House of Commons
Monday 10 September 2012
The House met at half-past Two o’clock
[Mr Speaker in the Chair]
Business before Questions
Committee of Selection
That Michael Fabricant, Mr Mark Francois and Angela Watkinson be discharged from the Committee of Selection and Mr David Evennett, Anne Milton and Mr John Randall be members of the Committee until the end of the current Session.—(Mr Randall.)
Oral Answers to Questions
Work and Pensions
The Secretary of State was asked—
Claimant Count (Harlow)
Figures are not available for flows from all benefits into work. Over the past six months, 3,330 people have left the claimant count in Harlow. Research suggests that, nationally, around two thirds of people leaving jobseeker’s allowance enter work.
I thank my hon. Friend for his reply and congratulate him on his appointment. Is he aware that the number of apprenticeships in Harlow has increased by 76%? Will he also note that we have a long way to go to increase employment in Harlow and therefore support the Harlow jobs fair that I am backing, which is supported by 100 local businesses, Harlow jobcentre and Seetec, and throw his weight behind it?
First, I thank my hon. Friend for his congratulations. We have a lot to do, but the numbers of people in work have increased since the Government came to office. I congratulate him on setting up the jobs fair and am delighted that Jobcentre Plus has worked with him to ensure that it is as effective as it can be so that it gets as many people in Harlow as possible into work.
Private Sector Employment
The latest figures, covering February to April 2012, show almost 23.5 million people employed in the private sector. That is a rise of 222,000 on the previous quarter and more than 900,000 since 2010.
What a splendid answer. Would the Minister like to increase that figure a little more? A company in my constituency has won an export order for 90 air conditioners to Egypt, but it is being blocked by red tape from the Foreign Office from carrying out the order. Could he provide some help and encouragement so that the order can happen?
My hon. Friend is absolutely right to highlight the need to rebalance the economy and to encourage more businesses to export. His comments will have been heard by our right hon. and hon. Friends in the Foreign Office and I shall ensure that they are made known to them directly.
The vast majority of people in part-time work actually want to work part time, but we need to find more ways to encourage people who want to work full time to do so and we will work very closely with Jobcentre Plus to ensure that those opportunities are available.
The private sector and private sector employment can be supported if there is a strong network of jobcentres. Will the Minister explain why his Department plans to close the Old Swan jobcentre in my constituency, making it harder for businesses to recruit workers?
The hon. Lady will be aware that the Old Swan jobcentre in her constituency was subject to an arson attack in May. The cases dealt with at the centre and the 63 members of staff working there have been moved to the West Derby jobcentre. I am confident that they can provide the same quality of service from there as they could from their previous centre.
3. What discussions he has had with officials in his Department on the long-term financial benefits to the Government of up-rating frozen expatriate pensions. (119816)
We estimate that the cost of uprating frozen pensions would be about £655 million a year. We believe that this is substantially in excess of any hypothetical savings arising from changed migration behaviour that might follow a change in policy on frozen pensions.
I am grateful to my hon. Friend for that answer. He will be aware of the Oxford Economics report published last year that suggested that the Government could make a net saving overall in relation to pensioners who wish to retire overseas but are incentivised not to do so by the frozen pension situation. He will also be aware of the grave injustice against British pensioners who have already retired overseas whose pensions have been frozen. Now that there appears to be an economic case for righting that historic wrong, will he undertake to reconsider the question so that those who retire overseas can enjoy the fruits of their work in this country?
I have indeed read that report, which I think is flawed on a number of grounds. To give an example, it assumes that if we uprate pensions, far more people will emigrate, and it counts savings from health and social care that might not materialise for 15 to 20 years while counting the costs up front. Our colleagues in the Treasury are not so far seeking policies with large costs for the current comprehensive spending review period that will give savings in 2030.
National Employment Savings Trust
NEST has been designed to complement, rather than replace, existing good-quality pension provision by offering low charges and simple choices to a target group of earners and employers. The Work and Pensions Committee has suggested that the NEST constraints might not be working in the way that was intended, potentially resulting in consumer detriment. We think that the evidence is not unequivocal and so are gathering further evidence to determine how to proceed.
I thank the Minister for that answer. He will be aware that for the past two decades we have had the highest pension charges in the OECD. Part of the solution for the next two decades is NEST, yet there are a number of restrictions on its operating model that are really quite onerous, owing to an onerous interpretation of state aid rules. Will he undertake to look at that again before auto-enrolment comes in, which could save many hundreds of thousands of people a lot of money?
It is important to stress that NEST is not an end in itself, but a means to an end, and the end is making sure that all employees under auto-enrolment have access to good-quality, low-cost pension provision, not necessarily through NEST, but because of the effect of NEST in the market. As things stand, in the early days of auto-enrolment, which starts in about 10 days’ time—I will therefore not change the rules right now—the early adopters of auto-enrolment are getting good-quality, low-cost pensions because there is huge competition, but we need to ensure that that remains the case.
