House of Commons
Monday 2 February 2009
The House met at half-past Two o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
Work and Pensions
The Secretary of State was asked—
Since 1998-99, 600,000 children have been lifted out of relative poverty and the number of children in absolute poverty has halved from 3.4 million to 1.7 million. Government measures over the past two years will lift about a further 500,000 children from relative poverty. On 28 January, we launched the consultation, “Ending Child Poverty: Making It Happen”, ahead of a child poverty Bill that will enshrine in legislation the Government’s promise to eradicate child poverty by 2020.
Does my right hon. Friend share my belief that children should not be written off or consigned to a life in poverty just because they happen to come from single-parent families? Will he join me in rejecting calls for preferential treatment for the children of married couples and confirm that he believes that all children should be given the best start in life regardless of their parents’ circumstances?
I entirely agree with my hon. Friend. It is right that we should help children whatever their family backgrounds, and that means not only helping them through tax credits and reducing poverty in that way, but helping them into work, because work is the best route out of poverty.
But another report today emphasises the connection between relationship breakdown and adverse effects on youngsters. If the right hon. Gentleman means exactly what he says about ensuring an equality of outcome, can the resources that are currently spent on the consequences of breakdown be reordered, so that we do more to prevent relationships from breaking down in the first place, rather than picking up the bill for the consequences, which cost so much, not least to the children themselves?
Surely, we should do both. That is exactly why we are, for example, investing more in family intervention projects to help the families who are in the most difficult circumstances, while increasing the amount of money that we put into tax credits. We said in the last Budget that we would take, in total, another 500,000 children out of poverty. I do not think that the Conservative party would have pursued that policy if they had been in power.
Does my right hon. Friend agree that there are some hard to reach families—I know that there are some in my constituency—and that, sometimes, there are parents who are either addicted to hard drugs or alcohol? There are also children from families whose wider family have brought in a husband or wife, with no education, from very poor parts of Pakistan or Bangladesh. I am not sure whether there are any remedies for such very hard to reach families, but I would appreciate my right hon. Friend’s comments.
My hon. Friend identifies a very important issue, which is exactly why we commissioned Professor Paul Gregg to consider how we can help families in those circumstances. That is why we are saying that we would require such families to find out about the support that is available and then be required, once their youngest child is three years old, to take up skills training or drug treatment to get off drugs and into work. I only wish that the Conservative party would support those measures.
Griffiths, Evans, Jones—we are all the same.
Poverty for youngsters is often reinforced when a married couple separates by a missing parent who refuses to take their responsibility. The Child Support Agency is often deficient in chasing the missing parent. What action can the right hon. Gentleman ensure that the CSA takes to make sure that it tracks down missing parents, so that they pay for their own children?
In the past year, the CSA—now the Child Maintenance and Enforcement Commission—has collected an extra £156 million, but we agree that more needs to be done. That is why we are taking powers in the Welfare Reform Bill to be able to take away people’s passports or driving licences without a court process. That will make things much more speedy. I hope that the hon. Gentleman will support that, unlike the Conservative party in the Lords the last time that that was proposed. That is also why we are saying that, where there is a payment, parents should be able to keep all of it and that there should be a complete disregard for child maintenance payments and benefits. We think that that could lift an extra 100,000 children out of poverty.
I welcome the publication of “Ending Child Poverty” by the child poverty unit and the road map to 2020 that it sets out. My right hon. Friend will know that, whenever we meet experts, they always raise the issue of financial exclusion and the problem that that causes in respect of child poverty. Does he agree that that will play an important role in helping us to meet that 2020 target? If so, will he consider building on the proposals that are currently in the Welfare Reform Bill?
Yes, my hon. Friend is absolutely right. We need to do more to support credit unions and enhance financial literacy, so that people know, for example, whether their financial arrangements are not in the best possible order. More money must be put into reducing poverty directly, thus both giving people more resources and a greater ability to earn money. If we had kept to the same policy as the Conservative party, 2 million more children would be in poverty.
According to a recent report by the Joseph Rowntree Foundation, 15 indicators of poverty and social exclusion had worsened in the five years preceding the onset of the current economic downturn, more than double the number in the previous five years. That includes the number of people living in very low-income households. Perhaps it is little wonder that the number of children living in poverty has risen by 100,000 in the past two years. How does the Secretary of State explain the Government’s poor performance?
Yet again, the Secretary of State is very complacent about his attitude to the issue. Another example of the Government’s complacency is their refusal to end the couple penalty in the tax credit system, which would lift 300,000 children out of poverty. Why will the Government not do that?
The right hon. Lady has no policy of that kind, because she has no way of funding it. The Conservatives used to say that they would fund it out of welfare reform, but now they are not prepared to do as much welfare reform as us. If the right hon. Lady wants to repeat that claim, she will have to find new resources. Hers is a policy without a budget, and I hope that she will not pretend to repeat it.
Jobcentre Plus is recruiting the additional staff needed to maintain a good service in the current economic conditions, and new jobseeker’s allowance claims continue to be cleared within the agreed target of just over 10 days, on average.
As my right hon. Friend knows, moving into unemployment is traumatic in itself for many people, but it can also be very confusing because of the interrelationship between jobseeker's allowance and other benefits. Can my right hon. Friend give the House a guarantee that the Government, and those who work for the Government, will make creating a seamless exchange for new claimants a priority, so that they do not fall foul of the consequences of either overpayment or underpayment?
My hon. Friend is entirely right. That, ultimately, is the ethos behind the merger of the Benefits Agency and the Jobcentre Plus network. I know that Jobcentre Plus staff endeavour to give everyone, at the appropriate time, all the information that they need both on establishing a JSA claim and on the ensuing benefits. The staff also work closely with local government, when that is possible, in connection with other benefits such as housing and council tax benefits.
While we are discussing the topic of prompt payment of benefits, may I ask when the Department will be in a position to issue a statement on the payment of disability living allowance to those living in other European Union countries?
Does the Minister accept that many of our constituents who have recently been made unemployed and who may have worked for 10, 20 or 30 years are slightly shocked that the national insurance benefit for which they paid over that period amounts to £60.50 a week, exactly the same sum that they would receive if they had not worked for a single day? What plans has he to reform and increase national insurance benefit, so that the national insurance fund, which is in surplus, helps to carry some of the burden of the recession?
My right hon. Friend is right in terms of the premise of his question, but he is not right to imply that that is all that anyone will receive in such circumstances. I will send him some worked-up examples of other benefits that apply, some—although not all—of which take account of the national insurance contribution history.
At the risk of putting my head on the block, let me say that I think that many of my right hon. Friend’s recent pronouncements about taking full account of the history of contributions are worth considering in the longer term.
As more people lose their jobs, many jobcentres will struggle to deal with the numbers coming through their doors. Will the Minister consider proposals to use other public buildings, such as council service points or libraries, to extend the reach of Jobcentre Plus, especially in communities where there may not be a jobcentre? That would particularly benefit people living in remote and rural areas such as those that I represent.
The hon. Gentleman has made a fair point. We are already doing that, but we may well need to do more given the volume of people going through the system. When I was up in Scotland fairly recently, there was much use of GPs’ waiting rooms and GP focus centres. As we implement children’s centres throughout the country, they will become another obvious possibility. Given that we are trying to move more and more towards a personalised service for each individual—often confidential, but sometimes involving groups—the space within which that happens will become almost a secondary consideration, but I take the hon. Gentleman’s point about using the wider public estate.
My right hon. Friend is right about the need to get people into jobcentres as quickly as possible, but can he assure me that the training will be up to scratch? We have observed lately that some of the people in Jobcentre Plus are not up to the mark in dealing with the sensitive problems experienced by some of my constituents, and I hope that the training will become a great deal better than it is at present.
I am sorry to hear that, and if my hon. Friend has details of particular cases I would be happy to look at them. I made a rather foolish and rash promise on a recent Radio 2 show to look at each and every individual complaint, so I am happy to report that there has been a trickle of such complaints, but not the avalanche that the officials who were with me—they fell off their chairs when they heard what I said—thought that there might be. My hon. Friend is right: we have to update the training of staff in Jobcentre Plus constantly, not least for the reasons alluded to by my right hon. Friend the Member for Birkenhead (Mr. Field)—that many people presenting this time around to Jobcentre Plus will have been in gainful employment for 10, 20, 30 years or more, and this will be completely new territory for them. We are trying to get that message across to our staff.
Some of the newly unemployed are in urgent need of assistance from the social fund, so why is it that the Department can answer callers to the CSA within an average of 18 seconds, when it often takes applicants to the social fund days to get through? The Department does not even know how many calls it is losing. When will the Department make a commitment to give a decent level of service to the most vulnerable?
That is a serious point, but the hon. Gentleman should perhaps calm down. We are doing much better than we have in the past. It has been an area in which we have been lacking, but I am assured that things are improving considerably. If the hon. Gentleman has examples of that not being the case, I will happily look into them, but he will have to agree that the situation is much better than it was.
One group of people that has been contacting me recently is the self-employed who are now out of work because their businesses have gone bust. That particular group seems to be having difficulties. What are the Government doing to ensure that that group are getting some advice about what help they can get at this difficult time?
That is a fair point, and I will happily meet my hon. Friend and some of the people about whom he is concerned to lay out clearly exactly what is on offer for the self-employed. At the other end of the continuum, we are trying to say, especially with our enhanced support at six months, that self-employment may be a route out of people’s current circumstances, but it is imperative that we show clearly what a self-employed individual can expect from the wider benefits system as well as from Jobcentre Plus. I will happily talk to my hon. Friend about that in more detail.
We have made significant progress in reducing the incidence of poverty among pensioners. Through targeted support and £13 billion of extra spending, the proportion of pensioners in relative low income has fallen from 29 per cent. in 1998 to 19 per cent. in 2006-07, with 900,000 pensioners lifted out of relative poverty.
