think that my constituents want to be offered jobs picking in a warehouse at 3 in the morning when there is no transport and where, instead of offering full-time jobs to fewer people, a larger number of people are being offered four or five hours of work a day? How can people live with that kind of casualisation?
Vince Cable
Obviously, I do not know all the details of that case, but it seems a very bad one. It is not clear to me whether it is to do with the employer or the way that the benefits system has impacted on people, but if the hon. Lady writes to me we will get it investigated.
Charlie Elphicke
I am a passionate believer in reform of zero-hours contracts, but does the Secretary of State agree that Opposition Members’ comments sit ill with the White Paper that the Labour Government issued that said that Labour
“wishes to retain the flexibility these contracts offer business”?
They then proceeded to do nothing about it for the rest of their time in office.
Vince Cable
I thank the hon. Gentleman for reminding us of that. Two of my Labour predecessors investigated this problem and neither of them felt there was sufficient cause to change the legislation.
Ian Paisley (North Antrim) (DUP)
The figures show that 580 more people are employed in my constituency now than this time last year, which is positive news for the area. However, what conversations is the Secretary of State having with the devolved Administrations to ensure unemployment continues to be tackled, especially for low-wage earners?
Vince Cable
Although the situation is improving in Northern Ireland, there are significant unemployment black spots. I want to work with the Northern Ireland devolved authorities to make sure that we deal with them systematically. As the hon. Gentleman knows, this is a long-standing problem in Northern Ireland that goes back long before the recession.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I raised previously allegations concerning a number of UK parcel carriers and minimum wage enforcement. Will the Secretary of State undertake to look at whether the minimum wage is being properly enforced by UK parcel carriers? Apart from the justice issues for the individuals concerned, there is the potential to affect the sustainability of the universal service obligation that Royal Mail is under.
Vince Cable
Certainly, if there is abuse of the minimum wage, we will want to know about it and we will investigate it. Liberalisation and the opening of the market was mandated by the European Commission some years ago, and it was implemented by the last Government, and we are now seeing the consequences in terms of pay and conditions.
Fiona O'Donnell
Will the Secretary of State remind me—and the Secretary of State for Work and Pensions, while he is sitting at his side—whether he still believes that any of my constituents on jobseeker’s allowance who turn down a zero-hours contract job offer should then be subject to sanctions?
Richard Graham (Gloucester) (Con)
My right hon. Friend has taken several questions on zero-hours contracts, but may I ask him a slightly different question? One of the most interesting statistics that has come out today is from the south-west Manufacturing Advisory Service, which serves as a leading indicator: 49% of all small and medium-sized enterprises manufacturing in the south-west have said they expect to employ more people over the next six months. Does my right hon. Friend agree that when we look at the forward leading indicators—whether for zero-hours or full-time employment in a great industry like aerospace in the corridor between Bristol and Cheltenham or other manufacturing industries around my constituency of Gloucester—we see there are huge indications of really positive jobs growth in really good growth industries?
Vince Cable
Yes, there are, and that is a very good example. We had an earlier exchange on the aerospace industry. One of the major accomplishments of the industrial strategy is that we now have a partnership stretching between Parliaments, guaranteeing large-scale investment by the Government as well by industry, and that is one of the factors contributing to the confidence that my hon. Friend described.
In my concluding remarks, I want to refer to the specific measures introduced in the small business Bill, which will support small business. Let me say at the outset that I fully accept the shadow Secretary of State’s point that one of the central issues affecting small business is access to bank credit. It remains a very big issue, and it is not difficult to understand why. We had the biggest banking crisis in our history going all the way back to the beginning of the 19th century. We have never had anything on this scale, and Britain was uniquely affected because of the scale of banks in the UK relative to GDP—it is higher, I think, than in any other country except Iceland—and, again, the Labour Government had responsibility at the time. The effect of the bank collapse and the subsequent deleveraging that has taken place, particularly in RBS, have been deeply damaging to business. We understand that and are taking steps to deal with it.
The British Business bank is now playing a significant part. Over the past year, I think there have been net flows of £660 million into the small business sector. That is a mixture of new flows to organisations such as Funding Circle and to the challenger banks, together with the guarantee schemes, which have increased by a factor of 75% since they came under the Business bank.
We are running up a downward-moving escalator, but the Government accept that we have a responsibility to intervene heavily to support like lending in the wake of an extremely damaging banking crisis. That is the context in which we are operating. The Bill will contain a series of measures that will help further. Late payment is a massive issue for small businesses, with something in the order of £30 billion in outstanding payments. The legislation will introduce a requirement on companies to be much more transparent in how they deal with late payments.
We also want to introduce much more competition in banking, to ensure that banks will come forward and lend to small businesses. Within the last year, we have seen the creation of a whole set of new banks, supported by the Business bank. The big obstacle—which I recall describing in the House 15 years ago at the time of the Cruickshank report—is the fact that the four leading banks had a stranglehold over the process through the payments system. We have introduced a new form of regulation of the payments system, opening it up to competition and preventing the kind of stranglehold that the existing banks have. The Bill will enable that to happen. In addition, we want to ensure that we have a proper system of data sharing. The lack of such a system is one of the obstacles to new banks coming in and competing. There are also problems with export finance, but the new Bill will enable us to extend export finance into new areas.
The shadow Secretary of State talked about the small business measures having taken a long time, and we accept that. There has been a massive consultation on pubs, for example. It has gone on for many years—indeed, it started long before this Government came into office—but we are now taking action. There will be a statutory code and an arbitration body. There will also be an option for an independent, market-based rent review. I am sure that we will discuss this legislation extensively, but it does represent action after many years of pressure from the Select Committee and from other Members.
Other business measures will include those relating to public procurement. This Government have opened up public procurement in central Government to small business in a way that has never happened before, but that has not always happened throughout the wider public sector, including local government. The measures that we are introducing in this big Bill will considerably improve practice in public procurement, opening up the rest of the public sector.
Mr John Spellar (Warley) (Lab)
The Secretary of State might have had representations from local opticians who had previously provided a service to the Driver and Vehicle Licensing Agency. All their contracts have been taken away from them, bundled up and handed to one big national company, Specsavers. Does not that show that, although the rhetoric might be fine, many Departments are still letting the system down?
Vince Cable
When the right hon. Gentleman looks at the figures, I think that he will find that there has been a substantial increase in the share of small businesses in central Government procurement. I am not a customer of Specsavers, but I will happily investigate the case that he raises.
The criticism from the Opposition and certain outside commentators has been that the legislative programme is light, and that there will not be a great deal for the House to do. In relation to the small business, enterprise and employment Bill, I would simply say be careful what you wish for. It will be one of the major pieces of legislation, and it will get to grips with many detailed, complex issues. It will make a significant difference. We are introducing it against the background of a real, balanced recovery that is having a major effect on employment, and it will reflect the substantial achievements of this Government.
Job Insecurity
Vince Cable Excerpts(10 years, 10 months ago)
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The Secretary of State for Business, Innovation and Skills (Vince Cable)
I am delighted to respond to the hon. Member for Streatham (Mr Umunna) and I appreciate that, as he acknowledged at the beginning of his remarks, he has a problem because trying to manufacture an Opposition day debate on the economy is difficult when it is now growing rapidly.
Vince Cable
Give me some time and I will happily take interventions. I am always generous with interventions and I will wait until a suitable point and give way to the hon. Gentleman.
