I beg to move,
That this House notes with grave concern that the emergency budget will increase unemployment; calls on the Government to publish the HM Treasury analysis of jobs that will be lost in the public and private sector; condemns the Government’s decision to axe the Future Jobs Fund, the Youth Guarantee and the Jobseeker’s Guarantee, scrapping hundreds of thousands of jobs and training places for the unemployed; further notes that the Government is cutting employment support to help people into jobs at a time when growth is still fragile; regrets that the role of the voluntary sector in helping people into work is at risk; further notes that the current claimant count is half the level it was in the 1980s and 1990s as a result of the support and investment the previous Government provided for jobs and getting people back to work; further notes the cost to communities and the economy of long-term unemployment; and condemns the Government’s decision to abolish regional development agencies with potentially damaging consequences for regional economies at a time when the recovery is not yet assured.
Mr Speaker, you said in response to the points of order that Secretaries of State are busy, but that it is very important that Ministers are accountable to the House. At 11.45 this morning, I took a call from the Secretary of State for Work and Pensions, who is not in the House today. He rang to tell me that he would not be here today and that he would not answer the debate because he is speaking to civil servants. Instead of giving a speech to Parliament, he has gone to speak to a London conference for civil servants. He has decided that he cannot rearrange making that speech, despite the fact that he is speaking at a three-day conference organised by the same civil servants who work for and answer to Ministers and advise them on the importance of answering to the House. So the Secretary of State for Work and Pensions has chosen to turn his back on Parliament and the debate. A debate in Parliament on support for jobs and the unemployed is clearly not important enough for him.
Will the right hon. Lady confirm to the House that, during no fewer than three of the last six Opposition day debates held under the previous Government earlier this year, the Secretary of State in the previous Labour Government failed to appear in the House?
The right hon. Gentleman will know that, on many occasions, the then Opposition did not put up their shadow Cabinet Minister to open the debates. He will also know that Members have given reasons for not attending. I was ready to take the call from the Secretary of State, had he told me that he had a family emergency, a health problem or a European event to attend. The Minister has an engagement in Brussels, and I understand that he will therefore not be here for the close of the debate. I completely understand that; of course, he must fulfil his international responsibilities. Of course, we recognise such responsibilities, but to choose to attend a three-day conference for the very hour at which the Secretary of State should be present in the House to discuss support for jobs and the unemployed is a dereliction of his duty not only to the House, but to the unemployed he should be trying to help.
We think that this is an important subject. That is why we have chosen it for our third Opposition day debate. This month, many young people will leave school, college or university, and they are looking for their first jobs. It is not an easy time to look for work. We have just come through the worst global recession for many generations, and across Britain as in many other countries, many people have been hit by job losses and unemployment as a result.
Next week, the June unemployment figures will be published. The House will know that the International Labour Organisation unemployment figure currently stands at 2.47 million, more than 500,000 less than many experts predicted when the recession and financial crisis started and more than 500,000 less, too, than in the 1980s and 1990s recessions. The claimant count is 4.6%—less than half the 10% that it reached in the ’80s and ’90s recessions and almost 750,000 less than expected in last year’s Budget, thus saving us £15 billion over the next few years.
Of course, those figures are too high, families are still struggling and we need to bring down unemployment, but it is worth understanding why unemployment has been kept lower during this recession, because it reflects the work that businesses and employees have done to protect jobs. People have been working fewer hours, often cushioned by tax credits—a cushion that Government Members now want to take away. To help to save jobs, businesses have cut other costs. The fact that unemployment has been kept lower reflects the extra support for the economy—the VAT cut, the public sector construction contracts, the car scrappage scheme and the maintenance of public spending and public sector jobs through the recession—all opposed by the Conservative and Liberal Democrat parties. It reflects, too, the extra help to get people back to work faster than in previous recessions—the youth guarantee, the extra education training places, the stronger jobseekers’ regime run by Jobcentre Plus—all support that the new Government now want to take away.
I pay tribute to the work that Jobcentre Plus did during the recession to help as many people as possible to get back to work much faster than in previous recessions, but this is a dangerous time. Too many people, especially young people, are still struggling to find work. If we look at the lessons from history, we see that this is the time when the labour market is at its most fragile. This is the time, just as the economy is coming out of recession, when there is most risk of people getting stuck in long-term unemployment. If we look at what happened in the 1990s, we see that it was a long time before unemployment started to come down after the recession finished. Youth unemployment rose for 18 months after the recession finished. If we look at what happened in the 1980s, we see that unemployment rose for years after the recession finished. Youth unemployment rose for four years after the recession finished.
On youth unemployment, has my right hon. Friend noticed the total absence of Liberal Democrat Members from this debate? Does she believe that they are unwilling to come to the House to defend their complicity in scrapping the future jobs fund?
My hon. Friend makes an important point. In fact, the welfare spokesperson for the Liberal Democrats said that his party had no plans to cut the future jobs fund and, indeed, that it supported help to get young people into work. He is not here either, despite the fact that he is a Minister in the Department that is responding to the debate.
In the ’80s and ’90s, the then Conservative Government turned their back on the unemployed, particularly the young unemployed, and unemployment rose for years as a result. But unemployment scars. Unemployment causes people problems for years to come. If people lose their jobs and cannot get back to work quickly, they can find it much harder to get back into jobs, even when the economy is growing again. That is what happened in the 1980s. It took a long time to get new job growth in many communities across the country, and by the time that we did, many people had been scarred for life and some have never worked again.
Does my right hon. Friend share my fear that the problem basically is that the Conservative party believes that the only reason people are unemployed is that benefits are too generous, that we do not need job creation projects and that all they need do is to cut benefits and, somehow, unemployment will magic itself away?
The troubling approach that the new Tory-Liberal Government are taking is to cut the help to get people back into jobs and to cut their benefits when they cannot get back into work. The Secretary of State has claimed to be concerned about intergenerational poverty and worklessness, but the truth is that many of the problems that the Government worry about have their roots in the unemployment and hopelessness of communities without work in the 1980s. If they are really serious about tackling long-term poverty, they should act to prevent long-term unemployment now. They talk about broken Britain, but the truth is that their party broke Britain in the 1980s and now they are trying to do the same thing again. Let us look at their actions in the first four weeks: cuts of £1.2 billion in support that was getting people back to work; cuts in the future jobs fund; cuts in the youth guarantee and in help for the long-term unemployed just when they need it most; and a Budget that cuts the number of jobs in the economy so that there are fewer jobs than there would have been, not just next year but in every year for the rest of the Parliament too.
Many of the previous Government’s measures helped some people into work, but the 3 million workless households where no adults of working age were working were barely touched in the Labour years. It is all very well to talk about the 1980s, but what was happening between 1997 and the last election? Precious little. Many of those people never saw anybody from Jobcentre Plus or anyone else. They were just left to stew.
I can tell the hon. Gentleman what happened after 1997. In fact, there was a reduction of 350,000 in the number of people claiming inactive benefits, as a result of the extra support that was put in. That was in strong contrast to the early ’90s recession when we saw an increase of more than 450,000 in the number of people on incapacity benefits. In this recession, we have had a reduction of more than 70,000 in the number of people claiming those long-term sickness benefits, despite the difficulties in the world economy.
One reason why young people find it so difficult to get into work is that they do not have experience, and the future jobs fund and the youth guarantee were very good for young people because they gave them that experience and made them much more employable. Has my right hon. Friend done any analysis of the effect on these young people of the scrapping of both those schemes?
My hon. Friend is right. She obviously brings great experience to the field, having been a member of the Select Committee on Work and Pensions for many years. She is now its Chair, and I look forward to hearing more of her views on this in the House. We have been talking to many young people about the impact of cutting the future jobs fund. Yesterday afternoon, I met 10 young people who have just started work thanks to the future jobs fund. They are all working for charities and social enterprises, have jobs in fundraising, in office work, in organising charity events and in repairs and maintenance, and some had fantastic jobs in creative design. Several are graduates who had struggled to find work because of the recession. Many had tried unpaid internships and voluntary work—anything to get a foot in the door. It was only the future jobs fund that had made the real difference to them. One of them said to me, “It’s a life saver.” Another said, “It’s given me confidence. It’s a proper job. It’s a huge boost to put this on my CV.” A young woman I spoke to in my constituency who was training to be a car mechanic, thanks to the future jobs fund, told me, “I tried and tried to get something, and this is just like the light at the end of the tunnel. In fact, it’s the only opportunity I’ve been given. I don’t understand why they want to cut it.”
On that point, my right hon. Friend might be interested to know that a constituent recently came to see me at my surgery who had been offered through the future jobs fund an opportunity to work by the Royal National Institute of Blind People, and on arrival at Jobcentre Plus was bitterly disappointed to be told that the list was closed because of the Government’s decision to cut the future jobs fund, and now faces the prospect of not having an opportunity that would otherwise have been available. Is it not ironic that with all the talk of a big society, jobs that would have been available to people in the third sector are now being cut by the Government?
My hon. Friend is right. This is happening now to young people throughout the country. One of the young women I talked to yesterday also told me about a job with the London Wildlife Trust. It had asked her if she would be interested in working for it through the future jobs fund, and when she contacted them to say yes, it said, “Sorry, too late. The programme is closed.”
Ministers try to claim that there are no cuts in these jobs. The Secretary of State said:
“we are not cutting any jobs at all. We are saying that we will stop the part of the programme relating to jobs that were not contracted for.”—[Official Report, 14 June 2010; Vol. 511, c. 584.]
According to the Secretary of State, if the contract has not been signed, it has not really been cut. He says that these were only notional jobs. The trouble is that he has not cut notional money. He has cut real money—£290 million this year, and hundreds of millions of pounds in future years. That money would have funded 90,000 future jobs fund jobs for 90,000 people—real people who will struggle longer on the dole as a result.
We were clear that the best way to cut welfare spending was to get more people into work. The very fact of getting people into jobs was cutting £15 billion from welfare bills over the next few years. That is substantially more of an impact than the right hon. Gentleman could possibly have by cheese-paring bits from employment programmes that end up putting more people on the dole and pushing up the bills for unemployment. That, in the end, is the right hon. Gentleman’s problem.
Does my right hon. Friend agree that the pressures placed on the private and public sectors in recent weeks will deliver a potential skills shortage in the UK? Without investment in our young people today, we will have a skills shortage tomorrow, which will be detrimental to our growth in future years.
My hon. Friend is right. This is about investing in our future, because this is about the young people who will support us all for very many years to come. If we do not give them the start in life that they need, if we do not give them the work experience that they need to get into jobs, if we leave too many of them stuck on the dole for years, we will pay the bills that result from their being unemployed for years and we will lose their potential skills and talents that could contribute to our economy for many years to come.
Is not the biggest burden on the young people about whom the right hon. Lady talks so eloquently the massive debts that her Government left behind? They are already shackled by the previous Government’s policies, and that will be a burden on them and their employment opportunities for the future.
If those young people cannot get jobs, if they end up stuck on the dole for years—that is what happened to young people whom I left school with in the 1980s—that will devastate their entire future. They will struggle to get work for many years to come and that will push up the deficit. The hon. Gentleman seems to fail to understand that if unemployment is high, that pushes up the bills for unemployment benefits and cuts the number of people who are working in good jobs and paying their taxes, not just this year and next, but for many years to come.
In my constituency, the unemployment rate doubled under the last Administration. In the last 10 years, unemployment has gone up. We recognise in Bedford and Kempston that we need small businesses to create the jobs that will employ people, not just in five years’ time, but in five months’ time. The one thing that small businesses in my constituency want is to know that the Government have control over the deficit, that their taxes will be down, and that regulation will be reduced. Surely that is the way in which we can create jobs.
Unfortunately for the hon. Gentleman, if we cut the deficit at the pace and scale that his party wants, that will make it harder for businesses. It will make it harder for small businesses and companies across the economy. His party’s own appointed Office for Budget Responsibility confirms that. It says that there will be fewer jobs in the economy, not just next year, but each year for the rest of this Parliament as a result of the Budget. It is hitting businesses and employers throughout the country, making it harder for them to take people on. That is the complete fallacy in the arguments of Conservative Members. They are stuck in the mentality of not just the 1980s, but the 1930s, which says that so long as the deficit is cut, things will suddenly be hunky-dory. It will not. It cuts jobs and makes it harder for people to get back into work, and it pushes up the costs of failure too. That is what is so irresponsible.
I have a lot of sympathy with the right hon. Lady’s argument and she is right to stress the fragility of the economic recovery at the present time and the fact that the Budget proposals will cut jobs, but I am sure that she is aware that the previous Government imposed cuts of £400 million on the devolved Scottish Government in the very teeth of the recession, knowing that it would cost jobs and jeopardise recovery. If her argument holds water now, why did it not hold water then?
In fact, the additional support we put in through things such as the future jobs funds and support for the economy helped Scotland. Indeed, Scotland benefited from thousands of future jobs fund jobs, which were funded by the Government, in addition to the money that went directly to the devolved Administrations. Every part of the Government had to make efficiency savings, and unfortunately the Scottish Administration consistently set themselves efficiency targets considerably lower than those set and met in Whitehall Departments across government. It was fair to expect the Scottish Administration to pay their fair share and to contribute to those efficiency savings.
We believed, however, that it was right to keep supporting jobs in Scotland through things such as the future jobs fund, which is why the Association of Chief Executives of Voluntary Organisations said, in response to the cuts in the future jobs fund:
“We know of many third sector organisations in Yorkshire who were ready to place people into jobs and were mid-way through bidding for FJF money to make that possible when the funding was cut. Among the placements that were to be created were jobs to support women in the community through a Women’s Refuge. Now those women won’t get the extra support and Yorkshire won’t get the extra jobs.”
Real jobs in Yorkshire gone—because of the Secretary of State’s plan!
It is third sector providers who often help to get people facing particular barriers into work. It is hard enough for young people to get into work anyway, but if they have barriers such as drug dependency or homelessness, it is particularly difficult. The future jobs fund was being used by organisations such as Aberdeen Foyer in my constituency to get those marginalised youngsters into work and to break that cycle of poverty, which the hon. Member for North East Hertfordshire (Mr Heald), who sits with me on the Work and Pensions Committee, talked about earlier.
My hon. Friend is right, which is why all young people, no matter what the difficulties they face, should have a guarantee of a job, training or support to get into work. She might also be interested to know that significant numbers of the people going into the future jobs fund were disabled, so it was providing additional support for people who might have found it more difficult to get their first job elsewhere in the economy and to get that start and get into work.
The former Chief Secretary to the Treasury, the right hon. Member for Yeovil (Mr Laws), told the House that DWP officials had advised that the future jobs fund was not effective and not working. That is not what young people and voluntary sector providers are telling us. For example, the Scottish Council for Voluntary Organisations said:
“It is obviously very disappointing that the Future Jobs Fund is not continuing as it was a highly successful initiative which was popular with employers and employees”.
Angie Wilcox, whom I met, from the Manor residents association in Hartlepool, said that
“in one area alone, manor residents have recruited 118 young people, of which the first 17 finished their six months last month, all 17 secured sustained employment...This is a vital programme that must stay”.
So what advice did DWP officials really give to the Treasury? The Employment Minister, the right hon. Member for Epsom and Ewell (Chris Grayling), has so far refused to publish any advice or evidence that it is not effective. That is because, in the end, he does not have any. He has commissioned a detailed evaluation of the future jobs fund for 2011, so there is no evidence to show that the fund is not working and plenty of testimony from young people and employers across the country that it is transforming people’s lives. The Government did not talk to a single voluntary sector provider before they axed the fund, and they did not talk to a single young person on the fund before they made their decisions—actually, the Prime Minister did. He talked to young people at a social enterprise in Liverpool, and told them he would keep the fund. He said that
“it is a good scheme, and good schemes we will keep.”
Was he setting out to deceive those young people, or does he just not care about the broken promises from the election?
The Employment Minister has, I understand, been back to that same corner of Liverpool to see the same social enterprise. He has told us in previous responses that he has not received any representations about the decision to cut the future jobs fund. Yet someone who was at the meeting said that
“when Chris Grayling visited Everton on the 26 May we raised with him the very negative impact cutting the Future Jobs Fund will have and 2 local people said the difference having a future jobs fund position was already having on their lives, their self esteem and their long term job prospects...We asked him specifically about whether his replacement scheme was going to give at least the minimum wage. He couldn’t guarantee that at all...The FJF has already made a big difference to us in Everton... Young people on the FJF have got their heads back up and are going for it.”
So what other excuses have the Government given us for cutting the future jobs fund and the support for the unemployed? The Secretary of State claimed on 8 June that the cost of the programme was “running out of control”. That is rubbish—it is a fixed-cost programme. It costs just over £6,000 per job and is paid when the job is delivered. Furthermore, the taxpayer saves six months of benefits too. It is a fixed cost, so it cannot escalate out of control.
The difference between us is that we want 90,000 people in jobs. The Government would rather have them on the dole than pay for the extra support that those young people and long-term unemployed need. So, from next year, they are cutting the rest of the guarantee. In total, they are cutting £1.2 billion from support for the unemployed—and they tell us it is all right because there is going to be a Work programme. But where is it? The soonest the Secretary of State will be able to deliver it is next summer, but what about the people in the meantime who need support and help? What about the young people leaving school, college or university this summer who need help? What about the people who have been unemployed for six months and who need support now? Yet now is the time when he is cutting future jobs fund opportunities in favour of a Work programme that cannot be in place for at least another 12 months.
The right hon. Lady talks about the young people coming out of schools and colleges. Did she think about them when she was in government and borrowing £500 million a day? Did she think about their future while the Government were borrowing £100 for every £300 they were spending?