I congratulate the Government on the various initiatives that they have brought forward to help hard-pressed pensioners. One of the best is of course pension credit: the problem is that many elderly people do not take it up for some reason. What will the Minister do to increase take-up to help hard-pressed pensioners by hundreds—and sometimes even a couple of thousand—pounds a year?
The hon. Gentleman is right to say that we must be vigilant in ensuring that pensioners know about pension credit. I am happy to say that in his constituency the number of households in receipt of pension credit has increased from 2,680 in November 2003 to 4,150 in May 2008. We are continuing to make changes—for example, housing benefit, council tax benefit and pension credit can be claimed over the phone in one phone call. We are also simplifying processes and making home visits to people who want them.
Many pensioners rely on interest from savings to supplement their state pension. They have seen that income drop considerably as interest rates have fallen. Will my right hon. Friend look again at the way in which the amount of savings held impacts on the range of benefits that a pensioner is entitled to receive?
As my hon. Friend knows, the Government have not had a cut-off point for savings above £6,000. The amount that people are expected to contribute from their own resources used to be based on £1 for every £250 of savings, and we have increased that amount to £500. There is now no upper limit on the amount of savings that pensioners can have before they are entitled to some help through pension credit.
The Minister will be aware that there are a significant number of expatriate pensioners living in France and other European countries who are suffering considerable poverty as a result of the Government’s inability to honour the European Court’s findings and to pay to them the disability living allowance and other benefits to which they are entitled. When are the Government going to make a decision on that issue?[Official Report, 9 February 2009, Vol. 487, c. 10MC.]
There is an increasing prevalence of one-stop shops in local authorities. I visited one last week in Halewood in Knowsley where constituents can access all sorts of services, including health services, social services, housing services and so on. One of the problems, of course, is identifying and making contact with those older people. Have the Government given thought to offering older people benefit health checks when they visit that sort of facility? That is a way of contacting the people who would otherwise not be claiming the benefits that they are entitled to and deserve.
My hon. Friend raises an important point. We have been looking through some of the Link-Age pilots at how we can ensure that people have a one-stop shop approach to accessing services. He is quite right to say that that can be used as a way of ensuring that people have a benefits check at the same time.
One of the gravest charges against this Government after a decade is that 60 per cent. of pensioners in deepest poverty are still not receiving income support, minimum income guarantee or pension credit entitlement. Given the Government’s sustained attack on savers and the fact that there are now a number of proud pensioners in this country who have never claimed anything from the state and who shy from doing so, which leads to disguised poverty among pensioners, when will the Government wake up and present to those people that they, too, are entitled to some kind of support?
I set out earlier the measures that we intend to take to ensure that people know their entitlement. We have made a number of changes to that. Of course, the hon. Gentleman might not be aware of some of the recommendations of the Turner commission about automatic enrolment and automaticity, which will make a difference.
This Government introduced a more powerful and proactive pensions regulator to protect the benefits of occupational pension scheme members. We also established the Pension Protection Fund, which provides protection to more than 12 million members of eligible defined benefit occupational pension schemes. About 140,000 people will receive help from the financial assistance scheme.
I thank the Minister for that answer. With the CBI and the TUC telling both employers and employees that now is not the time to withdraw or withhold pension contributions, what can the Government do to strengthen that message and get it across to people that pensions are now safer and a better long-term investment than they have ever been in the past?
My hon. Friend is right. I welcome the consensus on such a long-term approach. Obviously, fluctuations in markets will affect the value of assets in the short-term, but the fact is that it is the long term that is important for pensions. The framework that we put in place in 2004 is stable and durable, but it is important that we continue to work with the pensions industry to ensure that we respond to the points that are made. It is also important that we work together to give out the message that pensions are one of the best means to save for retirement.
The Pension Protection Fund has been increasing the levy that it charges on company pension schemes each year, and it might now be approaching the ceiling that it is allowed to levy over the next few years, particularly as company schemes close. Once it reaches that ceiling, the only other way for it to make ends meet will be to cut pensions in payment. If it approaches the Government requesting permission to cut the value of pensions in payment, will the Minister guarantee that she will refuse such a request?
The PPF has made it clear that it does not believe that it needs to increase the levy. In fact, it has frozen the current rates for the general levy and for the PPF administration levy. Of course, the hon. Gentleman will know that we have a rolling deregulatory review to see how we can make the systems simpler and less burdensome, and that we have reduced the revaluation cap from 5 to 2.5 per cent. These are all measures that we are taking to support pensions at the moment.
In view of the fact that some employers have announced their intention to close their occupational pension funds not only to new members but to existing members, is the Minister’s Department having discussions with such companies to try to dissuade them from taking such steps?
As I have said, we are trying to set the general framework, so that we can do everything we can to support companies and the industry at this time. I have outlined a number of the measures that we are taking, but we will continue to work with the industry on some of the concerns that is has raised, to ensure that we maintain that dialogue with it.
But does the right hon. Lady accept that the last line of defence for occupational pensions is the Pension Protection Fund, which some experts now believe to be heading for a £1 billion deficit? Does she believe that the extra burden should fall on struggling companies, or that the benefits paid by the PPF should be cut? Or is she now reviewing whether the Government should stand behind the PPF as guarantor?
As I have said, the PPF has made it very clear that liquidity is not a problem. It has £3 billion in assets, and it is paying out about £4 million a month in compensation. It provides reassurance and an essential safety net, and it has made it very clear that liquidity is not a problem at this point.
Jobcentre Plus continues to meet the demands of the rising number of people looking for work. Clearance times are at an average of 10 days, which remains the best performance since records started to be kept in 2003-04.
Some former Woolworths employees might be fortunate enough to get one of Asda’s 7,000 new jobs, but for many other redundant workers, there might be a mismatch between their present skills and those required for any other jobs that are likely to become available in the foreseeable future. In the light of the comments of a former Woolworth’s employee on television yesterday that she would have to be unemployed for six months before becoming eligible for any new training, what help with training can people expect from jobcentres, and what plans does my right hon. Friend have to introduce more flexibility in order to give redundant workers earlier access to training schemes, when that is clearly what is required?
Order. May I gently say, as I have said before, that although it is important that we argue for those who are unemployed, there should be no written statements made in supplementary questions? Also, supplementary questions should be short; I do not expect a prepared statement.
My hon. Friend makes the important point that we should be getting help to people, even before they are made redundant. That is why we have been working with Woolworths and others to get help for people to retrain, if necessary, and to improve their CV and their knowledge of how to look for work. From day one of their unemployment, people are able to train, as long as they combine that with a job search, and, after six months, we step up the support that we offer to people. We think that that is the right approach.
As we anticipate that mental illness is likely to rise with the rise of unemployment, what steps are the Government taking to ensure not only that the staff at jobcentres have adequate training but that they can refer people on so that they receive the necessary early intervention to ensure that their mental health does not deteriorate and further reduce their chances of getting back into work?
The hon. Lady makes a good point. We are working with pilots such as Talking Therapy, which she will know about, to make sure that employment advisers work side by side with therapists so that both employment prospects and people’s mental health are discussed. It is also important that we do not forget about people on incapacity benefit or employment and support allowance because of their mental health. We need to keep up the support and continue to reform welfare so that such people are not left behind because of their specific conditions.
In her question, my hon. Friend the Member for Llanelli (Nia Griffith) referred to a situation in which a large number of people were being made redundant and in which training might therefore be offered. In Milton Keynes, there are more than 500 vacancies but large numbers of people are being made unemployed from a variety of different places. Can the Secretary of State think about how those people could be put on training almost straight away, to upgrade their skills so that they match the jobs available locally? There are no low-skilled jobs available for them.
That is a good point, and exactly why we say that people can train from day one as long as they combine that with a job search. Furthermore, if they have not found work after six months, we step up the offer so that there is either a full-time training course to support people setting up their own companies or a job subsidy to make sure that people do not become unemployed long term. The real danger is that long-term unemployment becomes the scar that defaced so many of our communities in previous recessions.
We will provide the funding necessary to meet our commitment that people with mortgages who have been on income-based jobseeker’s allowance for 13 weeks can get help with interest on up to £200,000 of mortgage capital. Updated expenditure projections will, of course, be published in the Budget.
“Lose your job, lose your home” is the great fear that people have at this time. It is important that they should get quality advice when they first approach Jobcentre Plus having lost their jobs. There is a little confusion out there about the type of product on offer. The Government have made positive changes on support for people who have mortgages and lose their jobs. Will the Minister make sure that the advice given by Jobcentre Plus is of the highest quality?
My hon. Friend makes a good point. People who have been in work for a while and are paying mortgage costs may not be aware that the Government can, in some circumstances, take the burden of paying mortgage interest from them. We will be judged on how we respond to the recession that currently faces so many countries. In previous recessions, under previous Governments in this country, people ended up out on their ears and out of their homes due to the large number of repossessions. We are making sure that we are providing support to people where they need it. The first advice is always to talk to the lender, but the Government will now help after 13 weeks.
Two months after the pre-Budget report, why are the Government still unable to set out the costs of their proposed mortgage deferral scheme and to say how many people will take up the scheme? Two months after a Government statement that promised action to help people with mortgage problems, there has been no delivery. When will the delivery take place?
I simply do not understand the hon. Gentleman’s point because, as I just said in answer to my hon. Friend the Member for Telford (David Wright), we will make the funding available to meet the commitments that we have stated clearly in the pre-Budget report. It has been estimated that, as a result of the more generous support for mortgage interest, about 5,000 repossessions will be avoided. Those repossessions might have taken place under the policies of the previous Conservative Government. Obviously, we are working with colleagues at the Department for Communities and Local Government to make sure that the package provided is what people want. Updated expenditure projections are always published in the Budget.
As my hon. Friend will know, the Chancellor and the Prime Minister have been working with the Council of Mortgage Lenders to agree a deal to put to people who have mortgages with its banks and building societies. The details will be announced shortly; in fact, some have already been announced in the past few months. As a result of the pressure that we are putting on banks and building societies, the advice that we give people is clear: people should always talk to their lender first. There is flexibility there. After 13 weeks, the Government will help people on income-based jobseeker’s allowance who are having difficulty with their mortgage payments.