The danger the hon. Member for Streatham faces is that of creating a cliché such as “triple-dip recession” or “no more boom and bust” that then proves to be positively cringeworthy when the situation changes. Labour’s slogan is now the “cost of living crisis”, and at first sight that is a plausible line of attack because, as I have always acknowledged, real wages fell in the wake of the financial crisis, the country is poorer and the consequences have been painful. The hon. Gentleman buttressed his argument by quoting from the Institute for Fiscal Studies that this painful process is likely to go on until the end of next year. That was what it said until quite recently, but I do not know whether he has seen its report today, which states that the cost of living crisis is to turn around this year. Inflation is now falling so rapidly and the economy recovering so quickly that it expects that turnaround to happen by the middle of the year. I fear that the “cost of living crisis” may be another to go in to the museum of clichés.
Huw Irranca-Davies
Has the Secretary of State done an analysis of when the cost of living crisis might turn around in different regions of the UK, such as south Wales? What is his best guess on that?
Vince Cable
I will get on to regional variation. I am surprised that the hon. Gentleman raises the issue of Wales, because I was studying the regional employment changes and Wales has done relatively well against almost every other region of the UK. Despite the terrible history of unemployment in Wales, its unemployment level is now at the UK average. Its increase in employment levels is greater than in any other part of the UK, including London and the south-east. There is a good story in Wales as well as many very deep problems, which I of course acknowledge.
Nadine Dorries
Does the Secretary of State agree that the Government do not create jobs? Many of the new jobs that have been created have come from the SMEs. The cost of living crisis will turn around quickly, and would do so even more quickly if the banks allowed funding to get to SMEs a little more quickly so that they can grow as they want to with the funding that they need.
Vince Cable
The hon. Lady is right, and it is one of the major casualties of the banking crisis that SME lending dried up. We are taking action on that through the business bank and in other ways. Restoring credit to the SMEs through the banking sector is a critical objective and it is a constraint on growth.
The shadow Minister’s conclusion was a good issue to embark on, and I just wish that he had spent more than two minutes and the last line of the motion on it. There is a real issue about how the recovery will be sustained. There are deep problems, including the lack of trained people and the rebuilding of supply chains. I would love to have a long debate with him about the industrial strategy, how we extend it, and what a Labour Government would do to reinforce it. I do not know whether the shadow Chancellor will come up with some more money, but I would be delighted to hear that it would have that kind of support. But the shadow Minister dismissed it as an afterthought in the last two minutes of a half hour speech, and I was, frankly, rather disappointed by that.
The shadow Minister chose to focus on jobs, and they are of course central. I want to address the issues of employment and employment conditions—
Sheila Gilmore (Edinburgh East) (Lab)
I thank the Secretary of State for giving way before he moves on to the next section of his speech, because I would like him to correct the possible misinterpretation of the IFS report that he has given. While matters might be beginning to turn round sooner than it thought last year, its general conclusion was that
“there is little reason to expect a strong recovery in living standards over the next few years…real earnings are not expected to return to their 2009-10 levels until 2018-19.”
Vince Cable
That is correct. I was merely referring to the point at which things start to turn around and improve. The IFS, like everyone else, underestimated the strength and speed of the recovery. Of course, its forecasts, like everyone else’s, may have to be revised upwards.
I have been responding to debates from my current position for the best part of four years, and I have seen the Opposition’s jobs argument go through four or five iterations. When we first started, the argument from the Opposition was that the attempt to deal with the fiscal crisis would result in mass unemployment. That now looks positively silly today, but if they go back to their speeches in 2010, that was their prediction. We now have the highest level of employment ever—30 million. We have 1.3 million more people in employment than in 2010. The jobless—unemployed—total has fallen not just in relative terms, but in absolute terms by 650,000 to 7.1 %. Of course, there are regional variations. I accept that there are particularly serious problems in the north-east, which is the only part of the UK that has double-digit unemployment.
It is worth contrasting the overall picture with some other countries that had a far less serious experience of the financial crisis than we did. Sweden has 8% unemployment. The unemployment rate in Canada, which everybody thinks is a wonderful economy—we recruited our central banker from there—is higher than in the UK. In the eurozone, even including Germany and Austria, it is 12%. Our unemployment position is significantly better than that of most other western countries.
Chris Williamson
Will the Secretary of State at least acknowledge that the degree of underemployment is masking the real problem in the economy? If those people were put in full-time equivalent posts, the number of unemployed people would be a much bigger picture, would it not?
Vince Cable
I am going to come on to underemployment and part-time employment shortly, because it is a legitimate concern. Obviously, there are people who took part-time jobs in the depth of the recession who now want full-time work—of course that is true. What the hon. Gentleman might not be aware of is that in the past year the number of people in part-time employment has actually fallen in absolute terms by 7,000, and that the number of people in full-time employment has risen by 475,000. There was an issue relating to part-time jobs in the depth of the recession. It was understandable that people took part-time jobs in a very difficult situation, but over the last year the position has changed dramatically. Building an argument around part-time employment is now of historic interest, not contemporary interest.
Stephen Timms (East Ham) (Lab)
It is not an historic concern. The number of people who are working part time because they cannot find full-time work is still more than 1.4 million. It has never been that high before. It is a current problem, which the Secretary of State should be concerned about.
Vince Cable
It is a current problem, but it is a declining problem. The trend over the past year is striking: the new jobs being created are full-time jobs and part-time employment is declining. Of course, there are a lot of people who took part-time employment under very difficult conditions who now want full-time work. If the recovery is sustained, as it must be, then this problem will resolve itself, but I accept that there are a lot of people in unsatisfactory employment situations.
Mr Russell Brown (Dumfries and Galloway) (Lab)
We have now had nearly four years of talking about the numbers of people who are unemployed and the number who are employed. Does the Secretary of State have the figures for the number of hours worked on a weekly basis? Is he able to track that over the past three or four years?
Vince Cable
I do not have those figures, but I am sure we could get them. I am sure my colleague the Secretary of State for Work and Pensions will dig them out for him. I am sure that they reflect the pattern I describe that, certainly over the last year, full-time employment is rising relative to part-time employment.
Mr Donohoe
Will the Secretary of State give us the figures for those who are on zero-hours contracts?
Vince Cable
As the hon. Gentleman knows, we have had official figures from the Office for National Statistics and there has been a very wide range of surveys. The reason I have embarked on a formal consultation, which will be concluded at the end of March and will lead to policy action on the issues to which the shadow spokesman referred, is that we need to have a proper understanding of the scale before legislation is initiated. The simple answer is that nobody knows how many people are on zero-hours contracts—indeed, nobody can precisely define what they are.
Vince Cable
I think I would rather press on. I will take other interventions later.
The next twist in the argument on employment moved gradually away from the prediction of mass unemployment. The argument became that because public sector employment was declining, the growth in private sector employment would never catch up. What has actually happened is a very clear trend. In the period since we came into office, 1.1 million private sector jobs have been created. There have been losses in public sector employment of 440,000 jobs, but the ratio is about three to one. If we go back to the first quarter of last year, before the recovery had become properly embedded, the figures show that in every single region of the country, including in the north-east of England, private sector growth exceeded the decline in public sector employment, and that that trend has been sustained.