We are, at the moment, continuing with Labour’s constraints on NEST, and the reason is that those constraints were designed to encourage NEST to focus on low-income savers. It has therefore innovated on, for example, products and on language and has been a good thing. If we think that NEST is unable to achieve the job it is there for, we will change the rules, but the early evidence does not support that.
The European Commission wants to end the habitual residence test. As a result, we would have to pay benefits to EU migrants as and when they arrive and they would not have to prove that they have been here, are working and have a residence. I believe that that is fundamentally wrong, as do the Government. The habitual residence test is vital to protect our benefits system and to stop such benefit tourism. I also do not believe that the EU has any rights in that area, and we are working with other countries that feel much the same.
I thank my right hon. Friend for that answer. Does he agree that any measures that encourage benefit tourism place an intolerable burden on counties, such as ours, that provide generous welfare provision and that we need an agreement across Europe to protect countries from that threat?
Yes, I agree with my hon. Friend. I referred to working with other countries, and a large number of other member states also have real concerns about the move and believe that they, too, will be affected. Among them are 17 member states, including Germany, Netherlands, Sweden, Denmark and Finland, that attended a conference we held and they all expressed their concern. We are working with them on a set of agreed principles that we will present to the EU, which I hope will end this nonsense.
I am glad to hear that the Secretary of State will be robust in his dealings with the EU. What message does it send to hard-working taxpayers in Sherwood who, when they need the safety net of the state, find that it is being abused by those who simply step off a boat and who have not contributed to the system in the UK?
My hon. Friend is of course right that we want to support people who, through no fault of their own, fall out of work, and we want to do that for our own citizens. We also accept that for those who have been here for a period of time—hence the habitual residence test—because it is important to support those who are genuinely resident in the UK and delivering something for the UK economy. His constituents will understand fully that it is right to do that. However, it is not right for us to end up with a system—other countries agree on this—in which someone can literally arrive here and, only days after, decide that they are not working and, therefore, they are eligible for benefits. That would be quite wrong for the British taxpayer.
My constituents will be horrified with this proposal from the EU Commission but heartened by the robust stance my right hon. Friend is taking. Does he not agree that, in addition to a consensus across Europe on the issue, we need a firm and robust consensus across this House? Therefore, what representations has he received from the Labour party in this regard?
I actually have not received any representations from the Labour party but, to be fair, I did not ask for any. I always look forward to seeing my opposite number over a drink, although we have not had one recently, and he is more than welcome to make representations. He should know that we have had good representations from other countries that were not part of this, including Portugal, Slovakia and Slovenia. I want to put it on the record that the costs of the proposal could be enormous. If we did not have the British residency test, it is estimated that right now the cost would be something in the order of £155 million, although that could change.
I welcome the Secretary of State’s announcement on the habitual residence test. Does he agree that the test is vital in preventing abuse of our welfare state? Perhaps most of all, however, surely we should be deciding on such issues, not the European Union.
Again, I agree with my hon. Friend. We already have an issue that should be dealt with beyond that, with people who declare themselves as self-employed on arrival here—some coming in as sellers on the street, and so on. There is a way in which they can claim benefits. We do not want to open that up to everybody; we would rather deal with that but not lose the habitual residence test, which is my plan.
Will the Secretary of State none the less acknowledge that, in fact, migrant workers are more likely to be in work and disproportionately less likely to be claiming benefits than non-migrants? Does he not think it important that we conduct the debate with the facts accurately and reliably portrayed?
I agree that we want to ensure that the door is open to those who want to come and work here and benefit the UK. That is part of the agreements in the European Union. However, we have concerns, and we are not alone: 17 countries and others are beginning to ask why this is necessary. Freedom of movement exists; what the habitual residence test does is protect our understanding of that, not damage it. Indeed, we have no intention of damaging it, but we certainly want to protect British taxpayers from any kind of change.
Around half of all employees—around 13.5 million people—are currently not saving in a workplace pension. That is why we are pressing ahead with the introduction of automatic enrolment, to transform our long-term savings culture and support people in taking responsibility for their retirement.
My hon. Friend is exactly right, and that indicates the scale of the policy. I often say that everyone will know someone who has been auto-enrolled. We are talking about a huge transformation, which is supported, I believe, in all parts of the House. It will be a revolution in pensions saving, and I look forward to the formal commencement just next month.
The Minister will no doubt agree that a good grounding in financial literacy encourages individuals to make proper decisions about providing for their futures, including with pensions. What discussions has he had with colleagues in the Department for Education about putting financial education in the curriculum?
I agree with my hon. Friend that financial literacy and financial education are important. He will know that our colleagues in the Department for Education tend to take a light-touch approach to the curriculum, rather than wanting to be over-specific. However, there is a great deal that can be done in the existing curriculum. For example, compound interest is a pretty fundamental pensions topic and, in my view, ought to be in every maths lesson.