Does the Under-Secretary agree that one way of reducing the number of unemployed people who have to seek mortgage help is by her instructing her officials, and the Chancellor instructing his, that bureaucracy in the Government should not impose the firm rules for VAT, PAYE and other taxes? Companies can then survive for longer than normal because they are not pursued by the bureaucracy, which, with its rigid, authoritarian approach, drives companies to the wall and creates greater unemployment.
I do not know whether that point was directed to the hon. Gentleman’s Front Benchers or to ours, but we have already announced that companies can simply ring the Inland Revenue if they need help with rescheduling their payments to the Government. We are providing the flexibility. The problem with the Conservative party is that it will not agree to increase spending at this time to make such flexibilities—[Interruption.]
The help that the Government offer families on income support with their mortgage payments is welcome. However, in many families, one partner may be on short-time working, or one may have lost a job while the other is still in work. Those families are not on income support, but their reduced income means that they struggle hard with their mortgage payments. Can the Government do anything to assist families in those circumstances? Otherwise, we will have a lot of avoidable repossessions.
Absolutely. Obviously, every family is in different circumstances—that is why it is important that the Government can work constructively with the Council of Mortgage Lenders to ensure that banks and building societies give appropriate advice and flexibility to people in all sorts of circumstances. It is not in the interests of the banks and building societies for repossessions to take place.
Cold Weather Payments
The cold weather payment scheme is reviewed every year, normally in the summer. We consider the suitability of postcode to weather station links, and the effect of any changes to the postcode system made by the Royal Mail. Given today’s inclement weather, I hope that you will permit me, Mr. Speaker, to say that £165 million has been paid under the scheme so far this winter, including £16.7 million today to 668,000 people.
That is all very well, but hundreds of my constituents have been and are being deprived of cold weather payments, to which they should be entitled, especially in upland areas, because of the way in which the temperature is measured. For example, the temperature for Dartmoor is measured in the centre of Plymouth, where it can be between three and five degrees higher. Will the Under-Secretary take steps to review the method of measuring the temperature so that people in upland areas in Dartmoor can receive their cold weather payments?
We take the professional advice of the Met Office in determining which postcodes are linked to which weather station. As I said previously, if the hon. Gentleman wants to make representations on behalf of his constituency, they will be taken into account. I will look into the matter that he has raised.
Will the Under-Secretary reassure Labour Members that she will not revert to the sort of advice given by the former hon. Member for Salmonella and South Derbyshire in a previous Government: that older people should knit woolly hats? Does she agree that any action that we take should be tangible and well thought out, not specious and patronising nonsense, which probably damaged the woollen hat industry in my hon. Friend’s part of the world?
Indeed. My hon. Friend’s point speaks for itself. We are providing real help, which is why the cold weather payment increased from £8.50 to £25 this winter—I presume that that increase would not happen under a Conservative Government, since Conservative Members voted against it.
Does the Minister not accept that many elderly and retired people are very responsible and thrifty, and although they might benefit from a cold weather payment, they will hesitate to turn up their heating to give them an acceptable quality of life during a very cold spell such as today and, therefore, could well suffer from hypothermia? Is there any way—perhaps by following the suggestion from my hon. and learned Friend the Member for Torridge and West Devon (Mr. Cox)—that one could re-examine the way that cold weather payments are met, taking account of the responsible and thrifty people who comprise a majority of our retired people?
We are looking at improving the communication available to people as to whether they will be eligible. Everybody on pension credit as well as other low income groups will be eligible, even if the forecast rather than the actuality is an average of less than 0º C over a seven-day period. People can therefore act with confidence in the knowledge that they will get their payments quickly and in time for their next bill when it lands on their doorstep.
My hon. Friend is aware that pensioners are afraid to put on their heating because of the high energy prices, but we must remember that huge profits are being made by the energy companies. Has she considered having conversations with the energy companies to see whether they will pass on some of their money to pensioners, rather than keeping the immoral profits? Let us see if we can ring-fence those profits and bring them back to pensioners through vouchers.
My hon. Friend knows that that is rightly not a matter for our Department, but I agree with the point that he makes. That is why I am pleased that my right hon. Friends managed to negotiate the social tariff. I urge all energy companies to ensure that they pass on information about the availability of that to all their customers who may be eligible.
Latest figures show that 3 per cent. of the UK working age population and 1.7 per cent. of the Banbury working age population are claiming jobseeker’s allowance.
Last Friday a weekly job club was launched in Banbury with the support of the whole community. Between 200 and 300 jobseekers turned up for the first day, which is an indication of how grim the situation is getting. What is Jobcentre Plus doing to ensure that notified vacancies are matched up to jobseekers as quickly as possible, and that jobseekers can as easily as possible access the Jobcentre Plus notified vacancies? Not every town has a Jobcentre Plus office.
I take the hon. Gentleman’s point, which is why we are making sure that there is outreach work, for want of a better phrase, directed at smaller towns and areas. He will know that the Berkshire, Buckinghamshire and Oxfordshire district has developed a local employment partnership through which many of the notified vacancies are filled. About 45 per cent. of all vacancies are signed up to through the local employment partnership, but the hon. Gentleman is right to say that we must not only provide help and support, but get notified vacancies publicised to as wide an audience as possible. I will reflect on his point about rural areas and the sparsity of provision of Jobcentre Plus offices. They cannot be everywhere. Much of the work that we do in respect of notified vacancies is over the phone or the internet. None the less, it is a fair point and I will reflect on it.
Again, that is an entirely fair question. On the figures up to now, I do not concur entirely with what the TUC said about last month’s figures—that this is turning in to an equal opportunities recession, with a disproportionate impact on women—save for the fact that we know that in all downturns or recessions, part-time work, short-time work and temporary work are the first to go. Those are the very categories that include women. We are making sure that Jobcentre Plus is doing all it can not just for women who present, but especially for those from the retail sector. Our colleagues will know and understand that, as I said in my previous answer, we need to link up much more directly the vacancies out there in the retail sector with those recently made unemployed in the retail sector. It is a fair point that—[Interruption.] Along with the impact on young people and others, we need to keep an eye on that point during these serious times, which the Opposition clearly are not bothered about.
Do we not have to put the figures that the right hon. Gentleman gave to my hon. Friend the Member for Banbury (Tony Baldry) against the background that the number of UK workers in work went down last year, while the number of non-UK workers has gone up, with most coming from outside the EU? Is it not the case that we need effective control over work permits for workers coming from outside the EU? We also need an effective welfare-to-work policy for the nearly 2 million people who are unemployed, and for the additional 2 million economically inactive people who want to work, but who have been left to languish on benefits. Can we have less spin, less dithering and some fresh thinking please?
I am surprised that the hon. Gentleman has the front to say “less spin” at the end of that question. He does make some serious points, but let us be clear: about 8 per cent. of those in employment are foreign nationals and UK nationals account for more than nine out of 10 people in employment. Well over half of the increase in employment since 1997 is accounted for by UK citizens.
Through the points-based system, we are improving considerably the situation regarding work permits. Broadly speaking, the hon. Gentleman and his colleagues agree that there should be a focus on the economy and the skills shortage in the migration process, but he must be careful when using the other figures that he bandies about. Either he is conflating the International Labour Organisation and incapacity benefit figures, or he is—[Interruption.] It is not possible to use them to arrive at the figure cited by the right hon. Member for Maidenhead (Mrs. May) of more than 5 million, giving the impression that they are all economically inactive, without including—at least in part—those on disability living allowance, many of whom are in work, and carers, to whom it is a complete insult to suggest that they are in such a position.
Non-seasonally adjusted figures show that 959,419 people are claiming jobseeker’s allowance in England and 7,197 in North Yorkshire.
Can the Minister tell the House what happens at the end of six months when those claimants come off jobseeker’s allowance? Do they no longer feature on the register of the unemployed? How many of them are in work? It is an absolute scandal that those people receive money for six months, and then are no longer either in employment or on the unemployment register.
Their numbers are reflected in the ILO figures, which is why we accept without comment the notion of two sets of figures. I thought that the hon. Lady was going to say how wonderful it was that Yorkshire Forward and the Government have agreed on £54 million Train to Gain funds for those recently made redundant in Yorkshire. It is a shame that she did not want to celebrate that.
The Government are determined to avoid the mistakes of previous recessions when, too often, short-term job loss became long-term unemployment. In addition to the £1.3 billion in extra investment through the pre-Budget report, we have now taken further action through an extra £500 million of support for people who have been on jobseeker’s allowance for six months. Those measures will mean that personal advisers can offer a range of additional options to help people to get the support that is right for them so that they can get back to work.
Will the Secretary of State clarify the Government’s plans to compensate Equitable Life pensioners? Will he take this opportunity to reject any suggestion that only those policyholders who are experiencing financial hardship should be compensated? It was not the recommendation of the parliamentary ombudsman that compensation should be means-tested. It should be paid to everyone who has suffered loss caused by regulatory failure.
The Government have apologised for the problems that occurred under both the hon. Lady’s Government and ours. We have said that we will make ex gratia payments, but that is a matter for the Treasury, and she is very welcome to ask the Treasury that question.
I hope that I can do better than that. People can train from day one, as long as they combine that with a job search. Indeed, they can train earlier. For example, with Wedgwood and other major redundancies, we are going in from the moment that they are announced, to see whether we can retrain people so that they can get a new job, either in the same sector or, potentially, one that is close, but different. We want to provide training whenever it is appropriate.
We work together very closely; indeed, I met the First Minister recently to discuss how our employment policies could be best dovetailed. We have learnt from the ReAct and ProAct schemes that the Welsh Assembly Government introduced, which we have used for the six-month offer that we have introduced, which includes employment subsidies and training. We are learning from what is working in Wales and across the whole country.