Had we not increased borrowing during the recession, we would have seen recession turn into slump, millions of people on the dole being scarred for life, and huge increases in repossessions. Unless the hon. Gentleman is prepared to support the economy and growth, he will never see the deficit come down. The best way to get the deficit down is to keep the economy growing, and the only way to get us through the recession was to support the economy at a very difficult time. He seems to want to return to the madness of the 1930s when economies across the world were pushed into depression and slump as a result of the kind of narrow-minded, short-term policies that he is now advocating.
I have to come back on that point. Your policies have mortgaged and remortgaged the future of those young children, so for you to stand up and say that without borrowing you cannot sustain the recovery is inaccurate. You have to admit that borrowing £500 million a day—not a week or a month—is unsustainable.
The hon. Member for Stratford-on-Avon (Nadhim Zahawi) should learn a few lessons from economic history. He should look at what happened not just in the 1980s, when there was not the same scale of world recession, but in the 1930s and at the orthodox views being put forward then by Bank of England Governors and senior politicians and the devastating consequences that they had. Keynes was led to write his general theory because of the deeply destructive approach that so many people in senior positions took and the consequences that devastated the lives of millions of people who were pushed into unemployment and poverty. Businesses were destroyed for many years as a result of that approach—the approach that the Conservatives seem to want to go back to.
I agree that borrowing needs to come down, and of course we need to ensure that the deficit comes down in a steady and sensible way as the economy recovers. However, by cutting an extra £40 billion for ideological reasons in a way that will hit jobs and the economy, the Conservatives are turning their back on the unemployed. Ministers need to tell us what they will do to help young people this summer. What are they going to do to reassure parents that their sons and daughters will not be stuck on the dole for more than a year? All that they promise is a Work programme sometime in the future, with incentives for private sector companies to help people find work but no guarantees to young people or anyone else that they will actually get work. There are no jobs for them to go to.
Ministers also want people to move house to help the labour market, but it is not clear where they want them to move to. The Secretary of State has said that he wants the unemployed to move to more affluent areas where there are more jobs. In fact, if they do not and they are out of work for a year, their housing benefit will be cut. At the same time, the Government are telling working people on housing benefit in affluent areas that they have to move to cheaper areas because their rents are too high. If they do not, their housing benefit will be cut, too. The Secretary of State is telling my constituents that if they do not move south to get a job he will cut their benefit, and his own constituents that if they do not move north to get a cheaper home he will cut their benefit too. Presumably they can wave at each other as they pass somewhere along the A1.
The Secretary of State wants people to give up cheaper housing to find work, but he also wants people to give up work to find cheaper housing. He is telling people to get on their bikes, but with no clue about where they are supposed to go. That is the same Secretary of State who said last year that he wanted to maintain community ties. He said:
“It is getting more and more difficult for parents in some poorer backgrounds…that extended family link is often severed by the fact that they can’t get living near their parents.”
Yet those are the very same community ties that the Government’s policies on employment and housing would rip up right now. They are cutting help for people to get jobs and cutting their benefits too.
Does my right hon. Friend agree that the Government’s contention appears to be that the future jobs fund is simply training without a job guarantee? Is that not just snobbery, as they do not put forward the same argument—nor should they—that people accessing degrees should have a guaranteed job outcome? Quite simply, is it not true that the Tories have never believed in parity of esteem between vocational and academic training routes and still believe that unemployment is a price worth paying?
My hon. Friend is right. I know that his constituency was hit very badly in the 1980s as a result of the decisions that previous Conservative Governments took, and that that is why he feels so strongly that we should not take those decisions again. We have to do everything possible to help people back into work.
The Guardian has even reported that Ministers want jobcentres to give out charities’ food vouchers, so now they are turning the clock back not just to the 1980s but to the 1930s. It is looking less like welfare to work and more like welfare to the workhouse.
Before my right hon. Friend moves off the subject of housing benefit, I wish to mention that Aberdeen is one of the areas where there are jobs—unemployment in my constituency is 2.6%, which is higher than we would like but relatively low. The problem is that rents are high. A constituent who came to see me on Friday is finding things very difficult, because in the private rented sector she is already subsidising her rent despite being on full housing benefit. It is therefore impossible for people to move into Aberdeen to get a house and a job without falling foul of the Catch-22 situation that my right hon. Friend describes.
May I confirm that the matter has nothing to do with snobbery but is about the best way to handle the situation? Can the right hon. Lady confirm that at present, the number of 18 to 24-year-olds not in education, employment or training is at its highest, at 837,000?
If the hon. Lady is concerned about young people who are not in education, training or employment, why on earth is she supporting her party’s decision to cut the future jobs fund and help for young people to get into jobs? The number of 18 to 24-year-olds who are on the dole is about half the level that it was in previous recessions.
I think there needs to be clarity of purpose on a way forward; you have left us with a record deficit—[Hon. Members: “She.”] Sorry; the right hon. Lady’s Government have left us with a record deficit, and new times require new measures. Working together, we will provide clarity and look for greater apprenticeship schemes.
I advise the hon. Lady that asking me to give way and answer another question when I have not yet answered the first is probably not the best way to get her question answered.
I ask the hon. Member for Wirral West (Esther McVey) where is this Work programme and this extra support? All that we see so far is £1.2 billion-worth of cuts. There are cuts to the future jobs fund, a programme that is already in place and delivering real opportunities. She should go and talk to the voluntary sector providers in her constituency and constituencies across the country about the great work that they are doing. Social enterprises, charities and organisations in the public and social sectors are doing some great things to give young people a chance, and her party wants to pull the plug on that. That would be madness at a time when young people need our help.
I wish to return to the right hon. Lady’s point about giving out food vouchers. What is compassionate about a benefits system that is leaving people hungry in their hour of need? Voluntary organisations in my constituency, such as Church organisations providing food banks, are barred from offering vital necessities to people in jobcentres who are literally starving. That is ridiculous when people are going hungry.
I am interested that the hon. Lady is concerned that people are not getting enough support and believes that they should have more help. I wonder why on earth, then, she has voted for a Budget that cuts £11 billion from benefit support for those on the lowest incomes in the country. What she is arguing for are cuts in Government and taxpayer support, and for people simply to depend on charities instead. That would be a return to the Victorian approach of the workhouse and the pre-Beveridge, pre-welfare state approach of not supporting families across the country, which would be deeply unfair. There may not be the type of charity that she happens to have in her constituency in every constituency and working with every jobcentre in the country. We in the Labour party believe that we should support people, which is why we have not proposed cutting benefits by uprating them only by the level of the consumer prices index, which will take £5.8 billion out of the value of benefits for some of the lowest-income people in this country.
I can say very clearly to the right hon. Gentleman that my view was always that it would be unacceptable to increase benefits in line with CPI. I wish to make that very clear, and I am sure that papers will testify to that effect. It will be unfair on people such as those who are severely disabled or on the lowest incomes, who will see the real value of their support cut by hundreds of pounds over the next few years. For the Minister to try to defend the Budget as “progressive” when it will hit people who are severely disabled and cannot work, people who are on carer’s allowance and some of the most vulnerable people in the country who may be struggling to support their families, is a distortion of the meaning of the word.
Welfare to work does not work anywhere in the country if there is no work for people to go to. That is the real tragedy of this new Government. At a time when growth is fragile and too many people are out of work, they have introduced a Budget that cuts growth and jobs. It is shocking.
Even on the assumptions of the Government’s own appointees in the Office for Budget Responsibility, this emergency Budget means that there will be more than 100,000 fewer jobs in the economy, and not just this year. There will be fewer jobs every year for the lifetime of the Parliament as a result of the Budget. The Budget cuts consumption, through the VAT hike and benefit cuts; it cuts Government spending; and it hits private and public sector jobs. The Budget will also push up the bills of unemployment. Even on the optimistic assumptions of the Office for Budget Responsibility, the taxpayer will fork out around £2 billion on unemployment over the course of this Parliament as a result of the Budget. That is £2 billion that we could have spent on the future jobs funds, school buildings or other support to help people into work.
Does the right hon. Lady agree that that is merely the thin end of the wedge? Many of the young people who find themselves unemployed and many of the communities where unemployment is ingrained are also more reliant on other benefits and public services such as health. The mental health and well-being implications for those communities are enormous, but they have not been factored into those calculations.
The hon. Lady is right. We are having this discussion in the light of the Budget measures and the initial cuts in support for jobs, but we know that there are spending cuts to come as part of the spending review, to which the Government have added £17 billion to the amount to be cut from Departments. The consequence is that the Government’s policies will keep more people on the dole, not fewer, and more people out of work, not fewer. That is what the Budget does, and that is on an optimistic reading, because we know that the Treasury’s real assessment is worse.
The only reason why the Government think that employment will be growing at all is that they are counting on around 2.5 million net jobs being created in the private sector over the next five years. However, that is something that John Philpott of the Chartered Institute of Personnel and Development and other respected economists have said is simply unrealistic. The Government are living in cloud cuckoo land. In fact, the Financial Times survey of major private sector employers found that none was planning to increase recruitment on a large scale just because the public sector was cutting back. Arriva said:
“We are not planning a recruitment drive any time soon. Everybody is watching their costs at the moment.”
Today’s KPMG survey found that the number of new recruits is at a seven-month low, just at a time when it should be increasing. Business confidence has been hit by the Budget and the austerity approach that the Government have been pursuing.
The Government have abolished the regional development agencies, which were supporting jobs in the regions, and cut Building Schools for the Future and other capital projects that were supporting construction jobs. The Government are hitting jobs in the public sector and the private sector, all at a time when the economy is still weak. They say that this is unavoidable, but that is simply untrue. They do not need to cut £40 billion extra from the economy; they have chosen to do so, even though that will cut jobs and hurt the unemployed. The Government do not need to cut the help for the unemployed that is getting them into jobs; they have chosen to do so, even though it will increase long-term unemployment. They do not need to push up the costs of unemployment; they have chosen to do so, even though that will cost us more. They do not need to scar young people for years to come; they have chosen to do so, just as they did in the ’80s and ’90s.
Why are the Government doing that? It is because they say that they have to get the deficit down. Why are they introducing a savage Budget to cut the number of jobs in the economy? They say that that has to be done because of the scale on which they want to get the deficit down and the pace at which they want to do it. In the 1990s, the Conservatives said that unemployment was a price worth paying to get inflation down. Now they are saying that unemployment is a price worth paying to get the deficit down. However, unemployment is not a price worth paying; unemployment will stop the deficit coming down. This year’s school leavers will pay the price, our young people will pay the price, and we will all pay the price for many years to come. Unemployment is not a price worth paying. It is time that the Government ditched the failed ideology of the 1980s and the 1930s, and supported jobs for the future. That is what our party will do, and I commend the motion to the House.
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“welcomes the emergency budget which will tackle the unprecedented legacy of debt over the next five years by reducing borrowing from a projected £149 billion this year to just £20 billion in 2015- 16; notes the Office for Budget Responsibility’s projection that unemployment will fall in every year of this Parliament as a result of the Government’s policies to stimulate private sector employment by reversing the damaging increase planned for employer national insurance contributions, introducing a £1 billion Regional Growth Fund, reducing the corporation and small profits tax rates and increasing the Enterprise Finance Guarantee, resulting in the creation of a projected two million new private sector jobs by 2015-16; further welcomes moves to implement a single work programme that will provide personalised support to help people move into sustained employment, to introduce a £1,000 increase in income tax personal allowances which will incentivise work, to reform the benefits system to ensure that work pays and to provide 50,000 new apprenticeships and 10,000 new university places for young people, thus stimulating growth, delivering jobs and creating a fairer society for all.”
May I start by passing on the apologies of my right hon. Friend the Secretary of State to the House? Despite what the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) said, he has an important job to do in helping to lead our public sector out of the mess in which the previous Government left it, and he has an important leadership role with the people who will help him to do that. I am sorry that the right hon. Lady is disappointed to be debating against me this afternoon. I am rather pleased, frankly, to be debating against her and I was impressed by her lively form. I somehow think that the wrong member of her household is running a Labour leadership campaign.
Listening to the right hon. Lady, one would think that the past decade had been one of economic triumph and effective employment policies, and that the previous Government had left behind a golden legacy of wise and effective policies. Well, they did not. What they left behind was an economic hangover that we will all be dealing with for years to come, and I am not referring just to the huge deficits or the huge planned spending cuts that Labour had lined up. Indeed, one would think from listening to her this afternoon that the previous Government had no plans to cut spending. Actually, the opposite was the case. What they did not do was give us any detail whatever on where that money was going to be saved.
If we look back over the previous 13 years, the story is a pretty sorry one, with 400,000 more unemployed people today than when Labour came to power in 1997, a higher level of young people not in education or employment, and a lower proportion of people in work. Over that period, Labour spent billions of pounds on projects to try to get people back into work. They spent billions through the recession on supported programmes, but things have actually got worse. What we on the Government Benches know is that long-term sustainable jobs are created by the private sector, not by Government schemes.
Even when jobs were being created over that decade, Labour completely failed in its mission of trying to get people into work. Large numbers of people managed to come into the UK from overseas and find jobs, yet through the years of Labour Government, we consistently had some 5 million people stranded on out-of-work benefits. Many of them could have worked and many of them should have worked, but under Labour it just never happened. So much for “Things can only get better”.
A particularly poisonous legacy of the previous Government and their economic failure was the plight of young people. We now have 1 million young people who are NEET—not in employment, education or training—but even before the credit crunch came, there were as many people NEET at the end of that period of economic growth—albeit unsustainable growth, as we now find—as there were when Labour came to power. The previous Government let down young people, scarring them for life. We now have 1 million young people unemployed because of Labour, yet we have had no apology. What we need is this Government to sort out the mess that the previous Government left behind.
My hon. Friend is absolutely right, and I would ask the House this question. Why would we take Labour Members seriously on youth unemployment when they had such a terrible record on youth unemployment over 13 years in government? What we saw from Labour in office was at best incompetence, at worst a wilful disregard for taxpayers’ money, and a failure to understand how to create long-term sustainable jobs in the economy.
We have taken a decision—and rightly so—to push out of Government the job of economic forecasting. That is the purpose of the Office for Budget Responsibility. Its analysis, independent of Government, is that unemployment will fall and employment will rise as a result of the decisions that we have taken in the Budget. That is the direction in which we should be heading.
Those in the previous Government cannot simply blame the recession for this mess. Despite 10 years in power, even before the global banking crisis started, more than 15% of our children—1.75 million children—lived in households where no one worked. We have one of the worst rates of workless households in the EU. I am therefore delighted to take on the right hon. Member for Normanton, Pontefract and Castleford on employment today, and to remind the House and this country what a terrible record the previous Government had in their 13 years in office.
There were fewer jobs in manufacturing. We have heard a lot of talk today about the 1980s, but let us be clear: the big drop in manufacturing employment in this country and the big slump in the proportion of the economy taken up by manufacturing took place under the Labour Government, between 1997 and 2010. Labour should be ashamed of the previous Government’s calamitous record on supporting manufacturing business in this country and creating a regulatory environment that drove so many firms out of business and overseas. The previous Government constantly missed their targets on apprenticeships. We heard again and again of how they were going to deliver hundreds of thousands of apprenticeships, but they never hit their targets. They spent massive amounts on employment programmes—designed in Whitehall but ineffective in practice—and they left the biggest deficit in our peacetime history. After all those promises about ending boom and bust, Labour finished with the longest recession in the western world.
The right hon. Gentleman mentioned that some programmes were ineffective. One of the programmes that he has cut is the future jobs fund. I tabled a written question about that for his Department, but it was completely unable to tell me how many jobs had been created in my constituency. As the Department obviously does not know whether the future jobs fund was successful or not—it is too early—and as it is unable to provide any evidence that it was not, why does the right hon. Gentleman not just admit that cutting the scheme was a decision made for ideological reasons rather than because it was not working?
What we sent to the hon. Gentleman in the written answer was the details of the future jobs fund placements in his area. We have to be careful with taxpayers’ money, and it would therefore not have been prudent to collect data down to constituency level. However, the information is there for him to see, and when he looks at those data, he will see that the success of the future jobs fund in creating jobs has been consistently below target all the way through.
Let me lay to rest one myth today. We have not stopped the future jobs fund. Tens of thousands of additional places will be created over the next few months under the future jobs fund. We have said, however, that we need to take tough decisions in the light of the mess left behind by the previous Government. Also, by next spring, we will be bringing on stream the Work programme, which we believe will provide long-term support for those who are looking to get back into work. I shall say a bit more about that in a moment.
Does my right hon. Friend agree that the overall picture of Labour’s employment schemes shows that they helped into work the people with the highest levels of skill, and people aged between 25 and 49, and that a vast population was simply left behind that could not compete with the people who were coming into this country and taking the jobs that were on offer?
My hon. Friend makes an important point. What we learned from the new deals was that people were simply cycled round and round. They went through the system again and again because they were not placed in sustainable employment. That is one of the problems with Labour’s approach.
Let me tackle the issue of the future jobs fund head on, because we have heard a lot today about Labour’s flagship scheme. Around 100,000 future jobs fund jobs are still being created under the current scheme, costing up to £6,500 each. As the right hon. Lady said, most of them are in the public and voluntary sector. I could be wrong, but my idea of sustainable employment is not a six-month work placement in the public and voluntary sector. It is about getting people into long-term roles in the private sector, which can provide a long-term career for them. That is why our emphasis has been on creating apprenticeships, and 50,000 new apprenticeships have been created in a very early move by this Government.
That is not what I said. The right hon. Gentleman clearly was not listening. A six-month work placement in the public and voluntary sector with no guarantee of a job offer at the end of it, and no certainty that the role will involve the kind of skills development that an apprenticeship would offer, is a poor relation compared with the programme of apprenticeships launched under this Government.
I know that the right hon. Gentleman is an educated man. He has said that the country is in a recession. Is it not axiomatic that, in recession, private companies tend not to invest in employment? The purpose of the future jobs fund was precisely to create employment in the public sector, because the Government had leverage over the public sector.