A substantial number of those who are in pension schemes are saving well below the level needed to enjoy a comfortable existence in retirement. What are the Government doing to campaign for the better uptake of better schemes and encourage people to save earlier in their lives?
The hon. Gentleman is quite right: around one in five of those who will be automatically enrolled are in their 20s, and if we can just get people starting earlier in pensions saving, that would be a good thing. Next week we are launching television advertising about automatic enrolment. The key is good quality workplace provision, automatic enrolment—which most people will stay in—and incentives from the Government. To give just one example, people on the universal credit will get additional help with their pension, because their pension contributions are allowed against their income for universal credit, so low-income households will get an extra boost if they save for a pension.
In all parts of the House there will be agreement about the importance of auto-enrolment. However, the hon. Member for Warrington South (David Mowat) has already raised the issue of high costs and charges. Does the Minister agree that in order to meet his coalition pledge to reinvigorate occupational pensions, there must be full disclosure of all pensions costs and charges to the saver, and that this is a prerequisite to ending rip-offs and reinvigorating occupational pensions in the United Kingdom?
I think we have common cause across the House in wanting to see good value for money and transparency in charges. That is why I welcome recent initiatives—not just by the National Association of Pension Funds, but by the Association of British Insurers—to try to find ways of presenting such information simply and consistently. So far, under automatic enrolment competition is driving charges down, but we have the powers to cap charges and we will use them if we need to.
Following research commissioned in 2011, the Health and Safety Executive is developing a revised intervention strategy to promote better control of legionella risks by companies with potential sources of legionella. The strategy will involve working with stakeholders, as well as following up a safety notice that the executive issued in July reminding companies of the precautions required for cooling towers and evaporative condensers.
I welcome the Minister to his new post. In the light of the statements that we are to have this week about regulation, what he has just said means that we have to ask whether one person’s unnecessary burden is somebody else’s death sentence.
I refer the Minister to a research study carried out by Environmental Health News. It shows that in 40% of cases, local authorities were not carrying out proactive inspections. Given that local authorities and the Health and Safety Executive have shared responsibility for preventing legionnaires’ disease, we need a clear statement about the role that the HSE will take to prevent outbreaks such as those that we had in Stoke-on-Trent in the summer.
The Health and Safety Executive is taking a proactive stance on the issue. It is issuing guidance to stakeholders and others and ensuring that there is a risk-based approach to inspections, focusing on installations likely to cause the highest risk of legionella. We are taking action to tackle the problem and no one’s life will be put at risk as a consequence of the changes that we are making.
Does my hon. Friend agree that it is essential for the Health and Safety Executive to work closely with local authorities, as they are the bodies that interact with, and regulate, many of those in the sector that are prone to legionella?
My hon. Friend is absolutely right. There is a shared responsibility, and that requires the HSE and local authorities to work closely together. It requires them to identify the risks in their areas and take the right steps, proportionate to those risks, to tackle the risk of legionella.
Work Programme (Data-sharing)
From June 2012, providers have been able to share management information on referrals, attachments, job entries, and specified information on job outcomes with local authorities that have signed confidentiality agreements.
The hon. Gentleman should listen to the answer before asking the supplementary. I made it very clear that since June 2012 information has been shared with local authorities that are prepared to sign the confidentiality agreement. We are very keen to ensure the integrity of official statistics. The information is there to be shared and I look forward to local authorities’ working with contractors to use that information to develop effective schemes at a local level.
When the Minister gets this autumn’s official data on job outcomes and sustainment payments under the Work programme, will he have another look at the funding model for local training providers? He may be aware that, a few months ago, I raised with his predecessor the plight of a small provider in my constituency, and I was not exactly thanked for doing so. Is he aware that another provider in my constituency has now gone out of work in addition to two others? Will he promise to keep the matter under constant review?
The Minister’s predecessor made sure that nobody could find out what was really happening on the Work programme, and he has had his reward.
I warmly welcome the new Minister to his position. He can now make a clean breast of all this. I hope that he will heed the CBI’s call, made in July—after the announcement to which he has just referred—for Work programme providers to be allowed to tell local authorities everything about how they are doing. The CBI is right: the Work programme will not fulfil its potential unless that happens.
First, I thank the right hon. Gentleman for his congratulations; he and I have worked together from different sides of the Dispatch Box before, during his previous incarnation at the Treasury.
We have said that we will publish information. The first official statistics on Work outcomes will be published in November this year. We are keen to see providers, local authorities and other partners working closely together and using the available data to develop the right response. We are seeing success stories—such as in Barking recently, where there has been that local collaboration.
The Secretary of State should pipe down. [Interruption.] The shadow Secretary of State should pipe down.
I say to the right hon. Member for East Ham (Stephen Timms) that there are success stories. We will publish the full data in November and he should wait for that.