Andrew Bridgen
We have been talking about the rise in the number of people on zero-hours contracts. Is the Secretary of State aware of a report by ACAS saying that between 2003-04 and 2010-11—under Labour—the number of people on zero-hours contracts actually doubled?
Vince Cable
Indeed, and to be fair to the shadow Secretary of State, he did acknowledge that job insecurity—particularly zero-hours contracts—was not particular to our period in office but was a long-term trend.
David Rutley (Macclesfield) (Con)
The Secretary of State makes an important point about the focus being on private sector, not public sector jobs, which is an important development, especially for the north-west, where my constituency is situated. Under the previous Government, far too many jobs—tens of thousands—were created in the public sector, which crowded out jobs and had a detrimental impact on the private sector. Will he confirm that this Government are putting the focus on private sector job creation, encouraging people to become first-time entrepreneurs and, through things such as the employment allowance, enabling them to become first-time employers as well?
Vince Cable
The so-called crowding-out problem might well be an issue, if we run into problems of labour shortage, and indeed we are running into serious vacancies in some parts of the economy, so that might be a highly relevant consideration.
The rapid results service behind me has produced an answer on the number of hours worked. Apparently, in the last quarter, 969 million hours were worked, which was a 2.5% increase on the year.
Tom Blenkinsop
The Office for National Statistics estimated that 0.57% of the working population were on zero-hours contracts in 2010 and that by 2012 that had leapt to 0.84%, so it almost doubled in that two-year period under this Government.
Jenny Chapman
It is pleasing that the Secretary of State has referred to the north-east and acknowledged that we have a particular problem. He said that he would introduce policy once he knew the scale of the issues, but regardless of that, will he commit to doing something about employment agencies’ practice of skimming off tens of pounds from the weekly pay of minimum wage earners?
Vince Cable
I am not quite sure what the hon. Lady is referring to. Is she referring to something illegal that needs to be investigated? I think the shadow Secretary of State raised the issue of abuses by employment agencies at the last BIS questions. We had been tipped off about that, and we are investigating where there is illegality.
Jenny Chapman
I am happy to explain. A constituent of mine contacted me after taking a job through an employment agency on the minimum wage. He was required to sign away £16 of his earnings per week to pay the agency to process his pay—that is what he was told—so he is now taking home much less than the minimum wage. I can assure the Secretary of State that such practices are widespread. Will he commit to cracking down on this, regardless of the scale?
Vince Cable
Of course, if there is illegal abuse of the minimum wage, it needs to be investigated and prosecuted, and we will do that. If the hon. Lady gives me the facts I will ensure that the matter is followed up.
I want to round up on the broad issue of the level of employment. The trend is clear: employment is growing rapidly, unemployment is falling and all parts of the UK are now benefiting. Even among particular groups of the population with past experiences of unemployment —for example, lone parents, disabled people and over-65s—employment is now at pre-recession levels. The overall story in the labour market is a positive one, but there are still large pockets of serious structural unemployment and people who want full-time employment —we acknowledge that—and that is why the recovery still has to be made sustainable.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Member for Darlington (Jenny Chapman) raises a very important point. We might be talking about a circumvention of the law or a loophole. Will the Secretary of State ensure that people on the minimum wage are not being scammed or skimmed by agencies and losing part of their vital weekly wage because of some of these schemes? It would be obscene if that was happening.
Vince Cable
It is not clear to me from the intervention whether we are talking about avoidance or evasion. I need to be clear before we take action, so if either the hon. Gentleman or the hon. Member for Darlington (Jenny Chapman), or both, give me the details, I will deal with the issue.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I am grateful to the Secretary of State for giving way; he is being generous with his time. Is he aware that the health effects of insecure employment are exactly the same as those for people who are unemployed? He will be aware that mental health problems, as well as physical health problems such as cardiovascular disease, are associated with unemployment, but there is clear evidence that insecure work also has these detrimental effects. Has his Department made any assessment of the effects not just on individuals—which can obviously be traumatic if they have a myocardial infarction, for example—but on the health service?
Vince Cable
Yes, we are well aware that insecurity in general has negative health effects. It is important, therefore, that we restore security.
It is worth quoting a study that was carried out a year or so ago, which contrasted people’s attitude towards their work now with their attitude roughly a decade ago, in 2003-04. The workplace employment relations study said that despite recession, the level of work satisfaction is higher than it was before. Of course, these are qualitative judgments and we cannot quantify these things, but I accept the basic point—we need job security and confidence—so let me take the various policy issues raised in the motion, and that the Opposition spokesman raised.
We are already dealing with some of the issues the hon. Gentleman raised, as he well knows. The consultation on zero-hours contracts will finish on 13 March. We have made it clear that we would like to take action on exclusivity. We are discussing the practicalities of that and I will return to the House to report on it. He refers in the motion to penalties for minimum wage abuse. He may recall that I explained to the House just over a week ago—I think I was facing the shadow Chief Secretary —that the penalties are being quadrupled. We are bringing forward primary legislation that will extend the penalty system per worker, rather than per company, which will potentially be much more prohibitive.
Contrary to what it says in the motion, we are looking at local enforcement. Joint actions between Her Majesty’s Revenue and Customs and local councils are already taking place. Again, we have acknowledged that there are issues with false self-employment. The Treasury has admitted that this is a potential area of abuse. It has investigated it and a consultation is going out on how we can deal with the problem. Therefore, a lot of the issues raised in the motion are already being dealt with, as I think the shadow spokesman is well aware.
However, I want to deal with the areas where the hon. Gentleman reheats some of the criticisms of actions we took in the past. On the broad issue of employment rights, I have always made it clear that the hire and fire culture is not something I or we want to see. The people who argued that introducing a hire and fire culture into business was the only way to create employment have been proved as comprehensively wrong as the people who talked about a triple-dip recession, which is why we have not followed their advice.
It would also have been gracious to acknowledge that in some respects employment rights have been massively enhanced, and in two respects in particular: shared parental leave and paternity leave, and extending the right to flexible working. This affects hundreds of thousands of workers and potentially millions, whose rights at work have as a consequence been entrenched.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Talking about hire and fire cultures, does the Secretary of State recall saying that there should be no discrimination or victimisation of trade unionists following the dispute at Ineos in my constituency? Is he therefore as shocked as I am to hear that the convenor of shop stewards has today been summarily dismissed by the company on trumped-up charges?
Vince Cable
I am surprised at that. I am not an expert on employment law, but I thought that protection from dismissal for trade union activities was a fully protected employment right. If the story is as has just been described, I would have thought the person concerned would have a good case to support his job.
Let me deal with the areas where the Opposition spokesperson was critical. He referred to the fact that we have quite deliberately tried to reduce the scope of employment tribunals, both by extending the qualifying period from one to two years and through the fee system, albeit with remission in respect of people on low incomes, as I think he would acknowledge. That was done for a specific reason. We are trying to ensure that difficult cases are moved from a legal, court framework to a framework of conciliation through ACAS. Lest anyone imagine that ACAS is some right-wing, business-friendly organisation that is against employees, let me point out—I do not know whether this has been picked up by the Opposition—that I recently appointed Brendan Barber as its head, so those whose employment disputes are referred to it can be pretty confident that they will be dealt with properly. It is surely right and sensible for small and medium-sized companies in particular not to tie up a lot of time and money in litigious processes when their disputes can be dealt with much better through conciliation.