But the way that we will create long-term jobs for the future will be to revitalise and energise our private sector. The reality is that the Labour party went into the general election campaign promising to increase the tax on employment and to make it more expensive for the private sector to employ people. How can the right hon. Gentleman think that that is a route to long-term sustainable growth and opportunity for employment in this country?
May I ask the right hon. Gentleman whether there will be a job guarantee with the 50,000 placements that will be arranged under the apprenticeship programme? Also, where is the logic in making people wait so long? There are still many unemployed people in my constituency. After someone has been unemployed for six months, the private sector will treat them as long-term unemployed. How can it be right to leave people waiting until next spring before giving them something to work on?
I know that the hon. Lady is a new Member, and she might not be aware of the changes made by the previous Government. One of the things they did was to extend the period that people had to wait before they could receive support on employment programmes. In the case of young people between the ages of 16 and 25, the period was extended from six months to 12 months. I agree with her that things need to happen sooner, and one of the things we will do in the Work programme is to give that support sooner.
The coalition Government are committed to supporting people in sustainable employment, providing opportunities that will provide skills, open doors and help people to stay in work. Our goal is not to get people off the unemployment register temporarily, but to work with them to achieve a goal of lasting employment. That means plotting a different course. The same tired old policies will not work. For too long, economic growth in Britain has been unbalanced, driven by the accumulation of unsustainable debt and a bulging public sector. We have been forced to deal with the largest public spending deficit in peacetime history, and the crisis in the eurozone has shown that the consequences of not acting are severe.
I have heard what the Minister is saying, but how does he account for the fact that, in 2012-13 and 2013-14, employment will be 110,000 lower as a result of his Budget than it would otherwise have been, according to the assessment of the Office for Budget Responsibility? If there are fewer jobs in the economy, how on earth does he think young people are going to get more of them?
If the right hon. Lady looks at the figures, she will see that the OBR is forecasting an increase in employment of 1.5 million jobs in the wake of the Budget over the next few years. My goal, and the goal of this Administration, should be to ensure that as many of those jobs as possible go to people who are on benefits, many of whom have been on benefits long term. The big mistake of the past decade when jobs were being created was that that simply did not happen.
Again, I ask the right hon. Gentleman to confirm the OBR’s forecast that, as a result of this Budget, employment will be lower. Before the Budget, it forecast 29.47 million jobs in the economy for 2012-13; after the Budget, it forecast 29.36 million jobs for the same year. Will he confirm that the consequence of his Budget will be to cut the number of jobs in the economy?
The right hon. Lady has continued to operate on the basis that the public sector could somehow remain as it was, and that we could carry on spending the same amounts of money. She does not seem to understand the consequences of carrying on with the same level of deficit. They would include higher costs for business and higher interest rates. We can see the consequences in the eurozone of not getting to grips with the deficit. We are interested in creating long-term, sustainable employment, which is why we want to deliver schemes and support that will encourage the private sector to grow and develop. That will not happen if we maintain a deficit, however.
Last week, the right hon. Lady was criticising us for theoretically planning job reductions in the public sector. She cannot have it both ways. We cannot have an increase in employment, a fall in unemployment and a fall in public sector employment without the private sector beginning to take people on again. This might be a point of difference between us, and I can accept that, but I believe that, over the next 10 years, we shall need a successful, flourishing private sector that can create sustainable jobs. I am sorry that the Labour party appears to be reverting to type in believing that the public sector can somehow carry it all. This is a point of difference between us, but I believe that we will not create opportunities for those young people unless we have proper, sustainable private sector employment.
Will the right hon. Gentleman give way?
If the hon. Lady will forgive me, I would like to make some progress.
We will introduce radical reform and follow policies that will encourage growth and development in the private sector. We will also radically reform welfare, with a real focus on helping people to find sustainable work. We will reform the benefits system so that work pays. We will tackle endemic worklessness and the intergenerational cycles of disadvantage that it creates. We will halt the tragic waste of human potential that exists when people are out of work. When I listen to Labour Members talking about unemployment, I simply remember their record over the past 10 years, and those 5 million people who have consistently been on benefits.
Next year, we will launch the Work programme to provide a coherent package of support for people who are out of work, regardless of the barriers that they face or the benefits that they claim. We will end the programme complexity that we have seen over the past decade, and replace all the paraphernalia of programmes with a single, integrated package of support. It will not be a one-size-fits-all scheme, however, because we have had too many such schemes from Whitehall. We will trust the professionals on the ground who deliver back-to-work support to find the right way of delivering that support to individuals. We will look to investors in the private, public and voluntary sectors to provide the support, and we will judge the organisations that participate on their success rate.
Of course I want whatever new scheme the Minister comes up with to succeed, but does he share my concern about the possibility that the private contractors whom he wants to employ will charge more for their services because the changes the Government have made in the Budget will result in fewer jobs in the economy than there would otherwise have been?
That is not my concern. My concern is to ensure that, if the OBR forecasts are correct and we see employment growth amounting to 1.5 million more jobs in the next few years, we do not make the same mistake in government as the hon. Gentleman’s party did and fail to get people off benefits and into work to take those jobs. I do not want to see a steady and unchanging level of millions and millions of people on out-of-work benefits over the course of a decade while jobs are created around them, effectively operating outside our mainstream society. That must change. I want opportunity for those people. I want to see them back in employment. I am sure the hon. Gentleman shares that goal, but what we aim to do is make it happen this time around.
I am sure the Minister is well aware that the increase in the number of people claiming incapacity benefit is a result of mental health problems. He may also know that, in response to most surveys, 60% of employers say that they would not employ someone who has had a mental health problem. How will the Government solve that conundrum?
The hon. Lady has made an important point, which I am sure her Committee will want to address. In fact, I was going to refer to the work capability assessment. These are important issues, and we clearly face a big challenge. There are 2.2 million people on old-style incapacity benefit, and we must do all we can to help as many of them as possible to return to work. Of course, not all of those people will be able to work and many will need to continue to receive unconditional support throughout their lives; but every organisation I have ever worked with, come across or talked to that works with people with disabilities and long-term sickness problems would like to see more of them back at work. We all believe that work will help those people, and I am determined that this part of the Work programme will make a huge difference to them.
I am grateful to the Minister, who has raised the important issue of people on incapacity benefit and the large number of people with mental health problems. Given his belief that the solution to those problems lies in the private sector, is he aware of many private sector employers who are rushing to employ people with a history of mental health problems or with a serious history of incapacity problems?
The key to supporting people with mental health problems and other disability issues is winning the confidence of employers, and the role that can be played by providers—whether in the private or the voluntary sector—in forging relationships with employers. I believe that as that relationship strengthens, as people start to obtain work placements and as employers start to work with some of those who have been on incapacity benefit, employers will become more ready and willing to provide extra opportunities.
I have no doubt that many businesses in this country want to do the right thing. I believe that, in general, members of our society recognise that we cannot go on with the same number of people stranded on incapacity benefit. I am confident that if we get the programme right and deliver effective back-to-work support for those people, the opportunities will be there and will grow as time goes by. I know there is consensus across the House on this proposal. We came up with it originally, and the previous Government adopted it. Now we are taking it forward, and we will work hard to refine the work capability assessment to ensure that we get it right. I look forward to working with the Select Committee and the hon. Member for Aberdeen South (Miss Begg) to achieve that. It is fundamentally important that we actually make a difference to those people, about a quarter of whom have claimed incapacity benefit for more than 12 years. That has had a devastating impact on the people themselves, and it is a burden we have had to carry as a society. We must do all we can to help as many as possible of those people to make something better of their lives.
All that, of course, is in addition to the support that will continue to be provided by Jobcentre Plus. I agree with the right hon. Member for Normanton, Pontefract and Castleford that its staff do a first-rate job, which in recent years they have done under great pressure. I am glad that that work is recognised on both sides of the House.
Our package of reforms is not just about getting people into a job, and it is not just about saving money; it is all about helping people to make more of their lives. We have heard so much from the Labour party in recent weeks about its policies and how they would have made all the difference, but I do not buy that; I do not think they are right. What we inherited from Labour was a series of commitments it could not afford and a series of plans that involved short-term solutions to its political problems, rather than long-term solutions for the individuals concerned and for our country. We need a fresh approach, which is why we believe so strongly in focusing on apprenticeships rather than the future jobs fund.
Apprenticeships provide an opportunity to learn new skills that are actually valued by employers. They give people a chance to learn a trade and to embark on a career, while also improving productivity and developing a talent pool. A Labour Member mentioned skills. I happen to believe that a well-run apprenticeship is a much better way of giving someone a platform for life. That is why we are spending £150 million on a programme involving 50,000 apprenticeships that can make a difference.
May I ask once again whether there will be a job guarantee for those 50,000 apprentices? My question was not answered when I asked it earlier, and it is the kind of question to which my constituents want an answer. There is no point in people joining those programmes if there is no opportunity for them to get jobs when the programmes end.
We intend to continue the young person’s guarantee until the launch of the Work programme. However, there is no guarantee of a job at the end of any programme. The programmes are intended to create opportunities for employment. None of the last Government’s programmes involved a guarantee of a job at the end. The best we can do is to ensure that people are as work-ready as possible, and then try to provide an environment in which jobs are being created for which people can apply.
I am grateful to the Minister. It is fantastic that in my part of Wirral we saw a tenfold increase in the number of apprenticeships between 1997 and 2008. Does the Minister agree that the best thing we can do with apprenticeships—we all agree they are vitally important—is not to try to rewrite history or cut our way out of the recession, but to try to build business confidence so that investment in apprenticeships continues in my constituency and others?
One of the disappointing things about the last Administration was that we kept hearing the then Prime Minister make promises about numbers of apprenticeships. Year after year, we looked at how many had actually been delivered, and saw that they never hit the target. I hope we will not make the same mistake, and I believe that the 50,000 apprenticeships we have announced will make a difference to a large number people who will take them up as part of the Skills for the Future programme.
No; I am going to wind up my speech now.
I want to end by making a point about the overall context of our proposals. We are trying to create an environment in which business can grow, develop and flourish. The Budget was about that as well. The Chancellor announced measures to stimulate growth, including a reduction in the main rate of corporation tax and the rate of corporation tax for smaller companies, a reduction in the main and special rates of capital allowances, an increase in the enterprise finance guarantee, the creation of a growth capital fund, and the regional support with which we intend to help private sector employers to grow and develop in our regional areas. We also stopped the Labour jobs tax. All those measures are designed to create an environment in which small, medium-sized and larger businesses can grow, develop and create jobs in the next few years, and they have all been welcomed by business groups.
I thank the Minister for his generosity in allowing me to intervene again. He referred to support for the private sector and for private sector growth. Will he confirm that according to the OBR’s own assessment, in 2012-13 private sector employment will be 260,000 lower than it would have been under Labour’s Budget?
When will the right hon. Lady recognise that the Labour Budget was not affordable? It was taking the country down a path we could not afford. We have seen in the eurozone what happens if nations try to do things they cannot afford. Labour Members keep going on as if nothing had happened—as if all would somehow have been swimmingly good if they had returned to office, and all the problems would have been sorted out—but it is not like that. Labour Members are living in a fantasy land, but the reality is that business groups welcome what we have done.
Richard Lambert, director-general of the CBI, has said:
“There was clear recognition of the role that business needs to play in getting the economy back into shape, and generating the jobs and wealth needed to sustain economic recovery.”
The British Chambers of Commerce has said:
“The government’s decisive moves to cut the deficit will have positive effects on business and investor confidence. Even more importantly, the Chancellor's message that Britain is open for business will be welcomed by companies the length and breadth of the country, and across the globe."
That is what we need to do to create the environment in which Britain is a good place to do business again, and in which jobs are being created.
It has been interesting to listen to Labour today. To be honest, it has been like a Westminster version of “Life on Mars”. Suddenly we are back to the old Labour rhetoric of the past. They seem to believe that what we need is big Government to create jobs, and if we spend just a bit more all will be well. That is nonsense. We know that we need flourishing businesses if we are to create jobs for the future. We know that we need the right skills and technologies for the future. We also know that we need to ensure that everyone in our society has the chance to find the right opportunity for themselves. We heard some of those messages from new Labour in its heyday, but they were never followed through. We are all paying the price now. This Administration will not make the same mistakes that Labour made.
I was unable to intervene on the Minister of State on the role that big firms will play in creating the jobs of the future. I wondered whether he had seen the survey by the consultancy and accountancy firm Deloitte which concluded that big firms fear that a new recession will hit the UK. It said that business confidence has been knocked, in large part by the shroud-waving and fiscal hysteria from the Conservatives in creating the mood music for this draconian Budget. The survey of finance directors from 32 FTSE-100 companies and 93 UK companies accounting for 28% of the equity market showed that the net percentage of those who were more optimistic had dropped from 40% to 24%.
The hon. Member for Bedford (Richard Fuller) made a point about small business investment, but businesses need confidence if they are going to invest in the future. They will not invest in creating the jobs of the future if they are worried that this deflationary Budget, which will knock 1.3 million jobs out of the economy, will leave them high and dry. The money that they would otherwise invest could be kept for a rainy day or a potential future run on the bank.
That is an extraordinary allegation—that somehow the Labour Government took money away from businesses. I thought that it was the banks—[Interruption.] There was a failure of regulatory oversight, but it was not just in this country. It happened across the world. In future, economic historians will look at the psychological group-think that prevailed across the world in all Treasury departments. There was an economic orthodoxy that the level of growth was sustainable. In the end, the bubble burst and it was not sustainable, but we made the decision not to allow the collapse of a bank to mean that people lost their savings.
We also decided to follow the Keynesian route back to employment. For those Members on the other side of the House who are unaware of Keynesianism, I recommend an excellent article in The Independent by Robert Skidelsky, who was Keynes’s biographer. He is no left-wing madman: he is a sensible and respected economist. He has an interesting analysis of the Budget that makes sobering reading, and I recommend it to all hon. Members of whatever party.
I am grateful to the hon. Lady for giving way. As ever, she speaks with passion if not on this occasion with quite so much knowledge. Business is struggling because when the economy was booming and it was necessary to curb the lending of the banks, the Labour Government did the opposite and loosened the conditions for lending. After the collapse, the Labour Government did the opposite and tightened the requirements on the banks so that they were unable to lend. That is how the Labour Government both fuelled the boom and boosted the bust and that is why business is struggling so much to recover from Labour’s disaster.
I am so grateful to the hon. Gentleman for that basic lesson in economics. He may not be aware of my past working as an adviser to small businesses and to MBAs at Cranfield university on how to set up small businesses. Our economic record between 1997 and 2005 was extremely good when it came to ensuring that new businesses were created—[Interruption.] Would he care to listen to my answer or does he just want to keep commenting from a sedentary position? He claims that we turned the tap on too fast and then turned it off. It is understandable that when Governments end up owning majority shares in banks, they want to ensure that credit flows to businesses—and we ensured that that was happening through the small firm loan guarantee scheme. Now, the banks are almost in a monopoly position, and we need more competition for high street banks and to change their risk aversion when it comes to lending to small businesses.
We are straying from the point, which is the effect of the Budget on unemployment. The OBR has had an extraordinary few weeks. It was set up and has published its little forecasts, but now suddenly Sir Alan Budd—who set it all up—is to leave. I have been in politics a few years now and when someone leaves unexpectedly, I try to work out why. Why is it that someone in a brand-new, start-up situation who wants to perform a public service is leaving? I wonder whether there has been a row. Perhaps in the future we will find out the real reason—perhaps that he was leant on for the employment figures, which are heroically optimistic. The OBR claims that more than 2 million jobs will be created in the private sector over the next five years, but John Philpott, the chief economist at the Chartered Institute for Personnel and Development, has said:
“There is not a hope in hell's chance of this happening. There would have to be extraordinarily strong private sector employment growth in a…much less conducive economic environment than it was during the boom.”
The hon. Member for Beverley and Holderness (Mr Stuart) says that we funded small businesses through the boom, but the OBR and the Treasury now claim that we will have a similar level of employment growth—another boom—but there is no credit to finance it and, by the way, they are cutting huge amounts out of the public sector. I will give way if any Member opposite can tell me how that will happen. I thought not.
My hon. Friend makes a good point, and many skilled IT workers and other professionals will lose valuable public sector contracts as the so-called bureaucratic back-office functions are scaled back.
One of the ways in which the Minister proposes to help the unemployed is by laying off 2,000 jobcentre staff in the next few months. It takes a particular sort of genius to do that in a recession, and I bow to the greater knowledge of the Conservative Members. How will they help people back into work with fewer people on the front line?
I thank the hon. Lady for giving way to the greater prowess on this side of the House. I appreciated her comments earlier about the importance of the private sector. The fundamental truth in this debate is that the private sector does something that the public sector does not—it pays for the public sector. It pays for itself and its profits pay for the public sector. The hon. Lady nods, which is nice to see. As she worked in the private sector helping small businesses, does she agree that the biggest fear of people in the private sector is not cuts to the public sector, but the threat of a rising debt crisis with interest payments alone—now she shakes her head—forecast to rise to £67 billion a year? The effect that that would have on the sovereign debt crisis and the threat of rising interest rates could plunge this country into a serious economic crisis.
I thank the hon. Gentleman for his point. We are in danger of rehearsing the arguments that we had at great length on the Finance Bill last night. I chose not to speak in that debate, because otherwise it might have dragged on even later than it did. However, I do not think that someone running a corner shop in south Wales is worried about the interest payments on Government debt. Interest rates on Government debt are historically low, and the repayment period here for such debts is, at 14 years, longer than in the US and Greece.