I am grateful for what the Minister has said. I hope that he will pay very careful attention to what the CBI has called for. I am delighted to hear that we finally have a date for the publication of the first Work programme job outcome data, almost 18 months after the programme started. Will he, unlike his predecessor, accept that needless secrecy holds back public services such as the Work programme?
The right hon. Gentleman should remember that this is a two-year programme. Payments are made after six months of sustained work activity based on work outcomes. We need to build up the evidence to see how effective the Work programme is. I am confident that the statistics to be published later this year will demonstrate its effectiveness. It is a vital part of the work that we need to do make sure that we get more people into employment.
Mandatory Work Activity Scheme
Between May 2011 and February 2012 there were nearly 50,000 referrals to mandatory work activity and 16,790 starts. The scheme was expanded in June 2012, meaning that there are approximately 28,000 places available in 2012-13.
The mandatory work activity scheme is important in sending out a signal that sitting around on benefits is not an option under this Government. May I therefore congratulate my hon. Friend on securing its extension, with another 70,000 people a year doing placements in return for receiving benefits? Is he as ambitious as my constituents to see it extended to all able-bodied people on benefits?
In the short period since closure, 35 people have immediately found jobs, and the vast majority of workers have already taken up the offer of personalised support with caseworkers, which this Government have introduced to ensure that there is support and which the previous Government did not do. The Remploy board is still considering nine factories at the best and final offer stage. When it has made that decision, I will write to the Members affected and place a copy of the letter in the Library.
I thank the Minister for that answer and welcome her to her new position. I am disappointed to learn that there is low uptake, but any new job is most welcome. Remploy Marine in my constituency, in Leven in Fife, which has an unemployment rate of 18%, manufactures high-quality life jackets that are sold internationally, and its order book is full. Nevertheless, the employees are anxious about their future, and the phase 2 bidding process seems to be shrouded in secrecy. When will we get details of the process and the time scales?
First, I thank the hon. Gentleman for his kind words about my coming into this new position. If Mr Speaker will indulge me, I want to say how delighted I am to be here, particularly at the close of the Paralympic games, which have been such a sensational success. As Sir Philip Craven, the international Paralympics president has said, these have been the greatest Paralympic games of all time, with more medals in more sports— 120 medals—for Team GB and record ticket sales of 2.7 million in London compared with 480,000 in Beijing.
Let me return to the hon. Gentleman’s question. I know how much work he has done on this and that he delivered a 100,000-signature petition to the Prime Minister. Further work and analysis is continuing to determine the stage 2 process for the Remploy sites. Work is going forward. He, like me—I have read the words he said—wanted a viable business. That is exactly right, and that is what we are looking for. Where there is a viable business, it will continue, because we are looking for sustainable, long-term employment for all those employees.
I, too, welcome the Minister to her position. Will she remind the House how many more disabled people will benefit from the transfer of funds from Remploy, which is getting more disabled people back into work than was the case under the previous system?
I thank my hon. Friend for that question. He is quite right. At the moment, the money for sustained employment for disabled people goes to just a fifth of the number of people it should. We are maintaining the budget of £320 million and we want it to work more effectively for more people. We are aiming to have people getting sustainable work as we move forward.
I thank the new Minister for her swift reply to my letter, in which I raised the question of the tax rates that redundant Remploy workers have been issued with. They have been given a temporary tax code, so some of them are paying 50% of their money in tax. They cannot wait until the beginning of the next tax year, so will the Minister do something urgently about the situation, because it is adding insult to injury?
I thank the right hon. Lady for her question. We have worked on the issue immediately. Straight away, she will be pleased to know that everybody affected will have their redundancy pay and, therefore, money. She is right to say that a 50% emergency taxation rate was put on that. We have spoken to Her Majesty’s Revenue and Customs and to the personal caseworkers they will all get, who will help them fill in the forms and get the money back as soon as possible. I thank the right hon. Lady for highlighting that issue.
First, I welcome the hon. Lady to her post and wish her well. She has a very special role as a champion for disabled people both outside and, perhaps more importantly at times, inside Government.
The hon. Lady wrote to her local paper about her local Remploy factory in Birkenhead and was highly critical of management and very supportive of, in effect, a workers buy-out. Now that she is in a position to make a real difference, will she consider halting the current Remploy programme in order to allow workers throughout the rest of the country to benefit from a workers buy-out, which is the very policy that she supports?
I visited my local Remploy factory and met its workers, and I was hugely impressed with them. I was horrified to find out what had and had not happened with their proposed business plan, so I pursued the matter. The automotive industry on Merseyside was expanding at the time—we now have 24-hour work at Jaguar in Halewood and Vauxhall has been saved—and I thought that something could be done. That did not happen and I tried to get to the bottom of it—I was most disappointed with the management and that is on the record. What we are looking for is viable businesses, which we will support in every which way we can. I am also meeting various disability groups to consider the shape of the Remploy business in the 21st century and what we can do. I will be a champion for disabled people and I am looking at future job opportunities for them.