I hope that in the first instance Jobcentre Plus will send in its rapid response service to deal with those individuals long before the redundancies kick in. That has been done successfully elsewhere, notably with Woolworths and some other companies, often on a regional basis, but I would be happy to talk to my hon. Friend separately about ensuring that it happens in this instance, too.
I can absolutely give the hon. Gentleman that assurance, because increased payments are going out from today for the next few weeks, so that the overall payment received by people is exactly the 6.08 per cent. that my right hon. Friend the Chancellor specified in the pre-Budget report. Just by way of explanation, the reason why people’s payments dipped slightly—and why they will be higher, so that the average is precisely 6.08 per cent.—is that the Bank of England reduced its base rate on 6 November, but the pre-Budget report was not published until 24 November. In the intervening period, our automatic tracker system went into effect, which meant that some payments were reduced, but that is now being compensated for. I hope that that answers the hon. Gentleman’s question, although I will write to him with the precise number of people affected.
Sadly, with the huge decline in jobs in the ceramic’s industry in north Staffordshire over many years, the trade union Unity, the former ceramic union, has extensive experience of helping people back into work. Is my right hon. Friend aware of the work being done, particularly at Wedgwood recently, and would he care to visit my constituency to see the factory and meet workers and others affected by the downturn?
At the risk of accepting every invitation, I am very happy to meet my hon. Friend in his constituency to talk to Unity and others, not least about the work that the rapid response service has been doing and how it has helped, and about the outstanding difficulties in the ceramics industry.
I can assure the hon. Lady that there is no 10 per cent. rule. Tariff income is a simple method of calculating the contribution that people with £6,000 of capital are expected to make to help meet their living costs. Under the previous Government, anyone with savings over £12,000 was not eligible for any support at all. Also, the less generous rules assumed £1 a week income for every £250 of savings. The rate of tariff income is now half the previous rate, and we also abolished the upper capital limit, giving more people access to more support.
The Government have made it clear that training payments will be available to major companies that train those who are still unemployed after six months. Midlothian council is by far the biggest single employer in my constituency. Will the Secretary of State ensure that all local authorities are also entitled to that payment for training requirements?
I am happy to meet my hon. Friend to discuss that. We want to make sure that we use the training subsidies in the most effective way possible. It is just a shame that the Scottish National party Government are cutting training, rather than increasing it.
As the Secretary of State is aware, the Buncefield incident decimated the commercial sector in my constituency. Sadly, unemployment is now 30 per cent. higher than it was in 1997. Lord Newton’s report specifically said that Hemel Hempstead required special status to help regeneration. Where is that help?
The administrators of a company called Gibsons in my constituency have thus far failed to answer questions that I have raised about the employment rights of the people who were made redundant after the factory closure. Will my right hon. Friend the Secretary of State encourage Jobcentre Plus to impress on employers their duties and responsibilities when they make redundancies? In this particular case, if my right hon. Friend finds anything suspicious, will he ensure that his colleagues in the Department for Business, Enterprise and Regulatory Reform are made aware of it?
I think that my hon. Friend has just made my colleague from that Department, the Minister for Employment Relations and Postal Affairs, aware of the matter. We want administrators, and companies that are going into administration, to live up to their responsibilities to their employees, and we want to make sure that they provide as much information as possible. There have been cases in which administrators have been reluctant to do that, and have even been reluctant to let in the rapid response service. We would be very worried if that continued to be the case. We want administrators and companies to help people who have lost their jobs as much as they possibly can.
In Newton Abbot, Jobcentre Plus shares offices with Her Majesty’s Revenue and Customs. What assurances can the Secretary of State give that those people in Revenue and Customs whom his Government are about to make redundant will be found employment by their colleagues downstairs?
I can assure the hon. Gentleman that we are working with HMRC to see whether precisely what he suggests can be done. If there is an opportunity to transfer people from Revenue and Customs to Jobcentre Plus, to which we are recruiting more people, we will do so. We are already in discussions with it about how that can be done.
Does my right hon. Friend agree with the Secretary of State for Health, who yesterday called for a revision of the European posted workers directive to prevent the undercutting of terms and conditions, particularly in the construction sector, and to deal with various judgments of the European Court of Justice?
The Government used migrant workers artificially to boost employment over the past 10 years, when 80 per cent. of new jobs went to foreign workers. Does the Minister for Employment and Welfare Reform now accept that there has been a failure to tackle the skills problem in this country, and to carry out the necessary welfare reform to make workers in this country best fitted to compete in these more difficult days of recession?
A lot of people take out payment protection insurance during their working life. Do my right hon. and hon. Friends on the Front Bench think that it is fair that when those people lose their jobs, payments made under that payment protection insurance scheme are treated as income when they apply for unemployment benefits? If not, will they agree to review the situation?
On this day of extreme cold weather, may I ask when the Government are seriously going to introduce proposals to extend the winter fuel allowance to severely disabled people, including groups of terminally ill people? Such people include my constituent, Matthew Pinder, who today will be sitting at home in his front room with one fire on because his family say that despite whatever the Government have said, they do not have enough money to heat their home.
That is precisely why we increased the Christmas bonus by £60 this year—that will go to people who are disabled. It is worth saying that there was no winter fuel allowance under the previous Government—we introduced it. They used to spend just £60 million a year, whereas we now spend billions on ensuring that people receive help in winter. We do so precisely because we want to ensure that people do not have to choose between heating their home and fending for themselves.
Lindsey Oil Refinery
With permission, Mr. Speaker, I should like to repeat a statement being made by my noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform in the other place about the industrial action at the Lindsey refinery and elsewhere in the country.
On Thursday and Friday last week, contract workers at the Lindsey refinery in north Lincolnshire and elsewhere took part in unofficial industrial action. That has been followed today with further such action at Sellafield power station and other sites around the UK. The stated reason for such action is said to be that a contract awarded at the Lindsey site to an Italian contractor, IREM, has resulted in discrimination against British workers through the exclusive employment of Italian and Portuguese workers. On the Lindsey site, the great majority of the workers are British. I understand that all the striking workers are from maintenance or enhancement projects on the sites; and as of this afternoon there is no disruption of production at any of the sites where this unofficial industrial action is taking place.
On Friday, my Department asked ACAS, the independent arbitration service, to meet the employers and the unions to examine the various accusations being aired and to establish the facts—we expect its report very quickly. ACAS was in touch with the parties over the weekend and I understand that the first meeting is taking place today. ACAS’s first responsibility is to report to us on whether laws have been broken; if they have we will take action. We are determined to see robust enforcement of the employment rights legislated for by this Parliament, and the fair and proper application of the European rules that govern the operation of companies throughout the EU and the mobility of labour, which has always been an intrinsic part of membership of the EU and has been supported by successive British Governments.
In a statement issued yesterday, the energy company Total, which runs the Lindsey site, said:
“It has never been, and never will be, the policy of Total to discriminate against British companies or British workers.”
It went on to say that it subcontracts on a fair and non-discriminatory basis and that the wage rates are the same as for equivalent jobs on the site.
Two key accusations have been made in recent days. The first is that the use of labour from overseas leads to an erosion of wages and conditions for all concerned because these workers are paid less than UK workers. The second is that there is discrimination in recruitment practice against British workers. The statement issued by Total last night confirmed that workers from overseas are paid at the same rate as other workers on site, and it further confirmed that Total does not operate any policy of discrimination with regard to tendering or recruitment.
The same rules apply here as with UK companies bidding for work overseas, and I would remind the House that there are some 300,000 UK companies operating elsewhere in Europe. Subcontracts can be bid for by UK or overseas-based companies. Of course, if an overseas company wins a contract it can use its permanent employees to carry out the work, but Total has confirmed that where new vacancies are advertised, it will work with subcontractors to ensure that UK workers are considered in the same way as anyone else.
The workers coming here from Italy and Portugal are protected by the EU posting of workers directive, which the UK has implemented fully. It guarantees those workers minimum standards, for example on pay and health and safety, and facilitates the free movement of services within the European Union—a vital market for British companies. In the case of the Lindsey refinery, we have been informed that all subcontractors adhere to the national agreement for the engineering construction industry, which governs terms and conditions, working hours and pay.
Membership of the European Union and taking advantage of the opportunities for trade presented by the EU are firmly in the UK’s national interest. Free movement of labour and the ability to work across the EU have been a condition of membership for decades. It is important that we respect and guarantee that principle, not least because it guarantees the right of hundreds of thousands of British workers and companies to operate elsewhere in Europe. It illustrates the importance of Europe to the UK that half our £370 billion of exports per year go to the EU, half our £315 billion inward investment comes from the EU and between 3 million and 3.5 million UK jobs are linked both directly and indirectly with our trade with the EU.
At a difficult economic time, we fully understand the anxieties that people have about their jobs. That is why we have been taking the measures that we have to support people through these difficult times. We strongly believe in fair opportunities for everyone in this country and in ensuring that British people have access to advertised job vacancies. It would be quite wrong, and indeed against the law, for companies to advertise vacancies and exclude British people from them. Equally, it would run contrary to the principles of the single market and harm British people working abroad if we were to exclude foreign workers from employment in the UK.
Of course, we understand the concerns of workers at a time of economic difficulty, and we have now established a mechanism through the ACAS process to examine those concerns. It is through that strong and independent process that we should proceed, not through the continuation of the unofficial industrial action that has been taking place. Our aim is to get through the economic difficulties that we face with Britain continuing as a great trading nation, with our companies able to operate worldwide and our workers equipped for the jobs and industries of the future. I commend this statement to the House.
May I first ask, for the sake of clarification, for reassurance that this is a statement of the whole Government, not just the Department for Business, Enterprise and Regulatory Reform, and that the Secretary of State for Health has now recanted and been enlightened, and accepts what has been said? Most importantly, will the Minister confirm with clarity whether the Government believe that the posting of workers directive is satisfactory and working fairly in our interests, or whether they are seeking amendments to it? That has been left quite unclear in all the interviews given by Ministers so far.