The motion also refers to the dilution, as it has been described, of health and safety standards, although the hon. Member for Streatham did not refer to that in his speech. I do not know whether he has read the Löfstedt report, but it makes the position very clear. Essentially, what we have suggested is that where there is high-risk employment—and there is a great deal of it in agriculture, construction and manufacturing—the inspection regime should remain intact, but where there is found to be a low risk and that finding is evidence-based, the level of inspections should be reduced. No attempt is being made to undermine the safety regime applying to dangerous occupations.
It is worth bearing it in mind that, under the present Government, as under the last, British safety records are exemplary. According to our most recent survey, there were 148 fatalities last year. That is 148 too many, but the figure is comparable to the figure for the best previous year, 2009-2010, and significantly better than the figures in any other previous years. It means that we have a better health and safety record than almost any other country, including Germany, and that we are three times safer than France. Members should try to remember that important context before making throwaway references to diluting health and safety.
Stephen Timms
This is not a throwaway reference. I wonder whether the Secretary of State has seen the interview with Professor Löfstedt, whom he mentioned earlier. In that interview, which was published last month, the professor mentioned some of the steps the Government have taken on, for example, civil liability. He said:
“It’s very unfortunate; it’s more or less ideology. I have been trying to promote evidence based policy making and this does not help”.
That is what Professor Löfstedt is now saying about what the Government are doing.
Vince Cable
My impression is that the policy we have been pursuing is very much evidence-based, and the examples I have given on inspections are in precisely that category. However, my colleagues from the Department for Work and Pensions know much more about this aspect of the subject than I do, and no doubt they will respond to the right hon. Gentleman’s point.
Finally, let me deal with the one issue on which the hon. Member for Streatham spent quite a lot of time and with which he had a certain amount of fun. I refer to the “shares for rights” scheme. Of course, it is possible to develop a critique of that scheme, but what I find amusing is that at least three totally separate and conflicting arguments have been advanced against it. The first is that downtrodden workers will be stripped of their employment rights. When the scheme was being dealt with in Parliament, we tried to ensure that it would be entirely voluntary, and indeed we responded to proposals from the Opposition in order to entrench that.
Another line of criticism has nothing to do with downtrodden workers, but is all about highly paid executives carrying out a tax scam. That may be true. However, a third criticism—which we heard from Back Benchers and which is, at least currently, supported by the facts—was that neither of those things are happening, because not many people are taking up the scheme. If the Opposition are going to launch a full-frontal attack on the proposals, they should work out which of those three arguments they believe in.
Mr Umunna
The Secretary of State has argued that he has resisted some of the nastier aspects of his coalition partners’ moves to water down people’s rights at work, but we need only read the reports of what was said on both sides of the House of Lords to see what impact the “shares for rights” scheme was expected to have. That is the point I was making.
Madam Deputy Speaker (Mrs Eleanor Laing)
I appreciate the hon. Lady’s point of order. Of course it is always wise for Members to moderate their language. I make no ruling on whether the word “nasty” is appropriate, but it is certainly not a bad enough word for me to insist on its withdrawal.
Vince Cable
The scheme cannot have the damaging effects that have been described if companies do not take it up. We will wait and see how many of this modest number of inquiries actually lead to schemes being established. If there are large numbers and they do have the damaging effects suggested, I will retract some of the comments I have been making, but I think the problem is likely to be that, far from damaging workers and far from leading to large-scale tax avoidance, it remains a niche scheme chosen by a handful of companies as an experiment, and as such it can do no harm.
Let me conclude by dealing with what I think should have been the meat of the debate: industrial strategy. It is important that we discuss that. It is very important that the shape and sustainability of the recovery be maintained. I would argue that what we have done is something that has not been done for decades. We are trying to get industry around the table, talking to each other, thinking about partnership, thinking about long-term policy. That has not happened for a very long time. Business is very enthusiastic about it. Trade unions are very enthusiastic about it, too. They want to join our various sector groups.
When we do get round to debating this subject properly, I will be interested in hearing how the Opposition want to develop it. Let us take one or two examples. Although we are pressed for cash, we have put £1 billion into the aerospace industry, co-financing the private sector, and we have put £500 million into the car industry. We are doing similar things for agribusiness and other sectors. Is the shadow Secretary of State proposing to enhance that, or change or develop it in any way? We would all be interested to know.
We have rolled out a system of catapults which are attracting a great deal of positive attention from both the research community and business. We have nine of them, and we would obviously like to take this further. If we had the endorsement and support of the Opposition, that would be a great help. I would be interested to know where they want to go with it.
We have introduced radical reforms of training and apprenticeships, as a result of which we are now getting big improvements in quantity and quality. Again, I have never heard any feedback from the Opposition on where they want to go with vocational training.
These are the issues we need to be talking about. This is how we are going properly to sustain the genuine and real recovery we have at the moment. I look forward to having those debates in future, but for tonight I recommend that my colleagues vote against this motion.
Jobs and Business
Vince Cable Excerpts(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I am delighted to be able to introduce the section of the debate on the Queen’s Speech that relates to economic matters, particularly jobs and business. We will be talking primarily about Bills dealing with national insurance reductions for companies, consumer protection, and the protection of intellectual property, particularly design, as well as some of the carry-over Bills that will have significant implications in relation to banking, workplace change and reform, and shared parental leave and flexible working, which still have to be legislated for. We will also discuss some of the important social measures that have major economic implications, particularly the reforms of pensions and social care, about which my colleague the Secretary of State for Work and Pensions will speak. Of course, these are social changes, but they will have major economic consequences, notably incentivising saving and thereby contributing to long-term economic growth.
It is perhaps useful to focus on some of the comments that business groups made about this agenda. The Federation of Small Businesses responded by saying that it welcomes
“the focus on a stronger economy and measures to help small businesses to create jobs.”
The British Chambers of Commerce said:
“On balance, businesses will welcome the limited package of legislation announced in the Queen’s Speech.”
The CBI was more critical, but made this perfectly valid point, which will be at the heart of the debate:
“You cannot legislate your way to economic growth”.
Indeed, and that is why, in essence, this debate will be about economic policy rather than legislation.
We need to start with the basic economic context in which we operate. When we are writing the economic history of the past two decades, the story will be one of a spectacular boom and a spectacular bust—15 years of remarkable continued economic growth followed by the worst crash since after the first world war, the two things being intimately connected. The first requirement in approaching this subject is a certain degree of humility. We are in unprecedented conditions, and it is important to acknowledge that there is no simple or easy answer to many of the difficult issues that we have to grapple with. Risks are associated with fiscal consolidation that is too fast and risks are associated with fiscal consolidation that is too slow. There are genuine debates about the best mix of monetary and fiscal policy. There are also serious debates on how we deal with the banks in such a way that they rediscover their appetite for risk but do not do so in a way that destabilises the banking system as before. I hope that everybody in this debate, particularly the Opposition, will approach these very tricky issues recognising the very difficult context in which we operate.
Let me address a few of the questions that the Leader of the Opposition asked in his response to the Queen’s Speech. He asked about jobs, the link between jobs and wages, the very emotive but important issue of migration, and the banking system, which is at the heart of the problems we are dealing with. I will start with jobs.