We hope that most people will be able to manage their money successfully and we are working towards that, but we also recognise that, in the development of universal credit, there will always be some people who will need additional support. We are looking at and trialling that and making arrangements. There will be a range of budgeting support services available for those people to help them prepare for universal credit and to provide ongoing support. We are consulting on these matters at present.
I thank my right hon. Friend for his reply. I meet a local single mothers support group, the Women of Wandsworth, on a regular basis. Some of the mums have expressed concern about monthly budgeting and are worried that it will just be assumed that they can manage. Will my right hon. Friend confirm that, under universal credit, my constituents can be reassured that support is in place and that there will be no question of them just being left to their own devices?
Absolutely—I can give that assurance. That is exactly what we are working and consulting on at the moment. Of course, people will be concerned about it, but there are positives to take from this. The most important thing is that, by trying to move people, eventually, on to a monthly payment, that will bring them much more into line with the world of work. One of the great problems we have had is that, when people who have been unemployed go into work, they find it very difficult to cope with having suddenly to take on and manage their arrangements. The key thing is that we want to get those who can do so to that point, and we will work with the others. For some, there may be interim two-weekly payments. At the moment, we are looking to trial a whole series of arrangements to make that much easier for them, and we will make sure that that happens.
Not at all. When we came to office, I was told by the Department that despite the constant requests from a variety of people who provide food banks, in particular the Trussell Trust, to put their leaflets in jobcentres to advertise what they were doing, the last Government said no, because they did not want the embarrassment of their involvement. We immediately allowed them to do so, which is one reason for the increase in the number of people seeking food banks.
I congratulate my right hon. Friend on retaining his position. Given that eligibility for free school meals is a key factor in determining deprivation and a key indicator of a child’s educational life chances, what assurances can he give that the structure and income bands of universal credit will not undermine the ability to target educational improvement where it is most needed?
May I say first that the work that my hon. Friend did at the Department for Education will stand the test of time and that people will thank him for it? The consultations and work we are doing on things such as passported benefits are critical to ensure that everybody’s position improves as a result of universal credit. I give him my personal guarantee that that is exactly what we will do.
Does the Secretary of State accept that somebody on jobseeker’s allowance with a disposable income of less than £70 a week who manages with fortnightly payments is actually very good at budgeting? The danger of monthly payments is not budgeting but the lack of money to buy everything that everybody else takes for granted and that a person should be able to buy with their benefit.
Absolutely—I accept that we have to deal with those issues. We are seeking to move to monthly payments. When payments moved from being weekly to fortnightly, everyone said it would cause major problems, but very little happened. We are putting in place requirements so that people may receive their money on a two-weekly basis if they are unable to cope. We recognise that when we introduce this process, people will have to transition into it so that they are not left with a period without any money. All that is under consideration. We are trialling the programmes to ensure that we get this right. I give the hon. Lady my assurance that we will not move on this unless we are certain we can make it work.
I am a strong advocate of universal credit, as the Secretary of State knows, but I retain a couple of concerns. The plan for a single person within the family to receive all the universal credit could be detrimental to women in particular. Will he confirm that there will be enough flexibility to ensure that women do not lose out?
That issue has been raised, so we have discussed it with a number of people and will allow for it. People will be able to nominate who should receive the payment. If there is a problem, in certain circumstances we will agree that an individual should receive the money. There is huge flexibility over where the payment should go and we are consulting on that at the moment. We will make any changes we need to make.
The Secretary of State will recognise that among the people who will need help with budgeting under universal credit are women and men in flight from domestic violence and seeking refuge. Will he give an absolute guarantee that they will not suffer from a lack of places and that refuges will not be penalised, causing a reduction in places for the women and men who need them?
I can give the hon. Gentleman that guarantee. If he has any concerns that he thinks we might not have dealt with, my door is open for him to come and talk to me. I am talking to many organisations, including Refuge, to ensure that we cover those issues. This is a priority concern for us and I give my absolute guarantee that that will happen.
Annual Benefit Cap
We have received a number of representations on the benefit cap, which will be introduced from 2013 and be set at a maximum of £26,000 net a year. That is about restoring fairness to the system and ensuring that those on benefits no longer receive more in state support than the average earnings of a working family. We have worked hard to identify the households and families that will be affected by the cap well in advance of the April start date. There is additional funding of some £190 million to smooth the transition over the spending review period.
I thank the Secretary of State for that answer and congratulate him on the work he has done on this issue.
The average salary in my constituency is £22,400, and people cannot understand why anybody would oppose a cap on benefits that is substantially more than they earn to feed their families. A week on Friday I am organising a jobs fair in Burton, which we expect 2,500 people to attend. Does the Secretary of State agree that it is important to tell jobseekers that they will always be better off in work than on benefits?