Does the Minister accept that all responsible people will agree with him that however aggrieved people feel, industrial action at power stations and oil refineries at the present time of national crisis is not the way to take forward any of their arguments? The unions should help to get people to desist from that. Does he accept also that we do not want to see riots in Italy about British workers there at a time when British companies are seeking contracts on the continent for their British workers to engage in employment there?
However, does the Minister also accept that understandable worries at the present time have been turned into direct action as a result of the Prime Minister’s irresponsible use of the phrase “British jobs for British workers”? Is it not clear that that phrase was populist nonsense at the time when he used it—it was part of some curious Britishness agenda, which I seem to recall he was pursuing for reasons of his own at the time—that he was concerned more with his job security than with anybody else’s job security in this country, and that we will all welcome the fact if he never repeats it, no Minister ever repeats it and no such irresponsible statements are made by any member of the Government at any time in the future?
I should take this opportunity to welcome the right hon. and learned Gentleman back to the Conservative Front Bench. He brings great experience to his role. I always feel that, particularly when we are discussing issues of European competence, he may have more in common with Labour Members than with some Members behind him, but we will see how the debate develops.
The right hon. and learned Gentleman asked a couple of specific questions. As I said in the statement, we have fully implemented the posting of workers directive. It has been in place for some years, and as for many such directives, the European Commission has established a group to look at its operation, and we will see if it makes any recommendations.
As for the statements of the Prime Minister to which the right hon. and learned Gentleman referred, never at any time has the Prime Minister said or implied that he or the Government are opposed to the free rights of British companies to operate throughout the European Union or of European companies to operate here in the UK. What the Prime Minister said, quite rightly, was that, as a country, we needed to do more to equip the British work force for the jobs, skills and industries of the future. That is precisely what we are doing. That is why, while apprenticeships declined when the Conservative party was in power, we will grow apprenticeships to some 0.5 million, and we will stand by our commitment to equip British workers for the future.
As I am sure the whole House can appreciate, I have spent the past few days taking part in many discussions about the situation affecting the refinery in my constituency. I welcome the promise that ACAS is now to be involved and will be meeting both sides in the dispute to examine the accusations that have been made on both sides. However, does my right hon. Friend appreciate that for skilled engineering and construction workers who are currently out of work, seeing contracts going elsewhere can be very toxic? What can he say to those people, of whom there are many in my constituency and others, who have such skills and who are out of work? What can be done to assist them to get jobs, which they so desperately want at the moment?
I know that my hon. Friend has been closely engaged with this issue in recent weeks, and that she is doing everything she can to help her constituents in a positive and responsible manner. On future employment, I would say two things to her. The first thing we have to do is maintain our investment in infrastructure, and not cut it, as the Conservatives would, and that means continuing with rebuilding our energy and transport infrastructure, and with other important projects of national significance. The other thing that will support employment for her constituents, and those of all hon. and right hon. Members, is for this country to maintain its positive stance as a positive member of the European Union, to continue to look outwards and trade globally, and, in so doing, to increase wealth for the UK and employment in the UK.
We welcome the statement, but it has been made necessary because of the reaction to the cynical and undeliverable statement by the Prime Minister at the Labour party conference in 2007 that there would be British jobs for British workers. That statement was as misleading as the Prime Minister’s other promise to abolish boom and bust. That economic failure caused the understandable anxiety in the country at the moment, with Britain plunging deeper into recession, unemployment soaring and the final hallmark of all Labour Governments—increasing industrial unrest.
Pulling up the drawbridge cannot be the right response. British companies and citizens benefit from the free movement of goods and services across the European Union. Does the Minister agree that many in Germany and France who see a falling pound feel it is unfair that British businesses are gaining a competitive advantage as a result of changing exchange rates? I agree with the right hon. Gentleman and accept his comments that all new jobs must be open to all workers and that employment law must be upheld, but does he agree that protectionism, whether it is being advanced by the new President of the United States or by isolationist right-wing commentators in Britain, would be ruinous for our country and must be avoided?
I appreciate the hon. Gentleman’s welcome for the statement and his positive comments on Britain’s role as a member of the European Union. I agree that unofficial industrial action is not the way to resolve the concerns that have been expressed. We have set up a process through ACAS, which will involve the employers and the trade unions, to air the concerns that have been expressed, and as I said, the statement issued last night by the energy company Total addressed some of those concerns.
The hon. Gentleman is right about protectionism. If we look at past history and the economic problems of the last century, we can see that a retreat from looking outwards and a retreat from world trade would indeed mean that protectionism became a sure-fire way of turning recession into depression.
Does my right hon. Friend accept that this is not an attack on the mobility of labour in the EU, but an objection to the fact that one contractor—the Italian contractor—is bringing in its entire work force of several hundred people for one particular contract? This is a plea: in all the other jobs that will come into being with the contract for the closure and reconstruction of the Lindsey oil refinery, preference should be given to British workers, and to local workers, in an area of high unemployment where the skills are available. As well as sending in ACAS, should not my right hon. Friend be convening a meeting in London of the big oil companies, contractors and unions to allay the workers’ fears for British jobs and to see that the posting of workers directive is working properly?
As I said, the vast majority of workers on the site are British. It is legal for a European company to contract for work and to say that it will use its permanent employees to carry it out. The issue of discrimination arises if new vacancies are advertised, and the statement issued last night by Total, which runs the site, made it clear that if new vacancies are advertised the company will work with all its subcontractors to make sure that UK workers are considered in the same way as anyone else.
Although this dispute relates to the employment of European workers under European law, about which little can be done—at least in the short term—does the Minister accept that the reason why it has had such tremendous resonance across the country is people’s concern about the huge flux of immigration into the UK in recent years, a large part of it from outside the EU, which has accounted for a majority of the new jobs of people of working age? Last year, the total number of work permits issued was a record, at about four or five times the level when the Government were elected, so can he assure us that from now onwards far fewer work permits will be issued and, in particular, that people for whom no job is immediately available will not be issued with work permits allowing them to come to the UK just looking for jobs as, extraordinarily, the Government now permit?
The issue at the Lindsey oil refinery, of course, involves European workers coming here, as I said, under the rules of labour mobility that have existed for some decades. The right hon. Gentleman asks about non-EU immigration; on that issue, the Home Secretary and my colleagues at the Home Office have set out the new points-based immigration system, which is intended precisely to gear our needs more closely to immigration from outwith the EU. I would also say to the right hon. Gentleman that immigration from outwith the EU has made a tremendous contribution to this country. That is true of my constituency, and I am sure it is true of many others.
Will the Minister use this opportunity to dissociate himself from the remarks made on this morning’s “Today” programme by the Secretary of State, who made what I thought was a rather silly comment implying that the answer to all the workers who are worried because they are not getting these jobs was for them to go off and get a job abroad?
I am afraid that I disagree with my hon. Friend; that is not what the Secretary of State has said. What he said was that the rules of trade across the EU benefit EU companies and British companies and that we, as a positive member of the EU, gain by that, which is why we do not intend to change those rules of open trade. He was certainly not harking back to comments made at another time about people getting on their bikes. That is not what he said or what he meant; it is a distortion of what he said.
May I congratulate the Minister first on not quite being able to bring himself to defend the Prime Minister’s cheap populism, and secondly on rightly expressing the importance of the free movement of workers within the EU, from which this country and British workers have benefited? If he wants to lower the temperature out there in British industry, however, may I commend to him the policy of having an explicit annual limit on work permits issued to those coming in from outside the EU, because that would do a great deal to restore confidence in the fact that our immigration system is actually under control, as opposed to the current feeling in the country that for years it has been out of control?
Once again, the hon. Gentleman tries to tempt me away from the operation of the EU rules, into a general discussion on immigration policy. I am not sure quite what cap or number he wants, but as I said, this Government have set out a points-based immigration system for non-EU immigration, which is aimed precisely at matching our needs to the flow of immigration from beyond the EU.
Will my right hon. Friend ensure that ACAS talks not just to Total, but to Alstom, the subcontracting company, which subcontracts again to another company? It is that company that is causing the problem; it has a record of trying to breach the national agreement in respect of agency workers. That loophole was closed through the agency workers directive, and it is critical in this situation that ACAS looks into what is happening with Alstom as well as with Total.
In the coming weeks and months, as this is resolved, and there is a procurement process involving millions of public opportunities, a corporate social responsibility clause should be agreed by the Government to ensure that subcontractors as well as main contractors work to the national agreement, and that there is a commitment to creating local jobs and services in these big contracts, so that communities benefit, not just big companies.
My right hon. Friend has tremendous experience in these issues and his words should always be listened to seriously. With regard to ACAS talking to Alstom, I am sure that it will talk to all the major employers in this field that it can. With regard to the national agreement, Alstom has informed us that it abides by the agreement, but that is precisely why we asked ACAS to look at the issue. A number of claims have been aired in the past few days, and it is right to get ACAS to take a dispassionate and impartial look at those claims, so that we can establish the facts.
As the Prime Minister has said, we need to do more as a country to improve our skills base, but this is not just about the skills of individual workers, but about the companies that apply to do the work, some of which may do so with a permanent work force whom they deploy to do the work. It is not just about the skill of the individual worker, but about the whole package that a company brings when it bids for a contract.
I congratulate my right hon. Friend on the statement and his comments that he is determined to ensure the robust enforcement of employment rights in this country. Other hon. Members and I attended a meeting a few weeks ago at which we considered the economic climate in this country, in Europe and across the world. Comparisons were made with the difficulties that arose in Europe in the late 1920s and early 1930s in order that we may learn from history and ensure that history does not repeat itself. What we have heard in recent days worries me greatly. We all need to be very temperate in our language and ensure that we do not again see what happened in the late ’20s and early ’30s and play into the hands of and pander to the extreme right in any country.