We have unemployment of about 7.8% or 7.9%. That is about a third of what it was in the great depression of the 1930s, a rather comparable period in our history, but none the less worryingly high. It is useful, however, to make some apt comparisons. In the United States, which has recovered from the crisis much better than any other western country, except possibly Australia, the unemployment rate is slightly less, at about 7.6%. In France, which has had the benefit, if such it is, of a socialist Government, the unemployment rate is 10.6%. In Sweden, which is an interesting case—it is not in any sense shackled by the eurozone and it has had probably the most enlightened welfare and labour market policies of any European country—unemployment is significantly higher than in the UK, at about 8.8%.
Under this Government—perhaps even in the rather partisan atmosphere in which we debate things in this House, we should get a little credit for this—we have seen the creation of 1.2 million private sector jobs; the expansion of manufacturing employment, now at 82,000 after a period of Labour Government in which it collapsed from 4 million to 2.5 million; and private sector employment increasing six times as fast as public sector employment declined.
Mark Tami (Alyn and Deeside) (Lab)
The Government talk a lot about the growth in private sector jobs. If jobs are being created, why is the economy showing no signs of growth and just bumping along the bottom? Surely we should be producing more and the economy should be growing.
Vince Cable
That is an extraordinarily naive question in the wake of the phenomenal financial crash that we have had. I do not know whether the hon. Gentleman is familiar with the economic literature, but the econometric data suggest that after the banking crash that Britain experienced we should have lost about 50% of our GDP. We have done well to avert that. We face a difficult set of circumstances. It is a remarkable success story that in an economy that is still recovering from such a long economic heart attack, we are generating significant private sector employment growth. That is positive. Alongside that, we have seen the growth of about 250,000 new businesses, which will be the source of employment growth.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Many of my constituents are in those new private sector jobs, but the hours are limited. Many of them want to work more than the 16 hours or so that they have been given. Has the right hon. Gentleman counted how many of the new jobs are part time, with no prospect of becoming full time?
Vince Cable
The vast majority are in full-time work. The figures show that quite clearly. It is better to be in part-time work than out of work. I hope that there will be some recognition of that.
Mr Kevan Jones (North Durham) (Lab)
Does the right hon. Gentleman recognise that when the coalition came into government in 2010 the economy was growing because of the actions of the previous Government? Does he regret cutting capital expenditure straight away and the other mistakes that were made early on, which sent the economy into depression and have caused it, as my hon. Friend the Member for Alyn and Deeside (Mark Tami) said, to bump along the bottom?
Vince Cable
I have said that the cuts in capital spending have been too deep. The Chancellor has acknowledged that and changes were made in the autumn statement and the Budget. The hon. Gentleman seems to forget that the decision to slash capital budgets by half was made by the outgoing Labour Government in 2010.
Julie Hilling (Bolton West) (Lab)
How many of the jobs that have been created are so-called workfare jobs in which people are supposedly employed but there is no pay?
Vince Cable
There is no such activity in Britain. There were cases of people working without pay and my colleague, the Secretary of State for Work and Pensions, intervened to stop that practice operating on the back of the benefits system.
We acknowledge that there is one category of people among whom unemployment is worryingly high: young people. The Leader of the Opposition focused on that issue. About 1 million young people are unemployed. That figure is worrying, but we should recall that the level of young people’s unemployment, which is approaching 20%, is virtually the same as the level we inherited.
It is also worth recalling that a third of the figure is made up of full-time students. It has always struck me as a little odd that we regard full-time students as unemployed, but that is what the statistics show. If we strip that out, there is still a significant level of youth unemployment, which is worrying.
It is useful, as I did on the wider figures, to contrast youth unemployment in this country with that in comparable countries. In France, youth unemployment is 24%, in Sweden, which perhaps should be a role model, it is 24%, in Italy it is 35% and in Spain it is 45%. The Economist, as some Members will know, has been running a series on the global problem of youth unemployment. We share that problem, but in many ways we are outperforming comparable economies.
Mr Steve Reed (Croydon North) (Lab)
I hope that the right hon. Gentleman understands that in seeking to justify the unacceptably high figures on youth unemployment he will sound incredibly complacent to long-term unemployed young people in constituencies such as mine, whose numbers over the past 12 months have increased by more than 100%.
Vince Cable
It is not complacent to acknowledge the extent to which we have serious problems, which is where I started, or to compare the country with economies that are suffering similar problems. For those who are rightly focused on unemployment among young people, the simple truth is that long-term youth unemployment rose by 40% in the boom years when the Labour party was in power. Labour Members are therefore not in a strong position to lecture us on how to deal with it.
We have focused on two policy areas to deal with the problem of youth unemployment. I am most closely involved in the growth of apprenticeships and my colleague, the Secretary of State for Work and Pensions, will talk about the other. We have all embraced apprenticeships, including, rather belatedly, the Opposition. There is a recognition among employers and young people that it is an excellent model for training. Under this Government, the number of apprenticeship starts has increased by 86%. There were 160,000 last year. There has been a 42% growth in the number of young people starting apprenticeships. We are making reforms that will improve the system further, notably the employer ownership system, under which apprenticeship training will be channelled through employers so that there is the demand for real jobs. We are also introducing a staged approach through traineeships, so that young people have a route into proper training.
A difficult area is that what has kept unemployment down in the UK is the fact that real wages have not risen. Indeed, they have fallen. That was the main focus of attack from the Leader of the Opposition. We need to understand and explain what has happened. The British economy was hit massively by the financial crisis. We are a significantly poorer country than we were before that time, although we are now recovering. The impact of that has been felt predominantly through the reduction of wages in real terms.
We are trying to mitigate that impact in two major ways. The first is by lifting low earners out of tax, which increases their disposal income even though their pre-tax income may have fallen. The effect of that is that people on the minimum wage are paying half the income tax that they paid before we embarked on that reform. We have also taken 2.7 million out of income tax altogether. Secondly, and this is my direct responsibility, we have ignored the advice from some quarters to abandon the minimum wage or to dilute it. I have followed the advice of the Low Pay Commission on the minimum wage.
One of the points that the Leader of the Opposition made in his speech—
Vince Cable
I will finish my point and then take the intervention.
The Leader of the Opposition pointed to the apparently low level of enforcement of the minimum wage and the limited number of prosecutions. That worried me at the time, so I checked the history. I discovered that in the last four years of the Labour Government, the number of prosecutions under this flagship policy was two a year. We have therefore maintained a rather similar practice.
I have asked for an interview with the head of Her Majesty’s Revenue and Customs, who is responsible for prosecutions, to establish why the level is so low, because this is a perfectly legitimate issue. I have discovered that a large number of companies are being pursued under civil proceedings, where the maximum penalty is £5,000 a year. The matter is therefore being enforced assiduously, but not through the criminal system. I will establish why we are not doing that and whether we should be doing more to underpin the rights of some of the lowest-paid people in society.
Clive Efford
The right hon. Gentleman has anticipated the point that I was going to make, which was about the alarmingly low level of prosecutions for not paying the national minimum wage. Is most of the enforcement not taking place through trade union activity?
Vince Cable
I am sure that the trade unions play a part in bringing this matter to the attention of the authorities. Every complaint is investigated. Some come from the trade unions and I welcome the role that they play.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Further to the point that most activity surrounding non-payment of the minimum wage is conducted in the civil, rather than the criminal, courts, has the right hon. Gentleman’s Department made that information publicly available? If not, will he do that so that people can see, and a message can be sent, that the Government will not tolerate people trying to undermine the national minimum wage?