This is one of the most popular programmes that this Government are introducing, and the public genuinely believe that it is the right thing to do. The only group, it seems, who do not think it is the right thing to do are those sitting on the Opposition Benches.
When we recently started dipping into the issue and surveying those who were likely to be affected, it was interesting to find out that, already, well in advance of what is going to happen, about a third of people have admitted that they are out looking for work as a result of the oncoming benefit cap. Some 88% are now up to date with their rent, and 1% have reported having to move.
Work Programme Contracts
Like my predecessor, I intend to use every opportunity to meet providers to discuss all aspects of the Work programme. I will do so later this week. Effective partnership working is key to the successful delivery of the Work programme, and it is in providers’ interests to engage with a range of local partners including local authorities, employers and voluntary organisations.
I thank the Minister and welcome him to his post. On Monday I chaired a meeting in Slough of the local authority, the local college and local businesses as part of a campaign that we have run together to try to tackle unemployment locally. All the partners there were concerned about the lack of collaboration with Work programme providers and the lack of information and working together from them. Those findings are echoed in the recent Manchester Business School study, which stated that although centralisation has cut the cost of procurement, it can also undermine the very local engagement that underpins service innovation. What is he going to do to tackle that?
As the hon. Lady will know, in contrast to schemes produced by the previous Government, Work programme providers are incentivised to perform well to get people into work. They are paid by results, so they need to be as effective as possible in working with local partners to get the right outcomes. For example, I know that the contract that covers her constituency includes close work with further education colleges to improve outcomes for participants in the scheme.
May I welcome my hon. Friend to his post and congratulate the Government on the progress made under the Work programme? In my area, significant numbers of participants have now been in work for more than six months. Does he agree that one of the best ways of reducing unemployment further is to improve labour mobility at the lower end of the income scale?
My hon. Friend is right. There is a range of interventions that we can make to help people get back into work, and mobility is one. Welfare reform and universal credit are another, because they will ensure that people are better off working than not working. We want to see which levers and which policies work, to get as many people as possible into employment.
As the Minister indicated, some information about the Work programme will now be made available to local authorities on a confidential basis, but there is no accountability without transparency. When will he see the light and allow all of us who have an interest in ensuring that people can get work through the Work programme to have access to information about its performance?
I remind the hon. Lady that, as I said earlier, information is already shared with local authorities on a confidential basis. [Interruption.] We need to maintain the confidentiality of the data to ensure the integrity of national statistics. [Laughter.] The Opposition may treat national statistics cavalierly, but it is absolutely right that we protect the data to get the best information out there. There are no constraints on employers, local authorities or Work programme providers working together to share information, to get the most effective possible scheme in place.
The latest figures show that despite the previous Government spending huge sums—more than £300 billion—on working age welfare and tax credits, during their latter stages the level of poverty actually rose, and it was clear that the figures for measurement do not work as well as they should.
The Government are committed to eradicating child poverty and to the targets that we set up, but we are also interested in developing better measures through a consultation that will be launched this autumn.
My hon. Friend is absolutely right. One problem with some of the ways in which child poverty is measured is that not enough credence is given to the fact that we need to get beyond the simple point about money, and look into what causes some families to remain persistently in poverty. Although the latest figures show that relative poverty fell by 2% over the past year, I do not try to claim any point of success because levels of absolute poverty remained flat. The reason relative poverty fell is that during the major recession the overall economy fell as well, but that is no way to measure whether people are in poverty or not.
I am sure that in the recent past the Secretary of State has met non-governmental organisations such as Save the Children, the Children’s Society and Barnardo’s. Does he intend to meet those organisations during his consultation period to hear their genuine concerns about the change in the measurement of child poverty, and the difficulties it will cause that may distort outcomes at the end of the process?
I agree with the hon. Gentleman. We are consulting widely with those organisations, and when we introduce the consultation process we want to hear from them all about how best to look at the issue of measurement so that the effect of what we do is felt by those who need it most. We are taking the recommended steps suggested by Save the Children, and we are committed to eradication. Universal credit is critical to the process of taking some 900,000 adults and children out of poverty, which we should all support.
I pay tribute, as my hon. Friend the Member for Wirral West (Esther McVey) has done, to our Paralympic athletes, whose feats we have watched over the past fortnight. They have impressed us all and excited us by the very idea of competition, as well as overcoming their major difficulties. Next week my Department will publish the responses of thousands of disabled people to the “Fulfilling Potential” consultation that was launched earlier this year. Changing perceptions is key to helping disabled people overcome the barriers they face, as is tackling discrimination wherever it occurs.
The principle behind the new guidelines is that we see and meet every individual and help them to overcome the barriers they face, and that is exactly what we will do.
We are seeing that the flow from benefits is continuing at the same level as expected, but payment by results focuses providers’ minds on getting people into sustainable employment, and we will see the first results in November.