I quite agree with my hon. Friend that we should not pander to the extreme right. He refers to history, and that is relevant on two counts. First, in response to an earlier question, a retreat into protectionism would be a mistake for us and for the rest of the world economy if it was repeated in countries elsewhere. He is absolutely right that, since the end of the second world war, the establishment and growth of the European Union has helped to ensure not only peace but far greater prosperity for its citizens, and we should seek to maintain that in the future.
The right hon. Gentleman opened his statement with some so-called statistics about the benefits of the European Union that, in my view, are at the very least open to debate. Does he not accept, as many trade union leaders believe, that there is problem with the labour mobility directives? The UK Government have not on all occasions stuck up for British interests. If he is interested in seeking to reduce tension on this subject, perhaps he will produce a balance sheet of the number of projects that UK companies are carrying out in France, Germany and Italy, for example, as against the number of projects that are being carried out by those countries in the UK. Perhaps that would give people the facts of the case. Will he do that?
I appreciate that for certain hon. Members any positive statement about the European Union can sometimes be difficult to digest. It is very clear that membership has been good for our trade and growth and for the other matters hinted at by my hon. Friend the Member for Dumfries and Galloway (Mr. Brown). The labour mobility rules have been part of the EU for decades—they have not been invented in the past year or two. Labour mobility—the freedom to work throughout the EU in different member states—is one of the basic conditions of EU membership. That is worth bearing in mind in the current circumstances.
My right hon. Friend will be well aware that two large liquefied natural gas terminals are being constructed in Milford Haven and that there are Polish and Portuguese workers on those sites, but that they are seen as being in addition to local and UK skilled Labour. Does he agree that something is seriously wrong if, in the case at Lindsey and other cases around the country, the national agreement is being abided by, yet local UK-based companies are not successful in their tenders? My hon. Friend the Member for Great Grimsby (Mr. Mitchell) suggested a meeting with all parties to consider the issue. It is absolutely essential that major clients, main contractors, the trade unions and the engineering construction industry sit down with the Government to work out why foreign companies are able to outbid British companies.
I must take issue slightly with my hon. Friend. What is important is an open and fair bidding process for contractors to win the work. We cannot put ourselves in a position whereby every time a non-British company wins a contract, we say that it is unfair. British companies are operating successfully throughout the rest of Europe and throughout the world. What is important is that the rules are applied fairly and properly.
I agree with my hon. Friend about dialogue and interested parties. It was for precisely that reason that, over the weekend, we established the ACAS process to examine some of the claims. Let us see whether the law has been broken. Let us see whether European rules have somehow been contravened. That is what ACAS is doing, and that is why the first meeting was held today.
I believe that ACAS is the right body to examine the statement. I believe that it is perfectly capable and perfectly qualified to do so, and that it is respected by both employers and trade unions. That does not mean that we accept every statement made by everyone at face value. It was precisely in order to establish the facts properly that we asked ACAS to look into the issue.
The Minister may know that this morning, on a television programme, Derek Simpson said that the Prime Minister had had meetings regarding the three rulings of the European Court only about a month ago, and that some action was expected as a result of those discussions. He added, in reply to a question, that it appeared that that action had been dropped. Can the Minister tell us what action was proposed, and whether it was in line with what the Secretary of State for Health said on the programme yesterday?
Will the Minister also ensure that if it is impossible to overcome the European Court rulings—which we all know is the case—we will legislate in the House of Commons to ensure that we provide proper and fair treatment for the workers and trade unions of this country?
I am sure that the workers and trade unions of this country will welcome the hon. Gentleman’s strong support. I believe that he was referring to a series of European Court judgments issued over the past couple of years on pay differences between posted workers and workers employed locally. If the statements that have been made are true and, in the subcontracting cases that have been cited in recent days, the same pay rates apply throughout the site, it would appear that the issue of a race to the bottom in wages does not apply in this instance. As for the judgments themselves, as I have said, a European Commission body is examining the operation of the Posting of Workers Directive, and a social partners dialogue on the judgments is in progress at European level.
Does the Minister accept that there are some very nasty undertones to the discussions surrounding the disputes? In times of difficulty, the traditional role of the Labour party, the labour movement and the trade unions has been to oppose xenophobia and discrimination and to try to engender a sense of solidarity among all workers to enable them to face the difficulties together. Will the Minister convey the message that we want people to be united in the face of economic difficulties, rather than some turning against others on the basis of their passports or ethnicity?
I certainly agree that the rules of labour mobility, to which I have referred, and the rights to work across the EU have been in place for decades. I also agree, and have said, that workers from the EU and from outwith the EU have made a strong contribution. I understand that in times of economic difficulty there will always be heightened concerns about jobs. If those concerns include an allegation that the law or rules are being broken, we will look at them, and that is precisely what ACAS has been charged with doing. However, we will not turn our back on trying to reach out, trade openly and grow our wealth through our links throughout the world. We will take a positive stance on world trade and UK companies operating abroad, because that benefits our country.
Given the union complaint that it is the transport and accommodation of these workers that may be unfairly subsidised, will the Minister clarify the Government’s position? Is it that he wants to be sure that the directive is not being broken, or is he at all concerned to improve its working?
Our concern is twofold. First, we want to ensure that the domestic employment laws passed by this Parliament are properly observed and enforced. On that subject, we have put increased resources—for example through minimum wage enforcement—in place in recent years. Secondly, we want to ensure that the European rules that apply both to UK companies operating elsewhere in Europe and to European companies operating here in the UK are properly and fairly applied. In recent days, there have been allegations on both counts that that may not be the case, and that is precisely what we have asked ACAS to look at.
I agree with the Minister that right-wing anti-Europeanism and protectionism would be disastrous for British workers. Do I understand from his statement that ACAS will investigate the implementation of employment rights in respect not just of statutory minimum standards such as the minimum wage, but the national collective bargaining agreements that apply at all of those sites? The wages there are many times higher than the minimum wage. I still find it puzzling that European companies can bring their labour in, meet all the costs of accommodating and transporting them—both to this country and to and from work—and still claim to abide by national pay rates and conditions of service. That does not seem to add up, and I wonder whether the real answer to that puzzle is to be found in the fact that these subcontractors subcontracted all the way down the line to a point at which nobody really knew whether the workers concerned were being exploited or whether local workers were getting the justice and fairness to which they are entitled.
My right hon. Friend asks several questions, which I will try to answer. He asks about the national agreements setting standards that are higher than the basic minimum wage. He is right about that. Claims have been made that the subcontractors on the Lindsey site abide by the national agreement, and that is a legitimate issue for ACAS to look at. He mentioned the costs involved and I suggest that employers may not always choose the cheapest tender, and that speed or the overall package that a subcontractor offers may be strong factors. The statement issued last night said that the subcontractors did abide by the national agreement, and ACAS will doubtless examine that claim with the employers and the unions involved.
Is it not a sad fact that whatever changes the Government or the House may wish to make to the laws governing foreign contracts or the conditions attached to foreign workers, we are unable to make those changes because they are entrenched in superior EU law? Since that powerlessness is undoubtedly an element in the present frustrations, is the Minister aware that changes are on their way, because my right hon. Friend the Member for Witney (Mr. Cameron) has recently confirmed that it will be
“a top priority for the next Conservative Government to restore social and employment legislation to national control.”
The right hon. and learned Member for Rushcliffe (Mr. Clarke) clearly knew what was coming and thought that he had better get out before hearing that statement. If the time ever came when the Opposition were to get into power, I would be interested to see whether the right hon. and learned Gentleman would be able to support the policy that the right hon. Member for Wells (Mr. Heathcoat-Amory) just outlined. The right hon. Gentleman knows that the policy that he outlined—to resile from the European legal settlement that goes with membership—would end in a clash and that, ultimately, it would lead to withdrawal from the European Union. If that is his policy, he can defend it. I have set out a policy today of positive membership of the EU and positive trade throughout the EU that brings wealth and employment to our country. Although that can be difficult, it is not something that we will turn our backs on.
Will the Minister allow me to express my dismay at the way in which he has interpreted the law, which allows European companies to win contracts here and to put up restrictive barriers against employing local people? Can he assure the House that his interpretation is shared by the German, French and Italian Governments?
All the countries are signed up to the European posted workers directive. It is legal under the directive for a company to bid for work and to use its permanent employees as part of the fulfilment of that contract. That is not just a British right; it is part of the directive.
Points of Order
On a point of order, Mr. Speaker. I am sure that hon. Members will have noticed today’s inclement weather and the transport difficulties it has caused. We should be particularly mindful of the interests of those who work in the House, many of whom made great efforts to be here today and many of whom will have a very difficult journey home this evening. Accordingly, it might help if I notify the House that we intend to conclude our first debate at 6.30 pm this evening and the second debate at 9 pm to enable members of staff to get home safely.
That is very considerate of the hon. Gentleman. The staff of this House have, under very difficult circumstances, come in to look after the House and to enable the Chamber to sit. I am glad that hon. Members are thinking of the staff. I note that the Adjournment debate is very tight and that no one other than the hon. Gentleman who will promote it will be able to contribute, with the exception of the Minister, of course.
On a point of order, Mr. Speaker. In your statement on 3 December at the state opening of Parliament, you said:
“From now on, a warrant will always be required when a search…of a Member’s office, or access to a Member’s parliamentary papers, is sought.”
You went on to say:
“Every case must be referred for my personal decision, as it is my responsibility.”—[Official Report, 3 December 2008; Vol. 485, c. 3.]
However, in your statement made a week ago last Thursday you said that the police need only
“advise the Serjeant at Arms”—[Official Report, 22 January 2009; Vol. 486, c. 897.]
and that the Serjeant at Arms would then approach the Member concerned directly. First, why have you changed your view, if you have changed your view? I believe that colleagues would be far more reassured by your first statement than by the subsequent one. Secondly, if it is ultimately to be left to the Member concerned to decide what to do in such circumstances, that might place them under undue pressure. Surely matters of privilege should rest with the House as a whole, according to the statement made by Speaker Lenthall in 1642.