Government Members need to be very careful about the shroud-waving that they have done in connection with the Greek fiscal deficit. The UK is in no way comparable to Greece, which is an island economy based on tourism—[Interruption.] If the hon. Member for Beverley and Holderness (Mr Stuart) listens, he might learn something. Greece has 178 different public sector pensions, and none of them is funded. In addition, matrilinear succession means that the wife inherits when a man dies, and that the daughter inherits when the widow dies. Trying to compare Greece to the UK is absolute madness.
Will the hon. Lady confirm first of all that I did not mention Greece? She has mentioned pensions, but the second thing that concerns the private sector is unfunded public sector pension liabilities, which also saddle the private sector economy. She seems to talk as though the public sector can somehow carry on spending money, but it is the private sector that has to pay for it.
In the end, we all end up paying for it. We made pension reforms to try and get people in the private sector to enrol in pension funds, because companies in that sector tend not to pay pensions or enrol their staff in stakeholder pensions. As a result, the taxpayer—the state—picks up the bill and we all end up paying for it. The important point is that the state is, in the end, the lender and the funder of last resort.
I will not take any more interventions, as this debate is turning into another Second Reading of the Finance Bill and I want to talk about unemployment and the future jobs fund.
In my constituency of Wakefield—which is well known to my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper)—700 places were allocated under the future jobs fund. We are not clear how many have survived the Government’s hatchet job, but I was privileged to welcome 50 young recruits to Wakefield council.
In addition, with my right hon. Friend I met three future jobs fund recruits at the Able project, an environmental scheme that uses a piece of disused land owned by Yorkshire Water that lies next to a sewage treatment works. One could not hope to find a less glamorous environment, but the project has created something very beautiful. Its organisers have worked with Nacro and the mental health trust to get people digging, growing, learning and being out in nature. The land is between a sewage works and a railway line, but it is an area of environmental beauty. The project has become a green business, coppicing the hazel and willow that grows there.
I met two young workers there, and we were able to buy some of the honey that they had made. They told me that they had had an apprenticeship but that the collapse of the business meant that they could not carry on. After six months on the dole, they were desperate to get something.
My right hon. Friend the Member for Normanton, Pontefract and Castleford and I made the visit in March, and the young workers told us that they did not know what was going to happen at the end of the six months. They asked us to try and make the period a year, as that would mean that they had a year’s experience under their belts. One young man was working visiting schools and showing children how to build nesting boxes.
The Able project is run by a third sector organisation, but I was aware that, at the end of his time there, the young man I had spoken to would have carpentry skills and experience of working with children. He was going to have all sorts of facts about nature and growing things at his disposal, with the result that a range of different organisations in the area could employ him.
I feel really heartbroken that that young man, the person whom I also met who is a support worker at Reconnect, a project that befriends older people across Wakefield who are at risk of isolation, mental health problems and loneliness, and the three people for whom I was trying to find work as wardens in Thornes park, are all now facing an extremely uncertain future.
Does the hon. Lady agree that one of the challenges for the future jobs fund is that, because the placements last only six months and have been taken up almost entirely by the public and charitable sectors, they do not provide future jobs? I have spoken to several charitable organisations in Gloucester, just as she has in her constituency. They have got people doing things very similar to what she has just described. They make the same points that she does, but they recognise that these are not apprenticeships. They are different: they do not provide jobs, but really just take people off the unemployment register for six months.
The point is that they are entry-level jobs. The future jobs fund takes people off the unemployment register for six months, but the important thing is that those people then have a CV that does not say, “I’ve been on the dole and I don’t know how to get up in the morning. I don’t know how to set an alarm because no one’s ever taught me. I’ve got used to staying in bed till half past 10 and then watching daytime TV.” Instead, their CVs say, “I’ve been doing something productive and am able to get myself to work. I’m committed and I’ve developed my communication skills.”
The young people involved may have failed at school and may not be academically successful. They need every chance that they can get: they may need a series of six-month placements to build up two years’ worth of experience, because it may take them much longer to enter the employment market than someone with an Oxbridge degree.
Does the hon. Lady agree that a real apprenticeship that lasts three years, like the 50,000 new apprenticeships that this coalition Government are committed to providing, is a much more genuine gateway to a real job than a series of six-month benefits and training programmes that has no real guarantee of leading anywhere?
I am a product of something similar to the future jobs fund. In the late 1970s, there was something called a pre-apprenticeship scheme. I did six months on that and was very fortunate to complete it. The scheme was not just academic, as it gave me some transferable skills. It taught me to get out of bed and it led me, in later life, to do a master’s degree in contemporary urban renaissance. That is the sort of opportunity that the future jobs fund is providing.
I thank my hon. Friend for that intervention. He truly is a renaissance man, and I hope that many of the young people whom we met who got their entry-level work through the future jobs fund end up sitting on these green Benches. I hope that they can make the same incredible progress and journey that he has made in his life.
I turn now to the Work programme set out by the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). I have a great deal of concern about it. In a speech on 27 May, the Secretary of State spoke about
“a single scheme that will offer targeted, personalised help for those who need it most, sooner rather than later”.
If it is a matter of sooner rather than later, why are we waiting until next year for it to come in? I suppose that that has to do with the fact that the Government want to set up what I presume is a national contract with large-scale training providers. I tried to intervene about this earlier, because the Government are asking those providers to bear the risk of training people even though their contract payments will depend on outcomes.
That raises a series of questions. First, at a time when deflation, very low growth or even a double-dip recession are all possible, why does the Minister think that the private sector will turn to the banks for loans to cover this training given that, as we heard earlier, the banks are averse to risk and not very good at lending? Output-related funding is currently calculated on the basis that it takes six or nine months to get a person into work and then 13 weeks to ensure that he or she has lasted in that job. Why does he think that organisations in the private sector such as Capita or BT will line up to take on the massive risk involved in training people and employing them, when there is such a huge amount of uncertainty?
I have another question for the Minister, and I will give way to him if he can answer. How does he think voluntary sector organisations such as Nacro—the National Association for the Care and Resettlement of Offenders—will be able to do this? Such organisations have specialist programmes working with the most difficult, hard to reach and disadvantaged people—prisoners, young offenders and ex-offenders. They have the benefit of being present in and running training courses in prison and are then able to offer some sort of continuity when the offender leaves. I am also thinking of providers such as Rathbone training, an organisation that I had the privilege of serving as a trustee for seven years. These are small-scale organisations—Rathbone’s turnover when I left it in 2005 was £40 million. Why does he think that they will go to the bank—or their trustees would say that they should go to the bank—and borrow up to £20 million at a time, with a personal guarantee of the trustees, who are jointly and severally liable, who are for a programme when it is not clear that they will get the rewards from it?
I am happy to intervene briefly to confirm two quick points for the hon. Lady. The first is that, as she will recognise, this is an established marketplace that has grown. What we are talking about, in particular, is scale as a result of the incapacity benefit migration. We are pushing the envelope further than it has been pushed before, but established principles are involved. She is right about protecting voluntary sector organisations. I would be making another speech if I explained the full detail of how to do that, but I can assure her that I regard those organisations as important as she does.
I am relieved to hear that, but I am afraid that that was not an answer and I am unable to wait for another speech from the right hon. Gentleman to hear these plans emerge. Let us consider the position of an organisation 90% of whose budget depends on public sector contracts. Organisations are planning next year’s budget now. They will be signing off budgets that need to be ready in February and the finance directors will be making those budgets ready in October, November and December. How will such an organisation make plans for 90% of its funding—that could be £35 million, or £37 million at 2005 prices—without knowing what the system and financing mechanism will be for voluntary sector bodies? If the right hon. Gentleman is to grant the voluntary sector privilege, will he not be in danger of doing something about which we have heard a lot—will he not be risking crowding out the private sector? I shall leave those thoughts hanging in the air.
Rathbone training works with teenagers who have had chaotic homes lives and who have encountered poverty and unemployment. Many of them have failed at school and many have had babies early in their lives. Rathbone carried out a survey of those young people, asking them which profession they would like to pursue. Everyone in the Chamber will probably be relieved to hear that only a handful wanted to be footballers, pop stars or WAGs. Instead, the majority of Rathbone trainees preferred more everyday jobs such as car mechanic or office worker. That was summed up by a 17-year-old lad from Newcastle, who said:
“I’m happy at the moment training to be a bricklayer.”
I just hope that he has a job to go to in the construction industry when he finishes his bricklayer training. On the current prognosis, I am sceptical about that happening.
I am concerned about the incapacity benefit reforms and the assertion that such a one-size-fits-all approach will be better. Why will it be better than programmes run by people in the public sector? I am not so sure that it will be. I am concerned that we are going around in a circle—we are going back to the 1980s, as my right hon. Friend the shadow Secretary of State said, and back to the 1930s. We are going into the failed Thatcherite schemes of the 1980s—a youth training scheme mark 2. In the current plans, however, there is no enterprise investment scheme—and that did exist in the 1980s. We have heard a lot about the need for a vibrant and flourishing small business sector, but these reforms contain nothing, as yet, that allows would-be entrepreneurs in constituencies such as Wakefield and Normanton, Pontefract and Castleford, as well as those in Liverpool, to set up their own businesses. I hope that the Minister, who is no longer in his place, will examine that.
Does the hon. Lady regret the devastating effects on manufacturing of the past 13 years under the Labour Government? Does she have any thoughts on what can be done to encourage manufacturing? This is not just about construction and other private sector jobs, because we need to restore and rebuild manufacturing, which was growing in the last few years of the previous Conservative Government but has been devastated during the past 13 years under Labour.
I can perhaps turn the question around on the hon. Gentleman by asking him whether he regrets what happened to cities such as my birthplace of Coventry, where I grew up in the 1980s. All the car factories that I grew up around—the Massey Ferguson tractor plant, the Carbodies taxi plant and the Alvis plant, which used to make tanks, and the Coventry Chain Company—were all replaced, either by housing or by retail parks. The factories were all shut down during the short few years between 1984 and 1989, when thousands of incredibly skilled workers in those factories were lost. In addition, does he regret the fact that the previous Conservative Government shut down the coalfields of Wakefield, which could now be doing something to reduce our dependence on foreign energy supplies? I shall leave that matter for another debate.
I am concerned about the effect of benefit cuts on women. I am keen to hear from Conservative Members about the move to employment and support allowance and to jobseeker’s allowance. A little piece in the Red Book says, “After you have been on JSA for more than a year, your housing benefit is cut by 10%.” I am keen to hear from the Conservative Front-Bench team whether women with children—these children may be only a year old—will be affected by that proposal. If they are affected, that is an incredibly draconian policy.
I have no problem with women who have children going out to work. I am a mother of two children and I came back to work here when my child was six months old. I have no problem with encouraging mothers to get out of the home and into the workplace, and expecting them to begin the search for work when their child is three and has access to the free nursery place is very important. The idea that one can say to a mother with a babe in arms, “You have to put the baby into child care and go out to look for a job otherwise your housing benefit will be cut by 10%” is, as my right hon. Friend the shadow Secretary of State said, a return to the Victorian values of the workhouse and the notion of dividing the poor into two segments: the undeserving poor and the deserving poor. I leave that thought with hon. Members.
I shall now discuss the issues associated with people moving house to find work. I have no problem with mobility, because people should look around, think and open their horizons in the search for work; my parents are Irish and they came to this country on the boat—not on a bicycle—in the 1960s, finding gainful employment in Birmingham and then Coventry, where they settled and got married. However, we need to examine carefully the psychological impacts of asking people to leave their homes to look for work. One of the great untold stories of the Irish diaspora is the psychological impact that emigration has on the mental health, the alcohol dependency and the level of premature death of a particular community. The Irish are the only community whose life expectancy decreases upon emigration to this country. That is perhaps a little-known fact, and I can see the hon. Member for Beverley and Holderness (Mr Stuart) is thinking it through.
That is what happens when people move away from their communities, so it is very important that we ensure that we have the structures in place so that people can be supported if they want to move. I would turn the question around by asking another one. Let us consider what would happen if someone from Wakefield or a high unemployment area wanted to move in order to work, found themselves a job in London and went to one of the city centre local authorities, such as Hackney, Camden or Islington, asking to be put at the top of the housing waiting list. What would that do to the Islington, Camden and Hackney residents waiting to get out of overcrowded accommodation? How would seeing people coming in from outside and getting houses affect them? Would any such provision have to involve a minimum time that someone keeps a job? Would people have to stay in their job for three months, six months or a year? If they lost the job after 12 months through no fault of their own, could they keep the house or would they be expected to make the long train journey, or the long car journey back up the M1, to the city that they left?
I conclude by discussing unemployment and what it means to Opposition Members. For us, unemployment is not a theory, an abstract thing or a thing that has to be tackled. For us, unemployment is what happened to our families, friends, communities and, in the recessions of the ’80s and ’90s, ourselves. As for the idea of the big society, I say to Government Members that our society is not broken. Over 13 years, our Labour Government spent a lot of time, energy, money and thought trying to mend the broken society that Thatcher and Major bequeathed us in 1997.
In 1979 there were 1 million people on the dole, and the Conservative party won that year’s election with the posters of unemployment queues and the slogan, “Labour isn’t working”. Three years later, 3 million people were on the dole, a level of unemployment that had not been seen since the depression of the 1930s—a particular type of genius that the Conservative party has in pursuing flawed and deflationary economic policies.
I remember, during my childhood, coming down to breakfast and hearing the figure for the number of cities where riots had taken place in 1981, and I could not believe the number of places where people had spontaneously gone out and created mayhem and anarchy because they were tired of being left behind. I remember the songs, such as “One in 10”, about the one in 10 unemployed, and the song about my city of Coventry, “Ghost Town”. It was a ghost town. That is how I grew up, and I do not want any child or constituent of mine to grow up in a ghost town. Opposition Members will continue to focus on unemployment, because, as my right hon. Friend the Member for Normanton, Pontefract and Castleford said, for us it will never be a price worth paying.
Order. This is an important Opposition debate, and I want to give some gentle guidance. Hon. Members will be horrified to learn that we cannot go on until half-past 2 in the morning today, and that we intend to call the winding-up speeches at about half-past 6. If everyone wants to get in, and if people speak for wildly longer than 12 minutes, not everybody will be satisfied.
Also, I love interventions, which I think help the debate, but if they become mini speeches fewer people will get in. So, if we show some restraint, that will be very welcome to the entire House.
The House appreciated the passion with which the hon. Member for Wakefield (Mary Creagh) put her case, but if she were being frank she would accept that, in the 1960s, 1970s and, again, in the 1980s, this country faced some difficult economic problems. If she looks back at the history of interventions in the job market, she will see that since 1979 we have tried various options. Indeed, there has been some success in putting people back into work by using employment-market interventions, but I am sure that in her heart of hearts she will accept that we have let many people, particularly during the past 13 years, fall by the wayside.
The people who were getting jobs through Labour’s employment schemes had skills or were in the age bracket of 25 to 49 years old. Many other people became part of that workless group whereby 3 million homes had no adult of working age in work at all. Those people were not seen on programmes, and very few of them were seen at all, so we need to consider a programme that really challenges that situation and looks to provide the help that people need in all aspects of work. Too many schemes have been based on just one benefit: if people were on one particular benefit, there was a scheme for them; and if people were from one age group, there was a scheme for them. However, we need something that captures all the issues and removes all the barriers to employment, so that everybody gets a fair deal from the Government.
There are some encouraging signs in the labour market. The Chartered Institute for Personnel and Development’s latest quarterly survey shows for the first time in six quarters a plus 5 figure for the employment intentions of employers: they do intend to employ people. The figures for the south-east are particularly good, showing a strong intention to employ. Equally, Reed in Partnership, an excellent contracting company, has shown that the number of advertised vacancies is up by 5%, so there are some encouraging signs. However, the real question is whether the increase in private sector employment will be enough to deal with the undoubted fall in public sector employment and the likely redundancies there. That is the challenge for the next few years—to ensure that private sector employment increases sufficiently.
At The Times CEO summit last week, Sir John Rose, chief executive of Rolls-Royce, one of our best companies, was reported to have said that we as a country were very self-satisfied about the services boom in the Labour years, but that during that time manufacturing capability and competitiveness were on the slide. He noted that in higher education we are educating 7,000 people a year in media studies, at a time when China is educating technicians and people who will have skills in the nuclear industry. He rightly said that during that period we did not concentrate enough on investment in technical education at the secondary and tertiary levels, and that we need to address that issue if we are to have a future of success in the private sector.
On Reed in Partnership’s job index, the hon. Gentleman mentioned the figure for growth, on which the organisation comments in its press release, but that growth is predominantly in financial services, accountancy and insurance. The index also states that, compared with February, the figure for this month in charity and voluntary work is minus 30 index points; in construction and property, it is minus 7; in engineering, it is minus 8; in health and medicine, it is minus 19; in scientific, it is minus 6; in social care, it is minus 8; and in training, it is minus 15. In the north-east—my area—the salary index has also fallen, so fewer jobs are being advertised for less money.
I think the hon. Gentleman is wrong, because the headline figure shows an increase of 5% over the past six months, but he is right about the differences between sectors and regions. He makes an important point, which we should not ignore, and I shall return to it later in my remarks. However, Sir John Rose’s point was also well made. On the question of what needs to happen in this country, the role of apprenticeships should not be ignored, and 50,000 more apprenticeships are welcome, particularly given the good quality of education that they provide in technical areas.
In the latest CIPD survey, there is a lot of criticism of the abilities and work-readiness of our graduates, and there is a lot to be said for schemes such as internships, which get people ready for work so that they can do a good job as soon as they enter employment. I represent North East Hertfordshire, and a good thing about Hertfordshire is that we, as a county, have a series of institutions that are business-facing but educational. Our colleges are business-facing, and our university is well known as business-facing, which means that the county asks businesses what skills they need and our university provides the skilled workers. In terms of the employment service in Hertfordshire, if a graduate who is placed with a Hertfordshire company needs an extra skill, our university will teach them it, and our colleges all feed into that. It is no coincidence that we have the lowest number of NEETs in the country.