May I associate myself and my hon. Friends with the Secretary of State’s words of congratulations to our extraordinary Paralympians, who have simply dazzled us over the past couple of weeks?
I am delighted to see that the Secretary of State has survived the enthusiastic support of his friends in the Treasury, but may I press him on the price of his survival? When universal credit is fully rolled out in 2017, the Office for Budget Responsibility says that the extra costs will be £3.1 billion. The Treasury in its budget says that the price must be no more than £2.5 billion. With whose estimate does the Secretary of State agree?
The OBR agrees with me and I—strangely enough—agree with the Treasury. Our view is that we will roll this programme out at a cost of £2.5 billion per year. as originally estimated. I think the right hon. Gentleman is referring to a partial statement in a document produced before March by the OBR, and for the sake of the House I will read what it actually says. Although the OBR originally looked at this and wondered whether £3.1 billion would be reasonable, it has
“adjusted this down to £2.5 billion as the Government has stated in the Budget that final decisions on policy design”
are essentially now made.
I am afraid the Opposition simply cannot accept a think-tank set up by the Treasury putting the figure at £3.1 billion and the Treasury, in the March Budget, revising it down to £2.5 billion. The Secretary of State must accept, as I am sure many in the House do, that an extra £600 million will have a huge impact on whether people will be better off in work or on benefits. The Treasury clearly believes there is a state of chaos around universal credit, as do the Cabinet Office and No. 10. Surely it is time he tells the House exactly what is going on, and sets before us the business case that he is trying to keep secret from us. Is there something he is trying to hide?
There is absolutely nothing to hide—[Interruption.] No, no. We are committed to the £2.5 billion all the way through and we will deliver universal credit on time, as it is and on budget. Any time he would like, he is welcome to come into the office and look through some of our business matters, as is his colleague, the right hon. Member for East Ham (Stephen Timms). I will show him how we are on time, on target and on budget.
The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) did rather jump the gun. He referred over the weekend to universal credit as a car crash in the making. I need no advice from the man who produced the biggest car crash in British economic history.
T10. The Secretary of State will be aware that Bluewater shopping centre in my constituency recently announced a further 1,500 jobs to add to the jobs of 7,500 people who are employed there. Will he accept my invitation to visit Bluewater with me to see first hand the job creation that this Government have helped to make possible? (119847)
I look forward to visiting my hon. Friend and shall definitely come. He gives us a great reminder—the Opposition do not like this very much—of the three-quarters improvement in employment, and of falling unemployment and benefit claimant numbers. More importantly, as a direct result of what the Government have done in our welfare reforms, there is a lower number of economically inactive people than at almost any time since those records began.
T2. As other hon. Members have mentioned, the introduction of universal credit will mean that housing benefit will be paid not directly to landlords but to tenants, and that it will be paid monthly rather than fortnightly, causing tenants to go into substantial arrears. Does the Secretary of State agree that, when assessing whether a claimant is vulnerable enough to be exempted from monthly payments and receiving their housing element directly, it should be standard practice to consider the feedback of third parties such as social services and voluntary sector services as well as claimants? (119839)
I do, yes. We want to pay people directly, and we already pay local housing allowance to such tenants directly, which the hon. Gentleman and all hon. Members should remember. The vast majority cope with that payment—they are very similar. The point is this: we do not intend to cause problems, but the more we continue to treat people in receipt of benefits like children, the less likely they will be able to cope when they go to work. Those who can absolutely must get on to that payment schedule, but we will obviously talk to all the bodies to which he referred to ensure that we identify those who cannot. If people cannot get on to that schedule, we want to surround them with help and support to find out why they cannot manage their payments, and to rectify that rather than just throw money at them.
I thank the Minister for his assurances that the implementation of universal credit is on time. Will he confirm that it is on track to reduce child poverty by 350,000? As hon. Members will recall, child poverty rose sharply in the previous Parliament.
T3. I am contacted every day by vulnerable constituents bruised, battered and sometimes made ill by the Secretary of State’s Department trying to force them off benefits that they desperately need. He knows that huge sums of benefits go unclaimed. What is he doing to ensure that those on benefits understand their full entitlement, particularly in respect of Warm Front payments, on which I understand there will be an underspend this year? (119840)
I agree. The hon. Lady raises an important point about an area of work—I was just talking to my ministerial colleague about it—that universal credit should help to rectify and improve dramatically, because putting everything into one location will allow us to target it correctly on the intended recipients. One of the biggest problems is that the complexity of the system does not allow that to happen, meaning that lots of people fall through the cracks.
Universal credit will be the greatest revolution in the benefits system for more than a generation. Will my right hon. Friend ensure that every Member has the opportunity, between now and the introduction of universal credit, to get to grips with its minutiae, so that we can be confident of ensuring that our constituents understand how it will work?