I am grateful to the hon. Gentleman for giving me notice of his point of order. In my statement on Thursday 22 January, I confirmed that, in relation to the visit to the office of the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), the police officer exercised no compulsory powers to enter the office or to require any document to be supplied. It was not a matter that involved the seeking of a search warrant. I also confirmed that, in future, any police officer in the House seeking the assistance of a Member and the staff in a Member’s office must advise the Serjeant at Arms, who, in turn, will approach the Member concerned and obtain his or her consent before any action is taken. These requirements are separate from the procedure laid down in my protocol relating to circumstances in which the police seek to search a Member’s office under a warrant.
Further to that point of order, Mr. Speaker. I seek further clarification because my hon. Friend the Member for Ashford (Damian Green) has been approached by the Metropolitan police and asked for access to e-mails between him and me as Front Benchers of Her Majesty’s loyal Opposition. Has the Serjeant at Arms been notified of this, and does it come under your ruling that such requests will require a warrant and will be referred to you for your personal decision?
I thank the right hon. Gentleman for bringing this matter to my attention. This is news to me, and I will investigate whether the proper protocol and the procedures that I have laid down for situations without a warrant have been gone through. I will report back to the right hon. Gentleman and, indeed, the House.
Further to that point of order, Mr. Speaker. In your statement, and in the protocol, there is reference to search warrants. Will you take advice on whether—as has been indicated to me—the Police and Criminal Evidence Act 1984, on which any search warrant might be based, applies to this House, for the reasons that have just been given? Will you confirm that this is a matter for the whole House and, furthermore, that the Police and Criminal Evidence Act does not apply and that a search warrant issued under that Act would be void and invalid?
Further to that point of order, Mr. Speaker. I am glad that you are investigating this matter. When you have spoken to my hon. Friend the Member for Ashford (Damian Green), will you consider whether you and he should put in the public domain all the information that the police are requesting from Members’ computers that relates to other Members of this House?
The right hon. Gentleman knows that a resolution of this House says that, while criminal charges are proceeding, the matter should not be discussed—[Interruption.] Order. Mr. Penning, try not to do my job. We have just spoken a few minutes ago about how trade unionists should be trade unionists, and one thing that we do not do is try to do the Chairman’s job for him when we are Back Benchers. I was saying that there is a resolution of the House that deals with criminal proceedings, and that I am bound by that resolution. That is the spirit in which I reply to the right hon. Member for Hitchin and Harpenden (Mr. Lilley).
Further to my original point of order, and to the subsequent comments that have been made, Mr. Speaker, I am grateful for your clarification. With the greatest respect, may I put it to you that there are people outside the House who do not attach sufficient importance to what you have said? Until the House has debated these matters, and referred them to the Privileges Committee for proper consideration before bringing them back to the House to be resolved, we are pulling our punches and the police are failing to respect your word. That is a serious slight on this House.
[3rd Allotted Day]
Government Capital Expenditure
I beg to move,
That this House notes that the International Monetary Fund believes that the UK will suffer the worst economic contraction among advanced countries; notes with alarm that the Pre-Budget Report 2008 announced an effective 16.5 per cent. decrease in public sector net investment from 2012-13; further notes with concern that the Learning and Skills Council has decided to halt funding decisions for college rebuilding; expresses concern that there are currently 1.77 million people on the social housing waiting list, an increase of 100,000 on last year; further notes that only £400 million has been brought forward out of £8 billion to spend on social housing; notes how little investment the Government has made to ensure that homes are energy efficient and well-insulated; believes that the Government has neglected the current opportunity to invest in expanding the rail network; and calls on the Government to immediately bring forward funding for capital projects, particularly for schools, colleges, social housing, public transport and environmental works, all of which will create assets for the taxpayer and generate future income as well as countering recession in the short run.
The ministerial statement set out the chilling context in which this debate takes place. We are dealing with rapidly rising unemployment, much of it centred on the construction industry, and the situation is bitter and divisive. We shall try to suggest a positive approach to the problem through fiscal stimulus from capital spending.
I wish to make three simple points. First, fiscal stimulus is necessary, and the best way of providing it is through properly targeted public investment. Secondly, despite the Government’s claim to be bringing forward capital investment, that is not happening. There are severe problems in the public investment area, and the situation is complicated by the virtually complete collapse of private finance initiative projects. Thirdly, if we are to have public investment in an environment where there are growing anxieties about public debt, we need a mechanism for proper evaluation of such things in a way that does not happen now, because much of it takes place in the framework of the commercial secrecy that surrounds PFI projects.
Let me develop each of the points in turn. First, like most western Governments, we believe—and the Government say that they believe—in the need for a fiscal stimulus. Despite the severe financial constraints on the public sector, we believe that such a stimulus is right and necessary, and that the best way of bringing it about is through properly targeted public investment rather than, as has happened, the value added tax reduction. A few weeks ago, we proposed in the House that, assuming a belief in the fiscal stimulus, a much better use of that £12.5 billion would have been to introduce a series of public investment measures aimed at, for example, home insulation, social housing projects and public transport. We remain of the view that that would have been the correct way forward.
Why is public investment so important in a recession? Partly because it creates employment. There is a big opportunity cost to the alternative of not investing: people remain unemployed. Some 100,000 construction workers have already been laid off in this recession. The figure was 300,000 at the peak of the last recession in the early 1990s, and there is a reasonable expectation that the number of unemployed construction workers in this recession will be even bigger than that.
My hon. Friend is talking about the absolute importance of fiscal stimulus through capital investment. Does he share my concern about local authorities that put together capital programmes which rely partly on anticipated receipts on capital sales and the disposal of assets? Such local authorities are finding it increasingly difficult to make their programmes add up, as the opportunities for disposing of assets at a reasonable price dry up because of the recession. Does he agree that if the Government want the economic stimulus and local councils to deliver better street lighting, and improvements in schools and various other assets that councils hold on the public’s behalf, they need to find ways to bridge the funding gap to allow councils to make the capital investment today?
My hon. Friend makes a good point that I shall develop later. He is absolutely right that in the current environment trying to finance projects by selling off assets cheaply in highly depressed asset markets is not efficient, and that is one of the reasons why the Government’s own programmes are in considerable difficulty.
Let me finish my central point about the importance of public investment. Of course, it is important for employment generation, but it also generates an asset. If it is properly constructed, it generates a stream of income and environmental and social benefits. That is why we presented our series of proposals before Christmas.
My second basic point is that, despite the Government’s commitment in principle to accelerating public investment, a growing amount of evidence—anecdotal so far, but I hope that the Government will clarify the matter—shows that many of their enhanced public investment projects are not happening or are severely delayed. Let me enumerate some of the difficulties that we hear about from councils, parliamentary questions and elsewhere.
In the middle of last week, we heard about the serious problems that are beginning to arise with the large capital works programme for further education colleges and adult colleges. Two in my constituency are affected. Twenty-two advanced projects have been put on hold and a long pipeline of more than 100 others has been put into abeyance. There may be good technical reasons for re-examining the projects—for example, some depend on asset disposal, as my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) said. However, many do not. The adult college and the tertiary college in my constituency do not have that problem, or the other problems that are supposed to be associated with the building programme, and cannot understand why the projects are being held up. They say that they may have to retender. The process will take a long time—they will have to renegotiate bank loans, which will cause serious delay. Some of the colleges, which are being held up by what appears to be merely a three-month delay, say that it will retard construction by up to two years. When they come on stream, the recession may have passed, though perhaps that is an optimistic interpretation.
I visited Bournemouth and Poole college on Friday to learn that a project of £150 million had to be divided in two. Half has been deferred for at least 24 months and half is faced with general uncertainty. Does my hon. Friend believe that the Government should give a clear explanation for the hold-up and the possible waste of money for up-front expenditure, and a timeline for tackling that? My local college has already spent £11 million and it is faced with total uncertainty and antiquated buildings.
My hon. Friend makes her point well. Indeed, hon. Members of all parties made similar points last Thursday during Innovation, Universities and Skills questions. The problem is not only wasteful and exacerbates delays, but it affects a specific form of public investment, which, as the Government have demonstrated, is of great benefit. The colleges that have been built in the existing programme have produced quick returns in accelerating apprenticeship training and other useful activities.
The only explanation for the circumstances that the hon. Gentleman describes is either that the Learning and Skills Council overcommitted and led people to believe in an outcome that was never on the cards, or the Treasury has put a stop on the projects and blocked the pipeline. The cause of the problem was not clear from Innovation, Universities and Skills questions. Will he speculate on the answer?
I do not know the answer. The Financial Secretary is here and I am happy to take an intervention from him, but I am sure that he will give a proper explanation in his speech. Having talked to my local learning and skills council, I have a sense of Treasury involvement, but I do not know whether it is exclusively responsible.
In addition to the problems that affect colleges, other bits of the advanced investment programme are running into difficulties. I was recently shown a summary of a meeting of council leaders in the south-west. It reported repeated appeals to the Department for Transport to say whether the advanced projects that the Government had flagged up would happen and simply never getting an answer. The projects are not moving ahead. If that is happening in the south-west, I am sure that it is happening everywhere else.
There are particular problems with social housing. In the past year, my colleagues and I have asked the Government about the obvious things they can do in the face of the collapsing housing market, such as investing in social housing, both in new build and in acquiring unsold properties. The Government have responded in a general sense, but only very little is happening.
The Government had approval, within the envelope of the spending review, to spend £1 billion on social housing. As far as we can establish, only a tiny fraction of that has been committed. One of the reasons is that public housing projects—social housing—whether undertaken by councils or by housing associations, depend on agreements with developers and section 106 money. Private development has largely ground to a halt and section 106 money is not available, so public sector housing is not proceeding either. We also know that many social landlords have collaborated with developers, and many of them overcommitted themselves with bank borrowing. There is about £50 billion of borrowing by social landlords—certainly by the registered social landlords. Many of them are now paralysed and unable to proceed with developments.