Teesside university, the university of the year, is basing itself in my constituency, and I am quite interested in the hon. Gentleman’s idea about graduates not being prepared for the workplace. Will he please identify exactly when in the history of university education employers said, “All our graduates are prepared for the workplace”? When was that golden age of preparedness?
The hon. Lady makes an extremely good point, which is that we are not good enough as a country at preparing people for work. If we look at why we have so many workless families, and why employers are dissatisfied, it goes right back to the beginning—to school. The fact is that 40,000 young people leave school every year in this country who cannot read, write and add up properly. It is not good enough that we do not have the technical people we need in business coming through. This is a failure of the whole system that needs to be addressed. [Interruption.] The hon. Lady chunters, but Sir John Rose is probably one of the most eminent chief executive officers in the country, he is running a company that is a great success story, and he is right to highlight the need to do better on technical education and skills.
Over the years, we have had a range of employment programmes that have not succeeded as well as we would have hoped. A few years ago, the Work and Pensions Committee looked into what contractors can achieve. We did a major report on how the Department for Work and Pensions commissions employment programmes and the role of prime contractors. We were encouraged by the international examples. We looked at what had happened in Australia and visited the Netherlands to look at what was being done there. That seemed to show that contractors were able to provide programmes more cheaply, but also to get better results. Professor Finn, who was advising the Committee, found that Australia was achieving, through “contractorisation”, an improvement of about 10% in job readiness and people’s ability to find placements. In the Netherlands, we were told very strongly that the people who ran these contractor companies were able to specialise provided that they were given enough flexibility in respect of the barriers to employment that there have been and still are.
Looking at the picture overall, I have reached the view that as soon as a person is not working, and we are aware of that, they must be interviewed to find out what the barriers to employment are that they face and start to tackle them. If somebody has basic skills problems, we need to get on to that at an early stage and tackle it—and equally, if somebody needs child care or has a problem with addiction. These are all areas where action is required. In relation to the work capability assessment for incapacity benefit, a lot of people have not been seen for many years, and the on-flow that has been examined so far seems to suggest that many of them are capable of doing some kinds of work, but not necessarily all kinds. Those people need considerable help.
If we are to help people who have the classic problems suffered by those on incapacity benefit—musculoskeletal problems such as back injuries, and mental health problems such as stress, and worse—it is very important to get in with an early intervention. More can be done by employers, the NHS and the system as a whole—including, perhaps, the companies that provide insurance for people who are unable to work—in getting together to see whether they can do more to get this help in quickly. It is not acceptable that somebody of working age who has a back injury and needs physiotherapy has to wait 10 weeks for an appointment whereas if they were seen quickly they could get back to work. I ask the Minister whether it is possible to have liaison and discussion with the NHS, employers and insurance companies to try to do better in getting involved more quickly and stopping some of these conditions becoming chronic in the first place. With back problems, that means physiotherapy; with mental health problems, it may mean talking therapies as well as the drug treatments for depression of the sort that are available these days.
Yesterday, I talked to people at the National Ankylosing Spondylitis Society, who said that all too often they have to wait a long time for the treatment they need to deal with their condition. For people of working age, we need to prioritise their health and have something amounting to a national occupational health approach so that we do not end up with a lot of people who become chronically ill. It is well known that someone who has been out of work with a disability for two years is very unlikely to work again.
I welcome the Work programme. The criticisms that have been made of it are a little unfair, if I may say so. The fact is that the economy has been put into a terrible situation by the previous Government. The future jobs fund is a scheme that has only just started, and it is not as though it is not being replaced by something that is probably better—namely, more apprenticeships. It is a bit disingenuous to describe it as a jobs fund, as though these are permanent jobs, when they are really job placements for six months.
Speaking of disingenuous elements, the Government’s amendment refers to
“policies to stimulate private sector employment by reversing the damaging increase planned for employer national insurance contributions”,
which implies that that was a jobs tax. Is it not really the case, particularly for the north-east, as I have been advised by the North East chamber of commerce and the Federation of Small Businesses in the north-east, that the real jobs tax is the VAT increase that the Government have proposed?
If the hon. Gentleman thinks about when we got 2.5 million extra jobs in our economy in a three-year period, he will recall that it was under the Conservatives in the 1980s. That was done by allowing businesses to have lower taxes and to be less regulated—by really giving them a boost. We need to do something similar to help business and to get off its back. We also need to provide the technical training that Sir John Rose talks about, together with a scheme that helps the workless—the people who have been left behind in the plethora of employment schemes that we have had for the past 30 years.
If the hon. Gentleman looks back at the mess that this country was in when the Conservatives came into office in 1979 after the Labour years, he will see that it was not an easy period to be in government. He must accept, surely, that if we can improve on what has gone before, that is the best thing to do. We need to listen to somebody who is a thoughtful CEO saying that we need better technical training; to look at the idea of apprenticeships as good-quality training, which we all agree about really; to try to have internships so that our graduates are job-ready; and, on top of that, to have a Work programme that does not leave anyone behind, that is streamlined, and that involves contractors sooner rather than later. Surely that is the wisdom of our time.
The hon. Gentleman is right that in periods of our history, both sides of industry have not distinguished themselves in supporting apprenticeships adequately. I do not know whether he agrees with that, but now is the time to do the right thing, and to support apprenticeships and technical education. We need a scheme that works on the Work programme side, and hopefully this country can come roaring back from the mess it was left in by the Labour Government.
It is a pleasure to follow the contribution of the hon. Member for North East Hertfordshire (Mr Heald), but I want to talk about the construction industry and my constituency, and I am sure we will come across other related matters. I refer the House to my declaration in the Register of Members’ Financial Interests.
I was involved in the construction industry for more than 30 years before I was elected to the House in 2005. Frankly, I am shocked at what has happened in the industry in the past few years, and I greatly fear what will hit us in the near future. I started my own business in 1986, so I have weathered a few storms, but I fear that the future has something terrible in store for the industry. If it is bad for the industry, it is bad for jobs.
In the past few years, the construction and housing sectors have contracted massively. With that contraction in activity has come a contraction in the number of jobs. When the banks went into meltdown, the previous Government reacted appropriately. There was action to protect investments and to support failing banks, and genuine attempts to get money back into the marketplace. Although that proved a little more difficult than I would have hoped, that positive action saved jobs. However, now we risk all that effort.
It was necessary for the public sector to step in when the private sector failed—let us not forget that that is what happened. My background is in the private sector, and I am proud of the UK’s private sector—or at least part of it. It should be a driver of growth and the major contributor to addressing our budget deficit, but how will that happen when the private sector remains very fragile and the public sector is faced with ill-thought-out, ideological cuts?
The construction sector is a good example of that. The industry has some 250,000 businesses and employs more than 2 million people in the UK, with turnover of about £6 billion. We had the second largest output in the European Union—I do not know whether we still do—and we all know the role that the industry has played in the UK’s progress in recent years. It is a private sector enterprise, but its clients are both public and private sector. Businesses generally need the construction sector to expand, as does the state, when they are intent on improving the quality of life of citizens.
There are vital sub-sets in the construction sector. Construction product companies have annual turnover of more than £40 billion and employ more than 650,000 people in 30,000 companies. In Scotland, almost 12% of the work force are employed in construction or in some form of building-related activity, whether as a joiner on site, a planner in a local authority office or a lorry driver delivering materials to a building site. Sadly, that is changing for the worse. All those jobs are under threat.
One great mystery of the past 13 years is that there were record levels of immigration under the Labour Government and record lows in the number of houses built, particularly affordable housing units. I do not know the explanation for that, but I would be interested hear whether the hon. Gentleman, with his background in construction, has any thoughts on how we can increase the number of housing units in this country, so that we can tackle homelessness and boost the construction industry, jobs and employment.
I will address that in greater depth and detail in a few minutes, but the right solution is a joint public and private sector solution. The solution cannot be driven by one of those alone—it is not an either/or question.
The housing sector enjoyed some useful periods in recent years, prior to the recession. When it delivered large profits for many developers, it also delivered jobs in our economy. The sector was a driver for the economy, but the current situation in the private house building sector is absolutely desperate. There were 40,000 home loans in April 2010, which, if projected over a year, would be fewer than half a million. If that is the annual figure, it will be the lowest since 1974, yet the need for housing is ever growing, as the hon. Member for Beverley and Holderness (Mr Stuart) pointed out. Our desire to own our properties continues to grow, and we should encourage such aspirations.
To generate jobs in the housing construction sector, we need to increase the number of higher loan-to-value products, and reduce the 25%, 30% and 35% deposit demands from the mortgage industry. The mortgage products that were on offer before the recession were unsustainable, and we had the ridiculous situation of lenders lending 125% of the value of properties. Everybody has responsibility for that—the Government, lenders and borrowers—but I am concerned that the cuts in interest rates in the past few years have not been passed on to mortgage deals. That is stifling the market, and therefore costing jobs. Although interest rates are an issue, the loan-to-value ratio is the main problem.
Does my hon. Friend share the concern that a constituent of mine raised with me this weekend? He and other young people he knows who work in the public sector in Newcastle are all in fear of losing their jobs. They had planned to move house, but they have put that on hold because of that fear, and they know that many of their contemporaries are in the same situation. There is a real worry about great damage being caused to the housing market, particularly in my region.
That is very well put. It is a real problem and so, too, more broadly, is the effect of public sector cuts on the private sector. That will stop the private sector growing and providing the jobs and profits that the Conservatives expect it to create to get us out of the mess we are in.
We need to get to a sustainable level of 90% loan-to-value mortgages to generate jobs in the sector, but it does not stop there. If someone buys a new car they put fuel in it, and because of efficiencies it is probably a lot less than they had to put in their old car. However, people who buy a home spend additional money. Ask any retailer and they will say that they need a buoyant housing market, both new and second-hand, for the high street to be a busy place. Home buyers purchase carpets, furniture, white goods, televisions, curtains and more. This is therefore the one industry that directly feeds the spending of considerable sums of money into other sectors.
In 2007 there were 357,800 first-time buyer mortgages, and the Halifax produced data that suggested that the cost of furnishing and equipping a new property is about £6,000, so that equates to about £2.14 billion of high street spend from first-time buyers alone. If we multiply the original figure by the number of people in each property purchase chain, we see that the true amount of high street spend might be double or three times more. In short, support for jobs in the housing sector is delivered by the availability of appropriately priced mortgages, but that is lacking today.
Turning from housing to construction, I supported the last Government’s commitment to bring forward capital spending projects, and I should pay tribute to the councils in my constituency and the last Labour Scottish Executive, who delivered six new secondary schools in recent years, and the health board, which has delivered a new community hospital. I am also grateful for the introduction of rail services to Alloa and the new Clackmannanshire bridge.
All those projects were started under Labour. They are now finished, and because of the failure of the Scottish National party’s Scottish Futures Trust there is nothing coming along behind them to match the brick-for-brick commitment we have been given. We heard in the House just this week about the Government’s plans for the Building Schools for the Future programme, damaging our infrastructure, not giving children the best possible start and throwing people on to the scrap heap in what might be called the triple whammy. We need to invest in our infrastructure. Doing so improves the infrastructure, improves lives and creates jobs.
We also need an active home improvement market, but I fear that the recent announcement of the 20% VAT rate will decapitate what was beginning to look like a possible lifeline to the industry. The loss of 1.3 million jobs will not help either, but let me first deal with the VAT effect. Many Conservative Members derided the effectiveness of the last Government’s reduction of the VAT rate to 15%. They said it would be ineffective, but we all know that that was not the case.
There are real worries in the building industry about the new VAT rise. It will harm in many ways. First, it will chase people away from embarking on improvements, and in doing so it will cost revenue and jobs—and if it costs jobs, it will cost even more revenue. It will encourage a black market as people turn to cash-in-hand jobs to save that 20%, and what will that do? It will lead to a loss of revenue. Cash-strapped home owners will become increasingly vulnerable, and the £170 million that was estimated to be taken on the housing sector black market this year looks set to grow.
I am listening very closely to what my hon. Friend is saying. As a former Minister with responsibility for construction, I think the VAT increase on environmental improvements to homes is a major error, because it disincentivises people from making homes more energy-efficient. I cannot see a more short-sighted measure in the Budget.
My hon. Friend is right, and it is not just about the environmental or green side; it is also about quality of life. The quality of a property has a knock-on effect on children’s ability to grow up and learn, so there will be a negative effect all round. I am not sure that he, as a former Minister with responsibility for construction, will enjoy what I am about to say, but I think there is a strong argument for reducing VAT to stimulate the economy, just as the last Government did, but in a more targeted way. Reducing VAT to 5% on the labour element of home maintenance repair and improvement work could, as argued by Experian, create an extra 55,000 jobs this year alone. What the Government are doing will cost jobs. The views we have heard today about job growth are not shared by the Federation of Master Builders, which argues that 7,500 jobs will be lost in small and medium-sized enterprises in the construction sector this year alone as a result of the VAT increase. When the multiplier effect is taken into account, the effect on small and medium-sized construction companies in this year alone could be the loss of between 23,000 and 25,000 jobs.
There is another cause for concern. If firms go bust, close down and lay off workers, they will be in no position to train apprentices for the future.
The hon. Gentleman mentions the construction industry, which I think is relevant to all hon. Members in the Chamber; it is certainly relevant to the area I represent. Does he agree that the Government should try in particular to help those aged 50 and over who have worked in the construction industry all their lives? They cannot get jobs anywhere else and find it hard to retrain.
I do agree, but I would much rather see them retained in the construction sector. There is a strong argument that the construction sector can drive economic growth in this country, and I would like the Government to take that forward.
As I said earlier when I intervened on my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), if we do not deliver skills learning for apprentices today, we will have a skills shortage in future and that will have an economic impact. That should not be tolerated, but we have to understand that struggling businesses do not take on apprentices; they survive day to day and fight day to day. The last thing they are thinking about is having an apprentice, because they are thinking about getting through the day without the bank phoning them.
When the construction industry loses jobs, there is a lack of focus on the resulting suffering because it does not affect 2,000 or 3,000 people all under one roof. They are in different places around the United Kingdom, and when jobs are lost, it is 20 jobs here and 40, 50 or 100 there. That makes it very difficult for the construction sector to show the impact of policies and to get through to the Government and people in general the impact of decisions. It is very easy to see what is happening when a car plant or a big manufacturing location is threatened with closure, but it is very difficult to take on board everything that is happening in the construction sector because it is so disparate and is spread throughout the UK.
Before I discuss my constituency, I make one last plea for the construction sector. It is vital for training, revenue and business growth, and it is vital for improving public services, which I want to improve. It is also vital for improving the quality of life of UK citizens. I strongly urge the Government to recognise that and to invest in it accordingly.
My constituency is quite large and varied, with a rural aspect to much of it. We have industry, of which we are very proud. Some of it is excellent. There are businesses such as Highland Spring, Vector Aerospace, Owens-Illinois and Diageo, and I want to focus on two of those, their interdependence and the impact of the VAT increase. Diageo has long had an interest and a presence in Clackmannanshire. The county is very proud of that business, as it is of Owens-Illinois—or the Glassworks as it is called locally. The interdependence is that one of the companies produces the packaging for the product that the other produces.
My concern is that the VAT increase will impact negatively on product sales, which will impact negatively on the requirement for packaging. If that occurs, the safety valve will be jobs. It is not rocket science—it is simple and straightforward. In my opinion, and as we heard yesterday, the recent reduction in the budget deficit is a result of increased tax take arising from businesses getting back on their feet, from people being in work and from a return to growth. The VAT increase puts all that at risk. It is regressive, hits the poorest hardest and will result in job losses. It will not deliver the revenue necessary for the Treasury, and it could have a negative effect that might deliver a downward spiral. The VAT increase coupled with the axing of the future jobs fund makes the outlook anything but secure.
We have discussed today why the future jobs fund has been cut, and I am afraid that I and my Opposition colleagues do not understand why it has been cut. We also do not understand why the Prime Minister, who thinks it is a good idea, has decided to cut it. It is interesting to see some Liberal Democrats in the House this afternoon, because they think that the future jobs fund is a good thing, too, but have played their part in cutting it. In fact, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), said:
“We have no plans to change or reduce existing government commitments to the Future Jobs Fund. We believe that more help is needed for young people, not less”.
In Scotland, some 11,000 young people will be discarded as a result of the Prime Minister and the Lib Dems going back on their word. Much more can be said about the Government’s support for jobs—or lack of it—but I will end by saying this. The VAT increase will cost jobs, axing the future jobs fund will cost jobs, and failing to recognise the importance of the construction and housing sectors will cost jobs. They will all cost revenue, ruin lives and put the recovery at risk. None of them are a chance worth taking.
Order. Before I call the next speaker, I would appreciate it if Members could try to aim for 11-minute speeches. If they do not, not everybody will get in. I did not want to put the clock on, but I am being tempted. I understand that Members have a lot to say, but I ask them not to forget, if they take interventions, that if they can stick to around 11 minutes I will be much happier.
We have heard a lot of talk from the other side of the House about jobs and growth, but over the past 13 years we have seen illusory growth and illusory jobs that have been fuelled by public spending and paid for by unsustainable debt. Let me give an example: the National Audit Office published a report that suggested that between 2002 and 2007 the jobs created by regional development agencies cost £60,000 each. For every new job, the Government effectively spent £60,000. Such a level of public sector job creation is not the way that we will increase jobs in the long term.
There has also been a lot of talk about evidence, but if we consider the evidence of what creates growth and what creates jobs—I have looked at some international Treasury studies on this—we see that the most productive area of public spending as regards growth is infrastructure spending and the second most productive in terms of growth and jobs is education spending. That is where the Government should be focused and that is where we are rightly focused.