Vince Cable
The hon. Gentleman makes the same point I was making. The Government are pursuing that matter through the civil courts and there are substantial penalties. It is an HMRC task, but I take the point that we should perhaps make the message more easily available. Employers should not get away with the idea that they should ignore this.
Let me say a bit about a difficult area of policy in which issues of unemployment and low pay intersect: migration, which is one of the most important reforms that the Government will introduce. I was hesitant about raising the subject because it is essentially covered by the Home Office, but substantial economic issues are also involved and it is important to refer to them. I was provoked into feeling that we should debate the issue in this context because a couple of days ago I was on the radio on the “Jeremy Vine” programme. I was following a female voice that was ranting on about millions of illegal immigrants and the negligence of the Government in letting them all in and not deporting enough people. I thought at the time that it was some fringe party that regarded Mr Nigel Farage as a sort of soggy, left-wing liberal, but I then realised it was the Labour shadow Home Secretary, and I tried to understand where she was coming from. It says quite a lot about the Labour party’s current values that it feels it necessary to apologise for letting in foreigners, but is still reluctant to apologise for wrecking the economy.
I vividly recall a conversation I had with a constituent, shortly before the last general election. She was taking me to task for what she said were millions of illegal immigrants in the country and, rather recklessly perhaps, I decided to debate the subject with her. I asked, “How do you know?”, and she said, “Well, I see them in the high street the whole time.” I said, “Okay, but how do you know they are illegal?” She looked at me and said, “Mr Cable, why are you being so difficult? You know exactly what I mean”, and pointed up the road to the Hounslow mosque. Unfortunately, beneath a lot of the arguments about numbers, that is the prejudice we are trying to confront. We must, I think, make the case—I certainly intend to make it—for managed immigration that has a positive impact on the country, while at the same time providing the necessary level of reassurance.
Meg Hillier
Will the right hon. Gentleman update the House on his discussions with the Home Office about visas for students? The attitude of the Home Office is sending out messages that UK plc higher education is not open for business, and competition from Europe, Australia and other places is mopping up our student intake.
Vince Cable
I spend a good deal of time discussing that issue with the Home Office, and I will come on to students in a moment as they are a crucial category.
In order to clear the decks for an honest discussion of this problem, we must confront the reality that some of the facts, or factoids, used in this context are deeply unhelpful. All parties and commentators use the concept of net immigration as a way of measuring what is happening on that front, but at the heart of that concept lies a logical absurdity. One reason net immigration rises is because fewer British people emigrate—one would have thought it rather a good thing that people feel comfortable living in this country and want to stay here. Net immigration declines if more British people emigrate, which one would have thought is rather a bad thing. We often operate, therefore, with a concept that gives us misleading and unhelpful conclusions.
Similarly, the biggest item in immigration—this relates to the previous intervention—and the biggest category of people regarded as immigrants are overseas students. Of course, overseas students are not immigrants; that is not why they come here. A few stay on—indeed, I probably contributed to immigration statistics 50 years ago when I married someone who was then a student at the university of York. For the most part, however, people come to the UK to study and then go home. They are not immigrants, but by way of a quirk—not in our statistics, but those of the United Nations—they are regarded as immigrants and we must acknowledge that in our debates.
Setting aside prejudices and anxieties, it is important to acknowledge that in some key areas immigration makes an important and positive contribution to the UK. The first category is the one we have just been discussing: students. Overseas students contribute about £9 billion a year to the UK economy. They also contribute in other ways, but education is one of our most successful export industries. The Government have tried to curb abuses that were taking place. People were using bogus colleges as a route to illegal immigration, and those have been closed. Once we have established the principle of legality, students make a positive contribution, and I would see a negative trend in students coming to the UK as a problem rather than an achievement.
Mr Kevan Jones
I agree with the right hon. Gentleman’s point about bogus colleges. First-class universities such as Durham rely on a lot of overseas students not only for income but to become more cultural and diverse places. Does he agree that some of the language being used gives the impression to students from the middle east and far east that they are not welcome in the UK?
Vince Cable
That should not be the case, and the Prime Minister has gone out of his way—as he did on a recent visit to India—to make it clear that we welcome valid, legal overseas student visitors to the UK. That is our policy and we are encouraging it.
Mr Sam Gyimah (East Surrey) (Con)
Will the Secretary of State confirm to the House that there is no cap on the number of students who can study in the UK if they attend and have a place at a proper university?
Vince Cable
That is true and the core of the policy. There is no cap on legal immigration for students, not just for universities but also properly accredited colleges. There is also a right to work subsequently in graduate-level employment, and I hope that that information will be made more widely available.
The second crucial group of people are those with key skills. The Government exempt intra-company transfers from the cap on immigration. There are many key individuals in management, banking and engineering specialties, and in a highly specialised economy we will have more and more demand for services of that kind. The Home Secretary has gone to considerable lengths to remove some of the impediments surrounding visas for people who are needed by British industry and are an important part of our economy.
Meg Hillier
I thank the right hon. Gentleman for giving way yet again. I am MP for Shoreditch and what the Prime Minister calls Tech City. Business after business in that area has raised concerns with me about the challenge of getting visas for key coders and programmers whom they cannot recruit in the UK because we have not yet skilled-up enough—an issue for the right hon. Gentleman’s Department. Because of the Home Office cap, businesses are struggling to get those people in. Does he have any words of comfort for those businesses about his negotiations?
Vince Cable
Yes, I do. It is, of course, important to train people in the UK where possible, and one of the drivers behind the apprenticeship programme is that of ensuring we build up our scandalously neglected skills base. Where there are genuine vacancies, it is important that people are able to move freely. If the hon. Lady is able to bring cases to my Department, we will try to work with the Home Office to ensure that those people are able to come.
The third group of people are not immigrants at all but visitors. We wish to maintain our reputation as an economy that is open for business, and millions of people come to the UK to do business, shop, visit family and friends, or as tourists. It is important that they can do that with as few visa restrictions as possible, and where there are visa restrictions, we must ensure they are dealt with quickly and effectively. The Government are currently working hard, particularly with countries such as China, to ensure that the system works better.
Finally, there is the issue of the so-called single market within the EU. When the single market was introduced, it was made clear that one core element is the so-called four freedoms: the freedom of trade in goods; the freedom of trade in services; the freedom of capital movements; and the freedom of worker movements. They are at the heart of free trade. I am often baffled by people outside the Chamber who clamour for free trade with Europe but denounce the free market, because they are the same thing.
Modern trade relationships—there are very few restrictions on physical trade in goods these days—frequently involve people moving backwards and forwards. That is the nature of modern trading relationships, and we must uphold it within the EU.
Mr Steve Reed
Does the Secretary of State recognise that many immigrants are extremely entrepreneurial? One reason the London borough of Lambeth has the highest number of new business start-ups of any borough in the country is the relatively high immigration there.
Vince Cable
That is essentially the point I am trying to make. Perhaps the hon. Gentleman can communicate his message to the shadow Home Secretary, who has a slightly different take on those things.
My essential point is that there are positives, and we need to stress them in the current atmosphere. However, we also need to provide reassurance, which is what the Government are seeking to do in two main ways. First, when people come to this country, we should acknowledge a distinction between the rights to work and to claim benefits, which is at the heart of people’s sense of citizenship and belonging. My colleague the Secretary of State for Work and Pensions will explain how we want to ensure that British citizens and not people from overseas receive benefits. The sense of abuse in that sector fuels much of the current anxiety.