The ambitious targets for social housing are not being met at a time of growing housing need. Moreover, in the middle of a recession, one of the things that the Government concretely can do, and which we all agree is an imperative, is simply not happening. I would be interested to hear exactly what is happening on that front. We have repeatedly asked the Government. As far as we can establish, virtually no money is coming out of the appropriate Department to develop social housing when it is most needed.
The hon. Gentleman is advancing a sound case. Does he believe that because of the seriousness of the credit crunch and the financial crisis, there should be more genuine co-operation, contact and communication between the Government and the Opposition parties, to see whether there could be co-operation in bringing about a solution to the extremely serious problems that we face?
Over the past couple of weeks, Ministers, including the Prime Minister, have accepted the case that my hon. Friend makes and the need to get things going in the social housing, housing association and housing trust sector. Will my hon. Friend seek to elicit from the Government today a commitment, first, to draw down more money from the new Homes and Communities Agency—it says that it has lots of money that it is willing to spend, and that could plug the gap—and, secondly, to call in local authorities with a large social housing programme that is currently blocked, so that the money can be released? The sites are there, planning permission has been granted, and there are people queuing up waiting for the homes. Something could be done if the Government gave the matter urgent attention.
The idea of getting the councils in to talk to the Government about what can be done is right. It should also be possible to bring in some of the developers and get them to work together. There should not necessarily be a public/private sector demarcation. My hon. Friend is right. Although I think the failings are largely in the Government, they are not entirely in the Government. The new agency is probably highly conservative in its approach. I get a sense that it is reluctant, for example, to encourage the buying up of empty stock because it says that it is the wrong quality and cannot be used for public sector housing, so housing stock just sits there empty when many people are desperate. There is a conservatism and a reluctance to act across the board. If my hon. Friend’s suggestion is taken seriously, the Government should get all the parties round the table, bang their heads together and get some action.
Does my hon. Friend agree that a key barrier preventing many councils from investing in more social house building is the continuance of the housing revenue account system? While that is under review, should not everything be done to bring forward the review, so that we can see changes sooner rather than later?
I very much agree. Until recently, the assumption was that only housing associations should do social housing, but of course councils have a key role in that, and they cannot perform it while such an archaic and irrelevant formula persists. My hon. Friend is right about that.
My hon. Friend is right about everything he says, but is he aware that in Scotland the situation has been made even worse by rule changes imposed by the Scottish Government which require housing associations to borrow much more money from the private sector, so causing small housing associations in rural areas to have to suspend their house building programmes in many cases? Does he agree that the Scottish Government, as well as the Westminster Government, should be making changes?
Unlike Treasury Ministers, the Scottish nationalists are not here to answer for themselves, but we shall take it that my hon. Friend’s point is entirely correct.
My final point on the way in which existing programmes are not working relates to the developing PFI crisis. In the past six months, only one PFI project—as it happens, the M80 motorway in Scotland—has been able to proceed. All others have ground to a halt, as I understand it. The Financial Secretary shakes his head; if he can encourage us with some good news, I would be delighted to hear it. The PFI process is in considerable difficulty because commercial partners will not come forward, and the number of banks willing to participate has drastically contracted, mainly because of the credit crunch. It was always a rather questionable financial mechanism, and it is now in the deepest difficulty.
I have made several points about the difficulty that the Government are having in making capital investment take place. The problem is that the context is one of a crisis that is far worse than we knew it to be even three months ago. One of last week’s revelations was the fairly clear indication from independent outside bodies, such as the International Monetary Fund, that the crisis in the UK is significantly worse than that of almost any other developed country. It is worth reflecting briefly on why that is the case.
There are two major reasons why the British recession is likely to be much worse than in other developed countries. The first is that the bubble in the housing market and the growth of personal debt were more extreme than they were in almost any other developed country, except for Ireland and possibly Spain. The blame for that is quite widely distributed, but it is partly down to a failure of regulation: the deregulations of the 1980s and the liberation of the building societies that allowed them to become banks. It is partly due to failures by the Financial Services Authority, and partly due to a failure of monetary policy. Much of the responsibility for the failure to spot the bubble in the housing market lies with the Government, but also with irresponsible lending by the banking system. That was exceptional in the UK.
The second reason, and the full significance of this point is only now becoming fully apparent, is that Britain will suffer severely because we are host to some of the world’s largest banks. Of the largest five, three are in the UK, and they are ultimately the responsibility of the British taxpayer—not counting Lloyds HBOS, which is not far behind them. The City of London hosts those enormous, universal banks that are now in extreme difficulty, and the effects are rippling through our economy. That is happening because banks are rapidly—to use an ugly phrase—deleveraging, which is showing up in a contraction of credit to British companies, and because of the loss of revenue from the City on which the Government hitherto relied. A factor that has not yet come through, but which could be of enormous magnitude, is the big losses that the banks will accrue, much of which will end up with the Treasury. We do not know how much, but the amount will be large.
The context of the debate is one in which we understand that the recession in Britain could be much worse than it is everywhere else. Therefore, Government action, including fiscal stimulus, is all the more important.
I wonder whether the hon. Gentleman could give us a clear indication of the size of the fiscal stimulus for this year, and the next two full years, if he thinks that it is appropriate to announce it at this stage. The automatic stabilisers constitute more than 80 per cent. of the current stimulus package, given the fall in tax revenues and the rise in public spending, and less than 20 per cent. of the package will come from measures in the Government’s announcement.
Although £12 billion is a lot of money, the Government’s fiscal stimulus is not large in terms of the British economy. It is less than 1 per cent. of the economy, which is a much smaller proportion than in the United States. We have supported that measure, but we suggested a different mechanism for going about it.
A problem arises from the fact that we have growing budget deficits and growing public debt, which may have the effect of squeezing out any future public investment, which will be crucial in providing a continued fiscal stimulus.
I do not think that that is the right way to approach the problem. There is a great difference between a public investment such as a stadium or sports arena, which provides no return, and a public investment in the form of, say, social housing, which generates a steady stream of income and is justified in economic terms.
Why have an artificial cap on sensible public investment that produces a return to society? It should be justifiable in its own terms. Capital rationing, which is the approach that Conservative Back Benchers seem to be advocating, is a narrow approach to a big problem, and that is completely wrong.
I am intrigued by what the hon. Gentleman is saying. I think that there is a need to build hundreds of thousands of social housing units in the United Kingdom, to deal with the 30-year backlog. I also think that, in order to meet our climate change commitments, there is a need to insulate homes and so on, to which the motion refers. However, I understand him to have just said that if something is worthy, there should be no cap on it. That seems to be an extraordinary approach for a Government to take towards capital spending. Will he clarify that? If he agrees with me that we need, say, 1 million more social housing units, does he think that we should start building them immediately, with no capital caps? Is that what he is really saying?
The hon. Gentleman knows perfectly well that when the Treasury evaluates a project, it takes account of the scale of the problem and the amount of spare capacity available, and that affects the economics of the project. In recent years, the Government have made public investments amounting to something in the order of 2 to 3 per cent. of GDP. That is the order of magnitude that we are talking about. My concern is that that should continue, but the danger in the current budgetary crisis is that it will simply stop. My concern is how we create a mechanism to ensure that it continues.
For those of us who are less economically capable than the hon. Gentleman, can he give us a rough guide to how much money we are talking about, if we take his figure of 2 to 3 per cent.? He is not being tied to this figure, but to give us some idea of the scale that we are talking about, if we take the figure of 3 per cent., how much more is he suggesting that the Government should be spending?
I thought that I had just answered that. If we can sustain that level of public investment, it will be an important achievement in itself. The danger is that that investment will simply stop. If we look at what the Government have done in their public investment programme, we can see that they have brought investment forward; I think that the figures are £365 million for the current financial year—that probably will not happen—and £2.5 billion for the next financial year. After that they want a big cut of £3 billion in public investment in the following year. That assumes a short, minor recession, which seems utterly foolish in the current context.
I want to ensure that a steady programme of public investment of the kind that the Government had built up, albeit artificially, in many cases through private finance initiatives, is sustained. I have given the hon. Gentleman an indication of the magnitudes that we are talking about. Many of those projects will be justified in any event by the economic returns—they will produce a return to the taxpayer. Those projects will, of course, be costly and involve public borrowing in the short run, but in many cases they will pay for themselves and reduce debt in the long term. That seems to be basic common sense. I am not sure why he is wrinkling his brow in such a confused way, because I think that I am making the point very simply.
I am just checking, but the hon. Gentleman seems to be suggesting that those public investments will provide a long-term return on expenditure by the Government, who are not going to be subsidising houses, but making a great profit on them. Can he clarify that?
There may be a subsidy, which of course has to be weighed against other elements of current spending, but that is a separate argument. However, good public investment may well produce a return for the taxpayer, which has to be factored into all our calculations. Anybody who has read about what the American Administration argue on public investment, and anybody who has looked back to the 1930s and the role that public investment played in hauling western economies out of that slump, would not have difficulty with the obvious point that I am trying to make.
I am listening with interest to what the hon. Gentleman is saying. He talked about the International Monetary Fund projections published last week. Of course, as he knows, another projection was published by the Institute for Fiscal Studies. It argued that the UK would avoid a long and protracted downturn, not least because of the effectiveness of the VAT cut. I wondered what he made of the arguments that the IFS set out.
I am baffled that the Minister—or, indeed, the IFS, if that is what it said—thinks that the VAT cut made a major difference to the UK economy, because it was less than 1 per cent. of GDP, and a substantial fraction of it flowed straight out to imports. I think that we all know, from the experiences of our local shopping centres, that much of it was completely lost. Most of that VAT cut finished up in increased margins for retailers, which of course has some kind of indirect economic consequence, but not very much. It is difficult to see how it could credibly be argued that the cut had a major impact in staving off recession; I simply do not believe it.