In the light of what the hon. Lady has just said, which was put very well, will she make representations to the Government about the closure of the Building Schools for the Future programme, which is at the centre of both education and infrastructure in this country?
The evidence suggests that the most productive education spending is that on the quality of teaching, not on the quality of the buildings. I am happy to discuss that further with the right hon. Gentleman, and I will do so by letter if he likes.
Moving on to the reports that demonstrate that infrastructure spending is the most effective way to spend, it is not just those in ivory towers who think that—indeed, the Library agrees—but local businesses in my constituency do, too. I asked them to give me their priorities for what the Government should do for South West Norfolk businesses. They said, “No. 1: improve the road and rail links. No. 2: get the performance up in our schools, so that we have the skills that we need locally.” That is what people say.
I am in the process of making representations on the A11, which is a crucial project that would open up businesses in Norfolk. We should assess such projects—I shall come to this later in my speech—on the basis of economic return. We have a very small pot now, owing to what has happened and the money that has been spent in the past few years, and we need to use that pot wisely. I should like to see the evidence on those various roads and consider the highest rates of return. That is my answer to the hon. Gentleman’s point.
Given that businesses would like growth to be created in that way, so that they can create jobs, where have the last Government spent the money? Have they spent it on infrastructure? The World Economic Forum report suggests that Britain is sixth in terms of gross domestic product. Where do hon. Members think that we are on the infrastructure table after 13 years of Labour Government? We are thirty-fourth. That record has created the problems that we see: new jobs are not being created in the private sector because the money was not spent. Not only did the last Government fail to fix the roof while the sun was shining, they failed to fix the roads while the sun was shining, and we are left with that legacy. We are left with a difficult position. Not only are there potholes in our roads, but there is a huge hole in our budget. We must ensure that we spend on things that provide value for money.
Such decisions should be based on the economic return, as I have said. That is how we should consider spending our money. The problem with the previous Government is that the money has gone on politically motivated white elephants, to gain good results in Government elections or to placate interest groups. We have not seen value for money.
Is one of the other areas on which the previous Government wasted a huge amount of public money the most convoluted procurement processes for the spending of taxpayers’ money? That money should have been spent on the infrastructure that my hon. Friend has spoken about so well.
My hon. Friend is absolutely right. Not only was the analysis of where the money was spent incorrect, but the processes by which it was spent were cumbersome. I believe that the Building Schools for the Future process had nine stages. That has taken a lot of money that could have been used to create real jobs in our economy, by improving our infrastructure and education. I completely agree.
We have heard a lot of arguments from Opposition Members about how people would support a particular fund or a particular level of spending, but we have not seen a cost-benefit analysis. We have limited funds. We need to prove that those funds are better used on one project, such as the future jobs fund, or another project, whether that is the A14 or the A11. We have not seen such analysis. What we have heard from Opposition Members is a number of anecdotes. I do not think that anecdote is a good way to conduct government. We need to conduct government on the basis of evidence.
I would. That is not to say that everything spent by RDAs was wrong. There have been many good projects. But the way it was spent and prioritised did not use Government money to its best effect. That is my point. That is why I want to see the Government assess projects on the basis of economic return, as I mentioned earlier to the hon. Member for Luton South (Gavin Shuker). I want the way in which the projects are assessed to be fully open and transparent, so that we can have a proper debate about the best way to spend our limited money.
It will be growth on the basis of real jobs and on the basis of decent infrastructure, good railways and roads, that will seal our economic future in the right direction, not pursuing the initiatives and schemes that we have seen time and again during the past 13 years, frittering away valuable money. It is our money, not the Government’s money. Ultimately, it is the money of all those in my constituency who pay taxes.
It is interesting to hear how fearful the hon. Lady is about incorrect spending on infrastructure projects and what she said about how the Labour Government wasted money. My region has seen great benefits from the improved infrastructure on the west coast main line, and we were looking forward to reconnecting the whole of our region, led by the RDA, with the Manchester rail hub. Will she call on Government Front-Bench Members to commit to those infrastructure projects? Will she acknowledge to the House that the money that was spent on infrastructure by the Labour Government was extremely helpful in resetting our national economy?
I am afraid that the hon. Lady’s intervention illustrates the problem with Labour Members. They present schemes, but there is no ex-post or ex-ante analysis of their economic benefits. The hon. Lady asks a question, but does not produce the evidence. Again, I would be happy to discuss that with her later, but she did not present the evidence. We must have debate. Not only are we talking about what we are putting in, we are also talking about the benefits that we get out. We need an economic policy that is based on the costs and benefits and that talks about the important areas of spending. I am pleased that the Chancellor in his Budget decided not to reduce capital spending further, but to make sure that it will go ahead so as to have a proper basis for economic growth and jobs in the future. That is the important area that we need to be looking at.
I am delighted to follow the interesting speech of the hon. Member for South West Norfolk (Elizabeth Truss) on the need for an economic benefit analysis of every decision that is taken by Government. That is one of the factors that led to the devastation of many of the regions, because some things cannot be measured in pure economic benefit alone. There is also the social value of projects. That is why I want to address the House today on the disproportionate and unfair impact of Government spending cuts on the north-east of England—and, I am sure, on many other regions, but I speak for my own today.
In Newcastle upon Tyne North, we have many public sector workers, but we also have several major private employers, including Sage, Nestlé and Sanofi Aventis. Projects in recent years, such as Newcastle airport industrial estate, Newcastle Great Park developments and the development of many retail outlets, have diversified the local jobs market in Newcastle. None the less, many of my constituents are long-serving and dedicated public servants who stand to be directly and swiftly hit by the Lib-Con austerity drive.
In Newcastle upon Tyne North, the current situation has come as no surprise, because during the election campaign the now Prime Minister publicly identified the north-east as a region where spending was unsustainable and where public sector employment was simply too high. The first wave of public cuts were announced on 24 May, and now we have the ideologically motivated cuts laid down in the Budget.
It was not only Newcastle that was mentioned; it was also Northern Ireland. The Prime Minister was quick off the mark there. However, the level of public sector economic activity in Northern Ireland is almost 27%—5.2% above the UK average—and the dependence on public sector jobs is perhaps greater there than in other parts of the UK. I say to Government Members that it is important that the private sector is increased before anything happens to the public sector. I want everyone to be aware that the impact will be great, as the hon. Lady has said.
I thank the hon. Gentleman for his intervention. He is absolutely correct that those two regions were identified by the Prime Minister as specific targets for cuts. Recent announcements have made it clear that the future is particularly distressing for regions such as mine and that of the hon. Gentleman.
I thank the hon. Gentleman for highlighting the fact that the Labour Government stood on a manifesto accepting that cuts were necessary to reduce the deficit. That seems to be forgotten on many occasions when I and my hon. Friends are accused of not having announced any cuts.
Does my hon. Friend agree that we have seen a significant driver coming through—the 11% increase in the tax take this April-May compared with April-May last year—because of the growth in the economy? Does she also agree that growth is the best way to get the country out of recession and into growth, and to cut the deficit?
Absolutely, and I thank my hon. Friend for his intervention. It is notable that, since the emergency Budget that we debated yesterday was announced, the growth forecasts have reduced as a result of that Budget.
I return to the subject that I want to address today: the impact of the Budget on the north-east. Approximately 266,000 people in the north-east are employed as public servants—almost one in three workers—and many of those individuals, and the families they support, live in Newcastle and the surrounding areas. Large-scale redundancies in the public sector, which are now certain, will be disastrous for the city’s economy, which is, in turn, an engine for regional growth. The likely result will be lasting unemployment and an enforced exodus of talented professionals from what, during the past decade, has been a rapidly emerging region.
That is not the full picture, however. The public sector is so economically vital that it is not hard to imagine the impact of large-scale redundancies on private firms in the region. Simply throwing public sector workers out of their jobs will mean not only a loss of direct employment, but the devastation of private firms. More than in other areas of the country, such firms in my region depend upon revenue from public sector organisations.
That is directly linked to my next point, which is my deeply held opposition to the abolition of my region’s very popular and highly respected development agency, One NorthEast, which is located in my constituency on Newburn Riverside park. Owing to massive cuts in Government spending on regional development, combined with the Liberal-Conservative pledge to transfer RDAs’ functions to local authorities, the Government have announced, after damaging indecision and backtracking, that One NorthEast is to be abolished. Its closure will remove a vital local driver for recovery and eliminate a key means of building a stronger local private economy.
In March, the National Audit Office published its report on RDAs and concluded that £3.30 had been generated for every pound of Government funding given to them. A year ago, another investigation into RDA effectiveness, this time carried out by PricewaterhouseCoopers, showed that for every public pound invested there had been a return of £4.50 to the private sector. The ill-thought-out shunting and transfer of some of the RDAs’ roles—I presume not all of them—to under-resourced local authorities will be totally unworkable.
The hon. Lady cites the PricewaterhouseCoopers report, but the Institute of Directors also produced a report on the RDAs, which showed that only 18% of directors thought that they made a contribution, and 60% thought that development would have taken place in the regions without the RDAs being in place. To cite selectively from PricewaterhouseCoopers is slightly misleading.
I thank the hon. Gentleman for his intervention, because it highlights my point that these issues cannot be examined as a whole across the UK. The situation in each region is incredibly different and unique, which is why the RDAs were so successful in particular parts of the country and why the removal of the north-east’s RDA, which is successful and which business leaders across the region accept as a major driving force in the private economy, is a travesty.
My hon. Friend makes a very important point. Does she agree that regions are different, and that the previous Government used the movement of public sector jobs to regions such as the north-east and the north-west partly to save costs to the public purse?
Within the context of the debate about the evidence basis for RDAs and the benefit that they give, does my hon. Friend agree that financial information about the amount of money that goes in and comes out of the public purse is a much better guide than ideological points about how people feel about regional development agencies?
I absolutely agree, and my hon. Friend makes his point very well indeed.
A large number of my constituents lack any formal educational qualifications. Such individuals, should they be already unemployed or, as is likely to happen in my region, should they be made redundant, will be hugely affected by the cuts announced to the DWP’s job creation and training schemes, which have been widely debated today. They will no longer have the necessary help to prepare themselves to take advantage of new opportunities arising from the eventual recovery, and that is especially concerning in relation to youth unemployment. The future jobs fund has been abandoned, and the £1,000 incentive for businesses to employ a person who has been unemployed for six months or more has been scrapped. Extended periods of unemployment and a lack of appropriate training mean that those vulnerable groups will be dangerously ill equipped to enter the future jobs market. The decision to ask the Department for Education to make huge cuts is also disproportionately damaging. It is clear that, because only 10,000 of the promised 20,000 extra university places are now available, access to higher education for state school pupils will inevitably be restricted.
I am listening to the hon. Lady with great interest. She is clearly making a passionate case, expressing her genuine concerns about the cuts, but she mentioned ideological cuts. Does she really have no ideological problem with the debt interest that this county pays out every year potentially rising to as much as £70 billion? That would mean £70 billion not spent on public services and a debt for the next generation in the north-east and elsewhere to repay.
I do not have an ideological concern about the debt that is the current deficit, although I share the concern of all Labour Members that the deficit needs to be reduced. Fundamentally, however, it needs to be reduced in a way that does not throw thousands or millions of people on to the scrap heap, in the way that they were left there in the 1980s. I know that this is not taken very seriously by Government Members, but generations of people were left on the scrap heap.
I think I need to make progress.
Finally, some additional cuts have been announced and, although they have perhaps not been talked about today, I believe that they will fundamentally affect future jobs and the ability of people in the north-east to take them up. I refer to the cuts to child tax credits. Although the Liberal-Conservative Government have announced a £150 increase in the per-child element of child tax credits, that is nothing but a fig leaf for the abolition not only of the Sure Start maternity grant, worth £500, but of the baby addition to the child tax credit and the health in pregnancy grant, as well as for the decision to reject Labour’s proposals for a £4 a week supplement—a toddler tax—for each child.
For people on low incomes, tax credits are fundamental to empowering families to support their children and ensure that they get the best start in life, thereby breaking the cycles of deprivation that we see in so many parts of the country, particularly the north-east. As the mother of two small children, I know from experience how vital financial help can be. To be honest, I have been stunned by the callous manner in which that help has simply been abandoned by the Liberal-Conservative Government. Some £3 billion-worth of cuts have been made to support for families. Such decisions will be devastating for parents, preventing them from getting out to work or creating either a work environment or the capacity to work in their households, thereby breaking the cycle of deprivation that can so often take hold in workless households.
Joined to the unfair rise in VAT—a tax that punishes the poor—those cuts will have an impact on unemployment and child poverty in my region, thereby causing further unemployment in the long term. The national economy remains weak, especially in areas of the country such as Newcastle, where large numbers of children, unemployed people and low-income families are already struggling and will struggle more under this Budget. They are the people who must be protected and not punished by the Government’s policies during this difficult time.
Order. Before I call the next speaker, I remind the House that I asked hon. Members to limit the amount of time they took. Can we try to stick to 10 minutes? Hon. Members should please not take as many interventions, because otherwise people will miss out. I did not want to turn the clock on, but I am getting more tempted by the minute.
I rise to speak in this debate concerned about youth unemployment and job prospects, and I do so as we discover that the number of 18 to 24-year-olds not in employment, education or training has reached an all-time high of 837,000. That is 17.6% of our 18 to 24-year-olds neither earning nor learning.
The previous Government did not meet their apprenticeship targets, but they did leave us with a record deficit. That is a disastrous combination for the next Government not only to pick up but to clear up. We have unfulfilled targets, sluggish economic growth and a record deficit—a triangular tragedy for youth and unemployment. In my patch of Wirral West, we have some of the worst unemployment rates for 16 to 24-year-olds in the north-west. We were ranked seventh worst of the 39 local authorities in September 2009. The number of my constituents claiming jobseeker’s allowance has risen in the last year, and we are also below the national average for 16 and 17-year-olds in education and work- based learning. It is particularly worrying that those who are not in education or employment now will continue along that path, and it is vital that the Government put every effort into getting young people into work and training as soon as possible after they leave the compulsory education system.
The cost to the economy of youth unemployment is not insignificant. According to estimates, each of these so-called NEETs who drop out of school at 16 will cost the taxpayer almost £97,000 over their lifetime, when their unemployment benefits and their inability to pay taxes are taken into account. We have heard a lot about the economy today, and about what unemployment costs the country, but I want to look beyond the economics of the situation to the well-being of each individual, and to their physical and mental health, their self-esteem and their morale. To stare into an unknown expanse of time, not knowing how it will be filled or paid for, erodes the soul and destroys the spirit. That suffering cannot be quantified, but it seeps into the common unconscious of our nation.
We already have some of the highest levels of youth unemployment in Europe, and we need to be creative about how we are going to get out of that situation. We need to think of a new way forward. I like to think that there is light at the end of the tunnel, and I would like to bring to the attention of the House the Wirral Apprentice programme, which is leading the way in the apprenticeships field. It has created more than 100 new opportunities for young people by offering private sector organisations an 18-month wage subsidy for a minimum two-year apprenticeship. Working with the National Apprenticeship Service, the Wirral Apprentice scheme is delivered by Wirral council’s children and young people’s department and provides a dedicated member of staff to support each business that takes part. It has been hugely successful, and it is now in its second year.
The Wirral Apprentice scheme is heavily oversubscribed, however. Last year, more than 1,000 people submitted 3,117 applications but fewer than 150 businesses took part. It does not take a genius to see that many people will be left without an apprenticeship. The scheme is oversubscribed and under-resourced. Such oversubscription is not specific to Wirral or the north-west; it is to be found throughout the whole country, and we need to look at what we are going to do about it.
The Government are planning to get best value for money. They want to increase the apprenticeship scheme across the country by 50,000, and they are planning to put a significant amount of money into it. That is what we need to do. We need to look at places where the apprenticeship scheme is working. As I have said, however, the scheme is oversubscribed and under-resourced and we need to look at that as well. Perhaps the hon. Lady and I can do that together with the Government. The scheme is working, but we need to expand it so that more people in Wirral, the north-west and the rest of the country can be fulfilled.
As the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes) recently said:
“Demand for apprenticeship places is growing and one of our priorities is to encourage more employers to participate. Apprenticeships are both a route to key competences for employees and a vital way to help employers”.
I should like to extend an invitation to the Minister or the Secretary of State to come to Wirral to see how the scheme is working, and also to use what limited funds we have put aside to extend apprenticeship schemes. We do not need a new generation of our youth not knowing how to fill their time or how to pay their way.
It is a great pleasure to speak from the Back Benches under your chairmanship, Mr Deputy Speaker.
I hope that all of us in the House share a passionate commitment to what we might generally call human dignity. When we think about human dignity and where it comes from, we think of the component of family and love, and of how beneficial education and nurturing are as the centre of that human dignity. I think we would all agree, too, that for very many people purpose in life comes from employment, and in particular from skilled employment. I hope that all of us can agree on that basic principle.
Listening to what has been said this afternoon, I have reflected on my memory of standing at a bus shelter in Tottenham high road as an 18-year-old, wearing a suit a little cheaper than the one that I am wearing today and with a big Afro—looking a bit like the Michael Jackson figure before all the plastic surgery—and being approached by other people in the neighbourhood who imagined that I was there for one of two reasons: either I was on my way to the local magistrates court, or I was on my way to church. That was the context in which wearing a suit was seen in a community like that, back in the late 1980s and early 1990s. The dignity of work was something not experienced by far too many young people in that community.
In the 1980s, unemployment reached 20% and, in some parts of the community, 40%. When we came to power in 1997, it was at a record 28% in the constituency of Tottenham. Tottenham has the highest unemployment in London, but today the figure stands at just under 11%. This is paradoxical, but I sincerely wish the Government well in ensuring that we do not see another generation of, in particular, young people left floundering, feckless, restless and workless in communities like those that we saw before.