The second source of concern is the belief that the laws and restrictions we have should be enforced. There are measures in the Immigration Bill to try to ensure that the private sector, particularly the property sector, plays its role in enforcing them. Those restrictions will have to be subject to a proper regulatory impact assessment and, under the one in, two out principle, they will have to demonstrate that they do not impose red tape on small business. Provided that happens, I hope the combination of actions that have been taken in respect of the benefits system and enforcing the law will be sufficient to reassure the public, or those people who are willing to be reassured, that managed immigration is very much in the national interest.
Mr Kevan Jones
The right hon. Gentleman makes a thoughtful speech and brings some balance to the argument on immigration. However, if he looks at Department for Work and Pensions figures, he will see that the majority of immigrants are in work and not claiming benefits. Of those who claim benefits, some have contributed through national insurance. Does he agree that we should look at the facts rather than feed the myths put forward by the press? One fact is that, according to DWP figures, fewer than 2% of applications are fraudulent or bogus.
Vince Cable
The hon. Gentleman is right that myth-busting is an important part of what we need to do. However, in order to deal with myth-busting, we must also deal with genuine abuses. I hope he understands that. I am grateful for his first comment—I am trying to lower the temperature of the debate and to get us to deal with fact rather than myth. I am trying to have a proper balance that recognises the very substantial economic importance of managed migration to this country alongside the measures we must take to deal with abuse.
A large part of the Leader of the Opposition’s speech was devoted to the continuing problems in banking and the financial sector, and many of the current problems with the economy relate to the aftermath of the banking crisis. We have got to a situation in which banks—partly under pressure from regulators, and partly as a result of learning from their mistakes—have moved to a position of fairly extreme risk aversion. If we are to ensure that credit flows to small business, which is the motor of the economy, that needs to change.
There is some evidence that the situation is beginning to change. Some banks, such as Lloyds, HSBC and the trade finance market, are showing positive trends, as is Barclays. The head of Royal Bank of Scotland made it clear at the weekend that he has £20 billion-worth above his liquidity buffers and capital requirements available for small and medium-sized enterprise loans. We hope SMEs take advantage of that.
However, the position we are dealing with is genuinely difficult. In the light of banks’ previous misfortunes, they are operating what I call a pawnbroker model of banking, under which people need collateral, whether a gold watch or property, to secure a business loan. That is massively inhibiting for, for example, a creative industry that does not have such collateral, or an export company that is trying to trade on the basis of orders, or simply for a good company with a good business idea and a good business plan that is unable to get into expansionary mode because of the crippling effects of bank credit restriction.
The Government are trying to deal with the problem in a series of practical steps. We clearly need to do more, but it is worth summarising some of the steps we are taking. We have a sophisticated system of developing supply chain finance—the advanced manufacturing supply chain initiative. Work is being done with Kingfisher and others in the private sector to support trade finance outside the banking system. We have a £1 billion fund that now supports non-bank finance, which is proliferating rapidly. We have crowd-sourced funding, invoice finance and non-conventional forms of lending. The Financial Services Authority and, currently, the Financial Conduct Authority, relaxed rules on the establishment of new banks. Within the next year or so, we will hopefully have a lot more banks, based on the model of Aldermore and Handelsbanken.
Probably the most important step, and one that underpins the others, is the work we are doing with the business bank. We have £1 billion of start-up capital. The first £300 million is being marketed to support new banks and long-term patient capital, which can be raised in the City, and to support equity through angel networks. A crucial test of our policy in the coming months will be the speed with which we can get that capital into the market to relieve the genuine constraints.
I listened carefully to try to establish what, if anything, Opposition Members wanted to add to the debate, because the problem is a genuinely difficult one, and because Labour presided over the banking collapse. If I understand them correctly, the big new idea is regional banking. It is a good idea, and I want it to be explained and developed. It has been forgotten that, 15 years ago, we had regional banking—they were called building societies. I have a vivid recollection of that period because I was chairman of Save Our Building Societies, working with one or two Opposition colleagues, particularly the hon. Member for Edmonton (Mr Love), to try to stop the demutualisation of building societies.
I believe demutualisation began originally with Lord Lawson, but it is worth recalling that, in the first five years of the Blair Government, we lost most of our regional banks. It is worth itemising what happened to them: Bradford and Bingley collapsed and was nationalised, and is now part of Santander; Birmingham Midshires bank is now part of Lloyds; Northern Rock in Newcastle collapsed and is now part of the Virgin group; Woolwich is now part of Barclays; Halifax is now part of Lloyds; and Alliance and Leicester is now part of Santander. We had regional banking, and it went. I would love to see it recreated, but that is like turning omelettes back into eggs. I am all ears as to how that can be done. If it can be done, I am very much in favour of it, because we need much more diversity and competition in banking.
Mr Steve Reed
I thank the Secretary of State for being so generous with his time. He talks about the banking sector as though it is wholly independent when, in fact, large swathes of it are nationalised. Why does he not use the power that that gives him to compel banks to lend more to small businesses that are seeking finance to grow?
Vince Cable
There is one major bank that has predominant Government ownership. That does not give the Government powers to lend, because there are significant independent shareholders and the hon. Gentleman will be familiar with the corporate governance problems that presents. We would like RBS to lend more, and Mr Hester explained this weekend that he has a significant amount of capital available.
Mr Chuka Umunna (Streatham) (Lab)
There has been speculation about the Government entering into a hasty sale of RBS. Will the right hon. Gentleman assure the House that the Government will look to ensure that the bank returns to a far healthier position before they contemplate privatising it? On his earlier comment, I agree about the problems that small businesses face in dealing with banks, but does he not accept that the economic outlook has also had an impact on the pressing demand for lending for small businesses?
Vince Cable
Yes, there is an issue with the demand for loans. It is not simply a question of aggregate demand in an economic sense. Many small companies have been discouraged from applying and we need to overcome that handicap. On the wider question, I know that the Chancellor is listening carefully to this debate. I read the contribution of the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who suggested that the key issue was value for money for the taxpayer. I agree completely.
Mr Gyimah
I thank the Secretary of State for giving way once again. Does the intervention from the hon. Member for Streatham (Mr Umunna) not highlight the confusion in the Opposition’s approach to RBS and state-owned banks? On the one hand they want the Government to compel them to lend, and on the other hand they say that the banks should return to health and make a healthy profit for the taxpayer. Those are two conflicting positions. That is why schemes such as funding for lending, which help banks get money to small businesses, are the right way forward.
Vince Cable
Funding for lending is an important and valuable step forward. As I am sure my hon. Friend would acknowledge, it predominantly affects the mortgage market rather than the SME lending market, but it is an important initiative. I do not think that we are talking about forced lending here, and we should not be talking about that; we should be talking about how we change the risk appetite of banks. Some of the Government’s key interventions, such as the enterprise guarantee scheme and the new schemes for export finance, are crucial to changing the balance of risk. They work with the grain of the market, and that is the way we should deal with this issue.
I conclude on the banking issue, because it is the big legacy problem we have to deal with, along with the enormous deficit, which is painful and difficult but on which we are making real headway. The key point is that despite those problems, some real signs of hope are beginning to emerge: we have rapid growth in private sector employment; record levels of start-ups in the private sector; a growing sense of entrepreneurial energy and commitment in the UK; and a rapid growth in exports to some of the emerging markets, where future demand lies. There is every reason to be optimistic, and the legislative programme we are setting out will reinforce those positive trends.