What concerns me about the Government’s policy is their ideological commitment to slashing the deficit so quickly. They seem to imagine that it is possible to take £113 billion out of the economy by means of cuts, and that if they cut the public sector, in a short space of time the private sector will move in to provide the necessary jobs. I have seen it done before; it did not work then, and I am not convinced that it will work now. I ask the Government to think again.
Many of us who are in the Chamber must remember the old youth training scheme—the YTS—run by the Manpower Services Commission. I recall that 58% of those on the scheme left before time, and that 50% of those who stayed ended up with no qualifications and no employment at all. It became a joke scheme, not just in this country but internationally. When I hear about the Work programme that will be presented to the House in a few months’ time, it has the imprint of the old YTS scheme. When I am asked to believe passionately in the 50,000 apprenticeships that the Government claim they will provide, I recall that this is the same party that left us with 67,000 apprenticeships in the entire country when they left office last time. We built the number of apprenticeships back up to 250,000, and it was hard because persuading the private sector to offer those apprenticeships took considerable effort.
When the Minister winds up, perhaps she can tell us how many apprenticeships the Government have been able to encourage the private sector to provide since the announcement of the 50,000. By what date will the 50,000 be provided? So far, I have seen only one apprenticeship, and that is the Chief Secretary to the Treasury. I look forward to the numbers that will join him, and to some of my constituents being able to take up these apprenticeships.
There are constituencies where, historically, the private sector has not been present as it has in other areas. My constituency is certainly one of those. Most of my constituents, since the beginning of the welfare state, have been employed in the public and voluntary sectors. That is where they have always looked for employment and I say, with no shame, that because of historic discrimination black and ethnic minority people in this country have always looked to the public sector. Through the race relations legislation in the 1970s, we brought the public sector into the frame to ensure that employment, so they have always looked to the public sector—the very public sector that is now being slashed.
The slashing of the public sector sits alongside the Conservatives’ proposals on higher education, which are a double whammy. Higher education is a key sector for economic growth, but it is not ring-fenced or protected. It is outside the commitments that the Government have made on health and schools, and it will see its budget cut by up to 40% in the spending review to come. One part of the coalition is committed to the abolition of fees and the other is probably committed to a marketplace in fees. The likely result is a quagmire, a gap that will not be filled, and the issue will be kicked into the long grass. That means that universities will not get the money and that the expansion we have seen in constituencies such as mine will not continue.
That is the outlook for higher education. We are unlikely to see a growth in apprenticeships—we do not know the time frame or how many are likely to be created. We also see the scrapping of the future jobs fund that was a buffer and an ideological commitment that we must stand by on this side of the House. We borrowed £1 billion to create the future jobs fund, working with the public and voluntary sector, to ensure that we did not see another wasted generation. We believed that that commitment to young people would mean growth in our economy—that it would come good. We believed that because we had seen the evidence, not least from after the war when we built the NHS. We saw the evidence in the new deal that was set up by Roosevelt in much harder times in the US. That was our commitment to young people and, in the Government’s first few days in office, it is gone. There will be a reduction in employment in constituencies like mine, and there is a real prospect that the 1980s and 1990s will visit our communities again.
I shall end on a tough point that I believe with conviction. Very sadly, in parts of our communities in London, there are young people who would pick up a knife and who have experienced really chaotic lives. Their parents are the same age as me, and they are precisely the people who were failed previously. That is the social consequence of this ideological mistake that the Government are set on. I ask them to think again.
I shall keep my speech brief, Mr Deputy Speaker, as instructed.
One key element of our response to the recession and the pressing need to create jobs has to be a recognition of the value of the green economy. I think that more or less all of us now accept that it would be a mistake to try and recreate the conditions that brought us the crisis in the first place, but we have an opportunity to raise from the wreck of an economy built on housing bubbles, uncontrolled public spending and financial services an alternative that is both stable and sustainable.
Whether or not we are concerned about climate change, it is worth recognising that clean technology is an emerging global market that is expected to be worth trillions of dollars in the coming decades. In fact, that market globally is already worth hundreds of billions of dollars. This is a massive opportunity for job creation, by any standards, and Britain should be at the forefront, but unfortunately we have just a 5% stake in those clean companies.
We should be a leader in innovation: we are not, and in the past decade we have seen virtually no sign of a coherent programme. We have seen no real investment in carbon capture and storage—
I thank the hon. Gentleman for that intervention. Times change: the case now for clean coal has been renewed on the back of emerging evidence for climate change. If he does not mind, I will not go back 25 years, but I shall continue with a very brief description of what I regard as a huge failure over the past 10 years.
I mentioned carbon capture and storage, but there have been no effective incentives for home owners or organisations in the commercial sector to pursue energy efficiency. There have been virtually no incentives to develop renewable energy: as a result, we have seen virtually no progress over the last 13 years.
The CBI said last year that it is politics and policy, and not the recession, that have prevented green investment in the UK, and it pleaded with the Government to just “get on with it”. When Jonathon Porritt stepped down after nine years as the chair of the Sustainable Development Commission he also accused the Government of gross failure. He added, sarcastically, that the UK had become
“a world leader in green rhetoric.”
We should broaden our economic base to include more green technologies and more engineering and high-value manufacturing. We need to reconfigure our energy systems and find a way to wean ourselves off our dependence on imported hydrocarbons. That dependence is dangerous environmentally, economically and politically. We need to turn Britain into a world leader in green innovation, and we have the chance to do that now. In my view, the existing commitments of the coalition Government will set us absolutely on the right path
Paul King, chief executive of the UK Green Building Council, described the green deal as follows:
“This is a bold and welcome move. The biggest barrier to low carbon refurbishment—the upfront cost—is set to fall. Pay As You Save is a radical scheme, which could”
“at least 100,000 new jobs, saving money and conserving energy.”
The green deal is just one initiative, as the Chancellor has announced plans to create a green investment bank to facilitate investment from the private sector in new clean-energy technology companies. In addition to that, we have plans to create a number of large-scale marine energy parks. It is extraordinary that this country has 14,000 miles of coastline, yet we have barely begun to tap this extraordinarily valuable resource. We have plans—indeed, we have a commitment—to roll out smart meters and the feed-in tariff. If the example that Germany has shown us is to be believed, the feed-in tariff will lead to a revolution in decentralised energy and to huge job creation.
We have plans to lay out a national recharging network. It will trigger a shift, which we absolutely need, from the traditional, conventional car to electric vehicles and hybrid plug-ins. I realise that time is short, and I could cite endless examples of Government initiatives that will foster the shift we are going to see. At every stage of the shift, we will see huge opportunities for job creation and wealth creation, and we need to tap into those.
In green policies, as in most policies, the most powerful role the state can play is not to dictate or direct, but to empower. Instead of introducing a mind-numbing array of quangos, conflicting initiatives and schemes, all aimed at micro-managing our way towards a low-carbon future, we need to establish a clear framework, set the signals and let the market deliver. In truth, that is our only option. We cannot rely on public money because, as we all know, there is none. Instead, we have to find ways of ensuring that existing money flows in a new direction and if we are successful, we will prosper on the back of an economic recovery that might last. We will have done the right thing and we will be rewarded for having done so.
Historically, Birmingham and the midlands was the industrial heartland of Britain. In the 1970s, the regional economy outperformed the national average, but in the 1980s Birmingham and the midlands was blitzed by the effects of the Conservative Government and 200,000 people lost their jobs, overwhelmingly in manufacturing. A proud region paid a terrible price. Sadly, decline has continued since, and the area has gone from being at the top of the league to the 7th best region on economic performance. If my region had matched the UK average on output per head, the regional economy would have benefited by an additional £16.5 billion.
The human cost of that long-term decline starting in the 1980s has been immense. Four of the five most deprived wards in Britain are in Birmingham, 10 of the 20 most deprived wards in Britain are in the midlands and the constituency I am proud to represent—Birmingham, Erdington—is the sixth most deprived in Britain. The statistics are stark and so, too, is the appalling human price that I see day in, day out in my constituency. Birmingham and Erdington both believe in a tradition of self-help, but the problems we face are incapable of resolution, other than through the role of good government. The role of government is not to wash its hands of responsibility for the unemployed, because that is a Pontius Pilate approach towards those who need the help of government.
I wish to focus on Advantage West Midlands, which is the most successful regional development agency in Britain; the National Audit Office’s recent report gave it a rating of four out of four, and for every £1 of public money spent, the regional economy benefits by £8.14. AWM is a constantly improving RDA with an outstanding track record. Sir Rod Eddington’s transport study said that its work on transport infrastructure was the best in Britain. The Treasury review of June 2009 said that AWM was the most cost-effective RDA in Britain. I have seen at first hand the power of its work. I remember that when Rover was saved from closure in 2000, it was thanks to what AWM did in diversifying the supply base that when Rover tragically went under in 2005, tens of thousands of jobs that would have gone in the supply chain in small and medium-sized enterprises were preserved. I, too, experienced that terrible day when 5,000 workers lost their jobs at Longbridge. Advantage West Midlands swung into action immediately, and in nine months, by way of effective programmes, 4,000 of those 5,000 workers had been found alternative employment.
The transformational change has been remarkable. The development of the Longbridge innovation centre and Bournville college has meant 10,000 new jobs and 1,450 new homes. The development of our regional infrastructure, with the New Street Gateway, the single-biggest investment by any regional development agency, involves £100 million of public money, but it levered in £2 billion of private sector investment, with enormous economic benefits, including 10,000 more jobs.
There have also been solutions for business. Since 2002, 5,000 manufacturing companies, overwhelmingly small and medium-sized enterprises, have benefited from the world-class advice of the Manufacturing Advisory Service, adding £150 million to their turnover. It is little wonder, therefore, that the midlands business community strongly supports Advantage West Midlands. The voice of the business community, Business Voice WM, having consulted its members in June, said to the Government, “Do not abolish the regional development agency. An intelligent debate about change and reform? Perhaps. But do not abolish the regional development agency.”
I shall come in a moment to why it is important to have a regional structure by way of co-ordinating local authorities, because sometimes the competing views and demands of local authorities do not necessarily work in the best interests of the regional economy.
I shall provide a practical example of why, right now, we need an effective regional development agency. There are 150,000 people working in the automotive cluster in the midlands—from the major manufacturers such as Jaguar and its plant in my constituency, through the machine tool, logistics and component companies, to the universities and research and development institutes. All work together in an effective cluster, with the regional development agency bringing together local authorities and the private sector to work in partnership and galvanise and consolidate that which is absolutely key to the success of our regional economy.
Is there not an arbitrary nature to the structure of regional development agencies and the areas they cover? That automotive cluster would not include, for example, Cowley in Oxford, which is part of the south-east region. My constituency is also in that region, which covers an area stretching from Dover up to Oxford and Milton Keynes. Some of the structures do not necessarily fit the economic realities of local areas.
I accept that, and I am very familiar with Cowley because I have been to the plant there many times. However, if we want that automotive cluster to succeed, there is a simple reality to acknowledge. I am in discussions right now with Jaguar Land Rover about its decisions for the future. It says that the power and effectiveness of that automotive cluster is absolutely vital for its organisation, and in turn Advantage West Midlands is crucial to the cluster’s success.
Why destroy a success story and replace it with—what? I am all in favour of an intelligent debate about, for example, how one might have sub-regional arrangements in the midlands. Crucially, however, if we throw away the advantage of that regional, strategic approach, with it will go the co-ordination and initiative, working with strong business leadership, that has been absolutely key.
We need the Government to clarify their approach to the issue. I hope that during the debate the Minister will respond to that point, because there are mixed messages: on the one hand, the Secretary of State for Business, Innovation and Skills says that he is open-minded about the retention of a strong regional structure if that is the wish of the midlands; on the other hand, the Secretary of State for Communities and Local Government has taken an ideological position, which says, “We will wind up the RDA and not have a strategic approach, come what may.” We need clarity. I am in dialogue, right now, with local authorities, with the business community, and with many others who want that intelligent debate on what kind of structure we have for the future. Are the Government open to the retention of a strong regional strategy, which is what the midlands wants?
We have heard it said that according to the Treasury’s leaked documents, as yet unpublished, 1.3 million jobs will go, while the hope is to create 2.5 million new jobs. With the greatest respect, if we look at the history of job creation in Britain, believing that, in the current climate, with the savage cuts being made to public investment, 2.5 million jobs are going to flourish in the private sector is as respectable a view as that of the economist in the 1930s who argued that what caused the recession was sunspots that interfered with the mechanisms of the market and the minds of the bankers in the marketplace. The simple reality is that all informed sources, including the CIPD, have said, “There’s not a hope in hell.”
We look to the Government to respond constructively to the dialogue that we want on the future of Advantage West Midlands. We also want them to think again about some of the decisions that have been made: the abolition of the future jobs fund; the cutting back of the working neighbourhoods fund, with £4 million of cuts in Birmingham, the largest cut anywhere in Britain, despite the deprivation that we face; the cutting back of Connexions, with £2.7 million of cuts in Birmingham, the second largest cut in Britain; and the impact of the jobs tax—the VAT increase.
All this from a marriage of convenience—two parties that have come together. On the one hand, there is a party with a once great progressive tradition, the party of Lloyd George, Beveridge and Keynes; on the other, there is a Conservative party that once had a different tradition, that of Harold Macmillan, who, scarred by the memories of the 1930s, said, “Never again.” Sadly, in the 1980s the Conservative party, in the immortal words of Julian Critchley, got taken over by the garagistes, and in the 21st century it has been taken over by the bankers. Those parties are abandoning their own traditions whereby they remember the bitter period of the 1930s and know that if we walk away from the unemployed, this country pays a terrible price. The Con-Dem alliance may do that; this Labour party never will.
I shall try to be brief, as I have been told, and I will certainly keep my comments shorter than some of the contributions made last night.
I am grateful for the opportunity to contribute to this debate on support for the numerous measures already taken by the new Government to assist the unemployed and encourage the creation of new jobs, particularly in the private sector. Let us be clear: we face an extremely difficult employment situation. The dire economic recession has seen unemployment jump to just under 2.5 million, while the number of inactive people of working age has increased to a record high of 8.2 million. To put it simply, we cannot continue to sustain such economic inactivity.
A new approach is required, and key to any lasting Government support will be the creation of an economic environment in which private enterprise can compete and invest with confidence. I therefore welcome many of the measures in the recent emergency Budget which are designed to do just that. For example, lowering corporation tax to 20% will attract new business investment to the UK while giving us the lowest rate of this form of taxation in the G7. Meanwhile, combining that move with the small business rate relief will benefit more than 500,000 businesses up and down the country. If we are serious about driving down unemployment, we must welcome such moves to drive up private sector competitiveness.
In addition, if we are to achieve true economic recovery, we must ensure that those areas of the country whose economies were unbalanced even before the recession receive additional focus and Government support in the recovery. The sad truth is that regional disparities grew under the Labour Government. In my region of Yorkshire and the Humber, workplace-based gross value added per head increased by only 18.5% between 1997 and 2008, compared with a 37% increase in London in the same period. Indeed, all northern cities experienced slower rates of economic growth than the rest of the UK in the past decade. Frankly, if the Labour Government’s aim was to support the economies of the north, they failed. In contrast, the new Government have already announced that a new £1 billion regional growth fund will be set up in 2011 to help those areas that will be especially affected by reductions in public spending.
Another unfortunate aspect of Labour’s legacy was to leave areas completely dependent on public sector employment. That cannot be allowed to happen again, and I urge the new Government to do all they can to encourage the transition to private sector-led investment and growth locally, regionally and nationally. Empowering local communities will involve empowering individual business owners. By providing small and medium-sized businesses outside London, the south-east and the east of England with tax relief on national insurance contributions, the Government are indeed encouraging small businesses to employ and expand in the next three years, particularly in the neglected areas I discussed.
In addition to providing support to business and encouraging private sector-led employment and growth, it is also necessary for the Government to provide support for those who find themselves unemployed. Measures must be taken to ensure that a negative cycle of dependency does not take hold in the areas that suffer the most unemployment. Support must be targeted and streamlined, because for too long, the previous Government’s various employment schemes were overly complicated, frustratingly bureaucratic and woefully inefficient. Owing to the number of schemes, people slipped through the net and were lost in the system or not contacted. The new Government’s Work programme needs to be accessible and straightforward, so that anyone who finds themselves unemployed can get the help and advice they need swiftly and effortlessly. Support for the unemployed must be personal, local and flexible, and it must put the individual first.
Launching the Work programme, delivering personalised support to the unemployed, cutting corporation tax and introducing regional growth funds are together the ingredients for a far more business-friendly environment in which our economic recovery can take place. The recovery, however, is far from secure, and it is essential that the Government continue to address unemployment and job creation with the same vigour and determination as they have shown to date. I strongly believe that the initial measures taken by the coalition are setting us on the right course. However, those policies need to be implemented swiftly and reviewed regularly if we are to have progress on the ground.
I urge the Government boldly to push forward on this crucial matter. We have inherited a horrendous financial situation, and only the most robust and ambitious policies will get us back on the road of rising employment, job creation, economic stability and long-term growth.
I want to talk about jobs in south Wales, and the future jobs fund in particular. I do not believe the Government’s Budget will help boost employment in my constituency and in Wales. Instead, there is a great danger of the Budget reducing growth and increasing unemployment. Jobs are important in Blaenau Gwent. My constituency has the high unemployment rate of almost 12%. We used to rely on coal and steel, but those days are gone; now we need to develop a more balanced economy. We need green jobs, digital jobs and better services. We need to help those who have been unemployed back into work. We need the future jobs fund or a similar employment initiative, and, most importantly, we need it now.
Before I elaborate on my argument, however, I want to talk about an important event that took place in Blaenau Gwent last week. On Monday 28 June we commemorated the 50th anniversary of the Six Bells mining disaster. That commemoration was a tremendous event; thousands were there, including many relatives of the men killed that day. I met a Mrs Evans, a former senior nursing officer of the National Coal Board in Wales, who said that, apart from Aberfan, helping attend to the bodies taken from the pit that night was the worst evening of her career. Wayne Thomas, secretary of the south Wales National Union of Mineworkers told me that the wonderful steel and stone memorial is the biggest mines memorial in the country. I encourage Members to visit the Six Bells memorial, as it is a terrific reminder of the importance of coal and how it has sometimes left a tragic mark on our communities. It is a wonderful, evocative and powerful piece of art, and it is also a reminder that while coal is still part of the south Wales valleys, it will never again be the big employer it once was.
I had hoped that the Minister would talk today about policy plans that I would have found encouraging for Blaenau Gwent, but I have been disappointed by what I have heard. For me, the Government’s plans must include those that will deliver the programme. While Ministers have been quick to attack the future jobs fund, many important lessons have been learned from that project. That is certainly the case in Blaenau Gwent: that important initiative has been managed by our borough council and it has led to our streets being cleaner, our environment being cleaned up and our youngsters being kept out of trouble. Furthermore, the local people given work include redundant workers, those who find it hard to keep down a job and young teenage mums and dads. All those are groups that I would hope the Government would want to support back into employment and, in Blaenau Gwent, more than 500 people have, or will have, benefited from this initiative in recent months.
I must also say that I believe the Government have made a big mistake with their austerity Budget. At this difficult time, a better judgment would be to recognise that the best way to boost employment is to grow the economy, not cut it back. In south Wales, it is likely that the Government will find that the private sector is too weak to pick up the slack after Con-Dem cuts in the public sector. In the Financial Times last Wednesday it was reported that the private sector is not ready to employ the hundreds of thousands of public sector workers likely to be laid off as a result of Budget cuts. There was a study of 12 companies employing more than 375,000 people in various sectors, including household names like Morrisons, Jaguar, the Co-op and Arriva, and those companies said they had no plans to grow as the state shrinks.
Several companies have said that the financial situation is still too uncertain to consider recruiting. Experts such as Tim Leunig of the London School of Economics believe the economy is too frail for the private sector to grow and absorb jobs in the way it has in the past. That fatally undermines the Government’s argument. Mr Leunig has said:
“If the government thinks the private sector is automatically going to step into the gap left by the public sector, it is sadly mistaken.”
While there may be regional growth in the south-east, and the home counties may prosper early as we come out of recession, we need investment in Wales through the Assembly Government and local councils. We do not need a hope-and-a-prayer policy that somehow assumes the private sector will ride to the rescue, as all our experience in recent years has been that that will not happen.
I understand that the Government’s programme is not set to start until next summer. Also, it appears to include no guarantees that everyone will get work or training regardless of how hard to help they may be. Given what we know so far, it seems that this is an untested experiment on a large scale and carries considerable risk to the country and constituencies such as mine.
All this compares badly with Labour’s employment record. There are about half the number of young people signing on now than in the recessions under the Tories. Long-term youth unemployment is under a third of what it was when Labour came into office. Furthermore, because of Labour’s welfare reforms, investment in child care and family-friendly working policies, 365,000 more lone parents are in work now than in 1997. That good and important record will be undermined by the Government’s Budget.
Losing the future jobs fund is a mistake. It looks as though it will be followed by another initiative in the medium term, but in the meantime we will lose important momentum and delivery, and hundreds, if not thousands, of people will miss out. The Government should listen now to the agencies that are doing the hard yards on job delivery. The indications are that employment growth in the economy is still in the balance and that there is a real danger of much higher unemployment in the months ahead. I am grateful that the Under-Secretary of State for Wales has agreed to come to Blaenau Gwent in the coming months to talk about employment. That is generous of him, but if he is to make good on the Prime Minister’s recent fine words about this fantastic work programme, he has much to deliver on. In the meantime, some very good work and much good will is being squandered.
Thank you for letting me join this important debate, Mr Deputy Speaker. I want to pick up where my hon. Friend the Member for North East Hertfordshire (Mr Heald) left off. He talked about the lessons that must be learned from the past regarding welfare-to-work programmes. It is a great pity that Opposition Members will not join the Government parties in what should be one of the most important challenges—uniting to make sure that people in this country get the work and employment they need. Taking the bold and decisive action of creating a single Work programme that will streamline and focus help for all those who need to get into work is essential.
Taking action on employment is about creating a fairer society and social justice. Work is the way out of poverty and dependency, and it helps people to reach their potential. The gaps in our society have grown in the past 13 years, and nowhere more starkly can the consequences be seen than in health inequalities. The Marmot review which was published in February clearly demonstrates the links between the social and economic circumstances of people and their health. Key to closing the gap in average life expectancy is improving people’s educational and work opportunities. We need to create an enabling society that maximises individual and community potential. The benefits of reducing health inequalities are economic as well as social. The review states:
“The cost of health inequalities can be measured in human terms, years of life lost and years of active life lost; and in economic terms, by the cost to the economy of additional illness. If everyone in England had the same death rates as the most advantaged, people who are currently dying prematurely as a result of health inequalities would, in total, have enjoyed between 1.3 and 2.5 million extra years of life. They would, in addition, have had a further 2.8 million years free of limiting illness or disability. It is estimated that inequality in illness accounts for productivity losses of £31-33 billion per year, lost taxes and higher welfare payments in the range of £20-32 billion per year, and additional NHS healthcare costs associated with inequality are well in excess of £5.5 billion per year.”
The current time of financial austerity is an opportunity—a time to plan to do things differently. The welfare state and the NHS were born in a time of austerity after the war. Today, we need to do the same and to have the same courage and determination to ensure the well-being of future generations.
Thank you, Mr Deputy Speaker, for calling me to speak in this debate, which is important not only for the country but for my constituency. When we face difficult economic times, the primary task of Government is to protect existing jobs and to provide all possible assistance to get people who are out of work back into employment. If not tackled, unemployment can have long-term effects on society. It destroys communities, ruins lives and tears the very heart and fabric of society.
I was brought up in the south Wales valleys and I well remember my first day at secondary school in 1987. I remember a teacher saying to me, “I’ve one tip for you, boy.” I said, “What’s that?” He said, “Have no ambition, because nobody from round here ever amounts to anything. If you’re lucky, you’ll have a job in a factory—if there are any factories left when you leave school—but most probably you’ll be signing on.” For me, that summed up the attitude of the Tory Government in the 1980s, and I have not come to this place to see that happen ever again.
I must tell the House that it has been only in the past few years that our communities in the valleys have begun to recover, with the confidence that new jobs bring. Without the right Government support to encourage job creation, we risk repeating the mistakes of the past. To ensure we develop the right environment for new jobs to be created, it is vital that we maintain growth.
The Government have been keen to express sympathy for those facing unemployment. For Ministers, describing unemployment as a “tragedy” and mentioning helping the “forgotten millions” of unemployed workers into jobs might come easy, but it is action that counts. In contrast to those sentiments, the Government’s main labour market policy so far has been to cut support for unemployed people. The Government claim that the measures they are taking are necessary—after all, their tough words about getting people off benefits and into work will be meaningless if there are no jobs to get people into.
To create real jobs we need real investment across the country. Getting unemployment down requires two things: businesses must offer more jobs and the unemployed must have the necessary skills to enable them to take the new jobs as they become available. That means that the Government must invest in people and create the environment in which the private sector can invest to create jobs. If we cut too quickly, we will leave no room for the Government to work with the private sector and make job creation possible. We need a real partnership between Government and the private sector. That requires the Government to spend money to create jobs. The question is how we can minimise job losses and prevent another lost generation in constituencies such as mine.
The Government believe that if they cut public sector employment and slash departmental spending, the private sector will ride to the rescue and fill the void. They seem to have forgotten, however, that many private sector jobs are dependent on Government contracts. If departmental spending is slashed, those contracts are vulnerable, as are the jobs that depend on them. If we do not think seriously about the scale of cuts, there is a real risk that they will remove vital support for private sector industry and, crucially, for private sector jobs. Equally, however, it is vital that as companies develop, their employees’ sets of skills develop, too.
That is where Train to Gain has been so important. Across the country, 1.3 million people go to work every day without the skills that they need to do their jobs well. That affects productivity and limits how successful those employees can be. Often, though, employers are unwilling or unable to provide the extra training needed for their staff to realise their potential. It is only when the Government offer assistance that training opportunities can be realised and employees can fulfil their potential. It is therefore critical to our economic future that we invest in training and upskilling our people. In the US, 80% of people in work have been back in a training situation since leaving school. In Germany and Japan, the figure is 56%, but it is only 30% here. That is the measure of how far we still have to travel to improve training and opportunities for our people.
Train to Gain benefits both employers, by increasing the abilities of their workers, and employees, by giving them the skills they need to succeed. That in turn is good for the whole country and for our economic future. The Welsh Assembly Government—the only Labour-led Administration in the UK—have introduced ProAct, a progressive scheme that offers funding for employee training and a wage subsidy while the training is being undertaken. Companies are eligible for ProAct money only when they are on short-time working and when, without ProAct funding, the company would have to consider redundancies. ProAct not only keeps people employed when they might otherwise be made redundant but gives employees a wider skills base, meaning that companies can use quiet periods to upskill their staff. That is precisely the sort of thing that should be happening across the United Kingdom. It has a positive impact for employers, employees and the wider economy.
In addition, to help employers to keep people in work, the Government also need to help those who are currently out of work. It is particularly important that we get young people who have never been employed into their first jobs. That is why the young person’s guarantee and the future jobs fund were so crucial, yet that flagship policy has been scrapped.
The Government claim that their new Work programme will meet the needs of unemployed workers. However, there are several flaws to that argument. Nearly 2.5 million people are unemployed now, and the impact of the cuts is that less support will be available to them and any other people who lose their jobs over the next year. In addition, the Work programme is essentially replacing the flexible new deal initiative. The experience provided by the future jobs fund and the guarantees was in addition to new deal measures. So far, no details are available on the funding for the Work programme. It seems likely that, even when it is introduced, overall investment in tackling unemployment may fall.
At the end of March 2011, the future jobs funds will have funded more than 100,000 jobs, the majority of which will have gone to 18 to 24-year-olds who have been out of work for six months. Given that the Secretary of State for Work and Pensions has said that he wants to get young people off benefits and into work, it absolutely beggars belief that one of the first acts was to cut a scheme that does exactly that.
I should like to take this opportunity to point out to the Secretary of State that, if people are to be asked to travel to find work, it is vital that transport links are good enough to support them in doing so. In south Wales, there is no train link between Newport and Islwyn. Although there are plans to establish such a link by opening the Gaer junction, there is still no timetable for doing so. I ask the Government to ensure that that project goes ahead, so that the people of Islwyn and Blaenau Gwent can commute to work in Newport and the surrounding areas.
We should be striving for growth, but the Budget will mean lower growth and more unemployment. The Government are making the wrong decisions in all those areas, and it shows me that they believe, as they believed in the 1980s, that unemployment is a price worth paying to cut the deficit. [Hon. Members: “Oh!”] Yes, they think that unemployment is a price worth paying.
No, I am making progress.
Those of us who represent areas that lost out the last time that the Tories were in government know that the cost of unemployment is too high. I urge the Government to reconsider before they condemn areas such as mine to large-scale unemployment all over again.
There have been quite a lot of references to history in this debate. In the first few hours, which I sat through and enjoyed, many such references were made, including by the shadow Secretary of State for Work and Pensions, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), who said that she left school in the 1980s and that many of her friends became unemployed in the early ’80s. As I was born a decade earlier, I had a ringside seat in the decades that led to the 1980s. Throughout the ’60s and ’70s, various Labour Governments presided over truly disastrous industrial intervention policies.
I, too, come from Coventry, as does the hon. Member for Wakefield (Mary Creagh), who also contributed to the history lessons in the debate. She will remember the creation of British Leyland, the demise of our car industry, the massive subsidies that those Labour Governments poured into failing companies and failing industries, combined with marginal personal tax rates of up to 98%. In the end of course, as we all know, the country had to be rescued by the International Monetary Fund. That is what led to unemployment in the 1980s, not the Governments led by Margaret Thatcher.
A pattern developed during those previous Labour Governments, just as it has done in the past 13 years, and it results in the end in rising unemployment. Every Labour Government, I believe, have left office with unemployment higher than when they came to office. We must not forget that in a debate on unemployment. Unemployment among the young is greater now than it was in 1997. During the past five years there has been a 72% rise in my constituency of people on jobseeker’s allowance, more than a quarter of whom are between the ages of 18 and 24. Much has been said about the tragedy of unemployment among this age group with which I agree.
The previous Government inherited falling unemployment in 1997, and it steadily increased during the first decade of this century. We have been through a couple of economic cycles during that time, but historically unemployment is always greater when a Labour Government leave office than when they arrive.
Rising unemployment under Labour Governments is always followed by a lot of well-meaning interventions to try to support people back into work. That is a laudable aim, with which we all agree, but it leads, as it has during the past five or six years, to a confusing array of individual benefit programmes that create a flourishing array of different funding streams and agencies, and they grow like Topsy. They beget a flourishing cottage industry of providers, all of which make money out of the taxpayer in trying to deliver the same services. It is imperative that the Government simplify, as they are doing, the 12 support-for-work programmes. I congratulate the new team on the steps that they have taken to integrate everything into a single get-back-to-work programme.
I do not want to be wholly negative about the interventions under the previous Government. I was a governor of Stourbridge further education college in my constituency, and a good programme was developed with Westfield, the company that manages the retail centre, and it was known as the retail academy. It took long-term unemployed people, such as women who had left the workplace to have a family, who had not been able to get back into work and who had lost their confidence. They did not have to lose their benefits. The programme was a 9-to-5 commitment, and more than half of them managed to get proper long-term jobs in the retail sector. I would not want to imply that all the individual programmes were a waste of money—of course some of them helped, and I am sure that we will learn from them—but simplification and better co-ordination is key, as another example that I want to share with the House demonstrates.
A few weeks ago, like me, some Members will have visited the manufacturing insight conference that took place just off Westminster Hall. I was struck by the story of a managing director of a small business in Lincolnshire employing about 30 people who wanted to access training for her finance staff. They wanted NVQ level 2 finance training, but in order to qualify she had to guarantee that eight people from her workplace would attend the course. She did not have eight people who needed the course, but there was only one provider that she could approach, and it was subcontracted by another provider that had the contract with the college.
All these providers and subcontracted providers take a slice of taxpayers’ money, which is another reason why we must simplify and codify the work, so that just one company or social enterprise is charging the taxpayer a fee for delivering a much-needed service. Business needs support, but it knows, for the most part, what it needs to employ people, and we must give companies much more direct access to the funding. They should not have to go through all these multiple layers of provision, and they should not have to go through regional development agencies, Business Link and so on—they should be able to access the vital help much more easily.
Does my hon. Friend agree that laudable aims sometimes have perverse consequences? She will no doubt have come across people on the doorstep—usually women—who want to work more, but because of the extremely complex tax credit system built up by the former Government, it is simply not worth their while working. They therefore have an incentive to stay at home and remain on benefits, which cannot be right for them, their families or the wider community.
I thank my hon. Friend for that excellent intervention. It is absolutely true. We have to create a situation in which people do not fall off the face of a cliff when they lose their benefits overnight, as soon as they take on a job for not that many hours a week. It is a poverty trap—it traps the children as well as the parents—so we have to address that. He raises an important matter.
We have talked a lot in this debate about various Government support initiatives with which we will continue under the new simplified Work programme. However, let us not forget that what the private sector really needs is a vibrant economy. First and foremost, that is what drives jobs. It is not rocket science: we need an educated and skilled work force; controlled immigration, so that businesses are not tempted simply to seize on quickly available, easy and cheap labour—we really must stop that—a benefits system that does not discourage people from going into work, as my hon. Friend the Member for Peterborough (Mr Jackson) said; and, above all, a low tax and a light regulatory regime that encourages investment, rewards risk and stimulates growth. That is our golden vision on the Conservative Benches, that is what we will deliver over five years, and that is what the Budget was all about.
I am pleased to say that, despite the dire economic circumstances we are having to deal with, and the deficit reduction plan that has been forced upon us, we are making great headway in creating the conditions for business that I just described. I will conclude by running through some of the excellent programmes that will drive the recovery. For a start, the employers’ national insurance increase will be tempered and the planned increase on the employers’ side will not go ahead. Although the employees’ side will go ahead, it will be compensated for by the raising of the nil rate on personal tax allowances. We are also looking at tax relief for small businesses, and the first 10 members of staff in any business will be exempt from national insurance contributions.
Whenever I do a survey of businesses in Stourbridge, I find that one of the biggest complaints is the cost of business rates, and by increasing the small business rate relief for one year from October, we will help an estimated 500,000 small businesses. Furthermore, as a west midlands Member, I can say with great passion that the regional growth fund and the commitment of £1 billion will help areas and communities particularly affected by the spending reductions forced upon us. There are other regional policies designed to correct the balance as far as we can. The number of jobs in the boom years created in London, the south-east and the east rose at 10 times the rate of new jobs everywhere else in the economy. Having come from the west midlands, worked for many years in London and gone back to the west midlands, it is deeply striking to me how we have almost become two nations. I am therefore delighted that my right hon. Friend the Chancellor of the Exchequer is so committed to helping regions outside London, the south-east and the east.
Finally, I wish to acknowledge the words of the Secretary of State for Business, Innovation and Skills, who has said that
“the Government’s role is to create the right business environment and the right skills base. The Government cannot simply keep writing out cheques.”
That is the nub of how we propose to stimulate the recovery that this country so urgently needs.