Mr Umunna
With the greatest respect to the welfare Secretary, let me say two things. First, I have said that we have expressed regret in terms of the way in which we regulated the banking sector. However, let me also remind him that in the last two quarters of our term in office, we saw growth of 1.1%. During his time—[Interruption.] He should let me finish my sentence. If he does that, I might answer his question—I presume he wants to hear it. Did we leave him with a double-dip recession? No. Did we leave him with 2.5 million people out of work? No; so I will take no lectures from this welfare Secretary about the management of the economy.
After that excitement, let me return to banking. Reform is obviously needed, in particular to ensure that the sector provides finance to the profitable and successful small businesses that want to expand and take on more employees, but cannot access the finance that they need. That is crucial, because so many of those businesses are the ones we look to to create jobs. We know that under this Government lending to businesses is falling month on month, including a fall of £4.8 billion in the three months to February, according to the latest Bank of England figures. We know too—my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) mentioned this—that the Government’s schemes, from Project Merlin to the national loan guarantee scheme and, now, funding for lending, have simply failed to get credit to those businesses.
Every other country in the G8 has a state-backed investment institution to tackle the problem and ensure that their small businesses can access the finance they need. That is why we have argued since early in this Parliament for the establishment of a proper British investment bank and a network of regional banks, based on the German Sparkasse model, to work alongside a British investment bank to transmit those schemes to small businesses. Those are two sensible ideas that would bring us into line with our international competitors. Indeed, I am pleased to hear that the Business Secretary agrees that it is a good thing to re-establish regional banking in this country.
We would have introduced a Bill in the Queen’s Speech to establish those bodies, yet the Government have failed to do so. Instead, what have we got? Last year, rather late in the game, the Business Secretary announced, to much fanfare at his party’s conference, that he was establishing his small business bank. The British Chambers of Commerce and the Federation of Small Businesses have said that he must get on with setting it up. Last year he came to the House and told us that his bank
“has already been established, and it will be up and running next year.”—[Official Report, 20 December 2012; Vol. 555, c. 988.]
So where is this bank? The IMF is currently in town inspecting the wreckage of the Government’s failed economic plan. I know how keen the Chancellor is to rely on its pronouncements, so I went on its website to discern how it defines what a bank does. The IMF says that the primary role of a bank is to
“take…deposits…from those with money, pool them, and lend them to those who need funds.”
I suspect that most Members would expect such a bank to be established on a stand-alone basis, with its own building like any other bank—I remember all the questions put to the Business Secretary about the location of the green investment bank, for example. However, what do we find buried in the back of one of his press releases, issued just before the Easter recess? We are told that his business bank
“is expected to become a fully operational new institution in the Autumn of 2014,”
but before then any references to his business bank
“refer to the team within BIS responsible for the development and operation of its policy and programmes before it becomes a fully operational new institution.”
Mr Umunna
I will give way to the Secretary of State shortly, so that he can explain this to us.
What we have is a floor of people—mostly made up of the Business Secretary’s civil servants—in his Department in No. 1 Victoria street that is dressed up as a bank. It is in no way, shape or form what most people would understand to be a bank, and it will be up and running not this year, as he said to the House in December, but at the end of next year at the earliest.
Vince Cable
Instead of looking for information in IMF reports, perhaps the shadow Business Secretary should look at some of the business before the House. I do not know whether he is aware that we made a written ministerial statement a few weeks ago explaining exactly where we were with the business bank. At the moment it is marketing its first tranche of funding. We have a substantial team in BIS of people with banking experience recruited from the private sector. He is welcome to come in and talk to them. I think he will find that there is a substantial acknowledgement in the small business community that what we are doing is exactly right and on target. If he wants to question our delivery more generally, he should perhaps read what I said in Edinburgh yesterday about the substantial progress we are making with the other bank, the green investment bank.
Mr Umunna
With the greatest of respect to the Secretary of State, he said that the body he was establishing was a bank and that it would be up and running this year. It is in no way, shape or form a bank as most people would understand it and it will be up and running not this year but next year. As for his green investment bank, it will not be able to borrow any substantial moneys until it meets his fiscal mandate. Also, I presume that legislation will be required to set up his new small business bank, as was the case with the green investment bank, yet there was no sign of that in the Queen’s Speech.
Vince Cable
As the hon. Gentleman may at some future stage in history occupy this role—he is obviously preparing for it—let me clarify one thing. Is he at all familiar with state aid rules? If so, he will know that under the rules of the European Union, it is necessary to obtain approval before a bank can operate fully in the competitive market of the European Union. That is why 2014 has been cited—because we respect those rules. None the less, we are using the resource we have in the short term to provide support for business. That is what we are doing.
Mr Umunna
The Secretary of State says that it is not required. We will see. I fail to understand why legislation was needed for the green investment bank but not for his small business bank, but let us see. [Interruption.] Let me tell the welfare Secretary that I would love to have a general election, because then I might be able to occupy the Business Secretary’s post more quickly than he perhaps foresees. What we hear from most small businesses is that what the Government have done to increase access to finance and resolve the issues of the banking sector for the real economy has proved to be a let down.
Let me turn to skills and training. Weakness in specific intermediate or vocational skills is a business concern and a source of competitive disadvantage for the UK compared with our neighbours. With almost 1 million young people out of work—my hon. Friend the Member for Croydon North (Mr Reed) referred to this—we must ensure that we have system that delivers people with the education and skills that our businesses need if they are to move into work. We could start by increasing the number of apprenticeships, but crucially boosting their quality too. We have heard the Secretary of State, like other Ministers, boasting about creating more than 1 million apprenticeships, but the number of 16 to 18-year-olds starting an apprenticeship in the first half of this academic year dropped by 12%. Indeed, two thirds of large companies in this country do not offer apprenticeships. We urgently need to improve on that and also protect the quality of apprenticeships, which is precisely the point made by Doug Richard and Jason Holt, whom the Secretary of State commissioned to do reports on apprenticeships.
The Queen’s Speech made a vague reference to a desire to ensure that it becomes typical for those leaving school to start a traineeship or an apprenticeship, but where was the jobs Bill we wanted that would have required large firms getting sizeable Government contracts to have active apprenticeships scheme, ensuring opportunities to work for the next generation? There was no such Bill. I still fail to understand why this Government will not proceed with that simple measure. Ministers released details of their plan for traineeships yesterday, which is a six-month programme of training and work experience to aid young people towards apprenticeships or employment. We will have to study the detail closely, but I note that they expect colleges to have the scheme up and running by August. That will be a challenge, given the very short notice.
On procurement, which should of course be used as part of an industrial strategy, the Government’s Bombardier decision earlier in this Parliament demonstrated their failure to account for the impact of procurement decisions on jobs and growth and on the strategic development of industrial capacity. We know that the story is the same with defence. The Government’s defence industrial strategy has been abandoned in favour of buying off the shelf from overseas. In making procurement decisions, we would take account of the impact on jobs when deciding to whom to award contracts. The French, the Dutch and the German Governments do that within EU law—the Business Secretary referred to it—and so would we. If this Government were serious about backing British industry, we would perhaps see them taking similar measures. Again, however, there was nothing about this in the Queen’s Speech.