I will follow through on that very good suggestion. We are already consulting. My hon. Friend might be aware that in July we had a series of consultations in the Committee Rooms with Members of the other place and of this House. We intend to continue that consultation and to set up demonstrations of how it works at the front end and of what they will need to do. We are determined to ensure that Members understand how to claim it—I hope that some of them may have to use it in due course.
T4. We were told that universal credit would ensure that every additional hour that people worked would pay. Is the Secretary of State aware of concerns of the Children’s Society and others that many thousands of families face a cliff edge at the point when eligibility for free school meals kicks in? What is he doing to ensure that families do not lose out or find themselves better off working fewer hours? (119841)
We are discussing that with the Department for Education and others, and consulting the relevant bodies and interest groups outside. We are looking for the best way of integrating the process to eradicate such problems and cliff edges in order to create a seamless process that allows people smoothly to engage and improve the quality of their lives, rather than having to negotiate at the edges of those difficulties.
The Secretary of State knows that I fully support his introduction of a benefits cap and his measures to ensure that people are always better off in work, but does he concede that some people are still better off on benefits than other people in work and that to tackle that issue we need to reduce the cap even further?
It is interesting, of course, because I have had correspondence from people throughout the country saying that we should reduce the cap because it is too high. We have introduced the cap at this level because we think it is fairest—it ensures that average earnings are not exceeded by people who are out of work and that people who pay their taxes do not feel that they are paying them to people who do not work as hard as they do.
T5. A constituent has written to me stating that she has had terrible trouble finding work because she has a daughter under the age of six and has child care needs. She has visited Jobcentre Plus but has been told that jobs in term time are few and far between. She asks whether the Government have studied the situation in France, where 65% of women with children under the age of six are in work. (119842)
We have sought to create flexibility in Jobcentre Plus, particularly in respect of lone parents—I do not know whether the hon. Gentleman’s constituent is a lone parent—so that it recognises the need for flexibility around term times and some of the challenges around child care. If he wishes to write to me with the details of his case, I will look into it.
Jam jar accounts can help families’ budgets, protect housing associations and promote a savings culture. As credit unions can offer these at a much lower cost than existing commercial offers, will my hon. Friend do all he can to encourage them?
I congratulate my hon. Friend on his tireless work in support of credit unions. As he knows, as part of the universal credit roll-out, we are piloting different sorts of budgeting accounts, including jam jar accounts, and we would be delighted if credit unions were to play a full part in that process.
We inherited the work capability assessment from the previous Government. Through the work of Professor Harrington, we have sought to introduce a series of reviews to improve the assessment’s functioning, and we will announce further changes shortly. We want to get this right, and are prepared to listen and learn from the work of Professor Harrington and not leave the system unchanged.
There is concern among visually impaired people that they might be treated differently according to whether they use a long cane or a support dog, rather than being assessed on the level of their disability. Will the Minister reassure me that such discrimination will not exist in the final criteria for personal independence payments?
I assure my hon. Friend that assessments will fully reflect the changes that are required for blind and partially sighted people, and that there will not be any discrimination like that. We have not finished consulting; it is an ongoing process. We have listened to people’s concerns and altered the assessment as it goes, and we will be taking all of this into account.
In response to the question from my right hon. Friend the Member for Cynon Valley (Ann Clwyd) about the high tax being paid by sacked Remploy staff on their redundancy payments, the Minister gave an encouraging reply and said that the matter would be dealt with as soon as possible. Will the Secretary of State confirm that that means the money will be returned to those sacked staff in the current tax year?
I fully support the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wirral West (Esther McVey), and I really welcome her arrival. She said that the matter was being looked into right now, and she will receive my full support while that happens.
The Government are piloting a scheme in my constituency in which the young unemployed who have never worked will be required to do voluntary work in return for their benefits. Does my hon. Friend agree that that will be good for the long-term job prospects of the young people concerned, and good for confidence in the benefits system, in showing that people will not get something for nothing?
My hon. Friend is absolutely right. We are implementing that scheme in conjunction with the Greater London authority, and it will provide an important way of getting more young people into work. That will be to their benefit and to the benefit of society and taxpayers generally.
Further to the Minister for Work’s answer to my question on 6 December on the International Labour Organisation’s meeting at which the crisis of youth unemployment was discussed, will the Minister tell me what briefing he has received from the UK representatives, given the damage that the eurozone crisis is doing to manufacturing in my constituency and to the possibilities for young people who want to enter industry?
I am sure that the hon. Lady will welcome the youth contract and the work we are doing to ensure that young people come off benefit and get into work. She should also recognise that youth unemployment is lower now than it was in 2010, once we take into account policy changes. We are tackling the issues, but we do recognise the impact of the eurozone on our economy.
I am delighted that the Secretary of State has announced that advice will be given to vulnerable claimants on how to spend universal credit. Who will provide such advice in deeply rural areas in which there are no jobcentres and no access to citizens advice bureaux?
I can assure my hon. Friend that we will work closely with local councils—whom we are consulting right now—and all those involved, including those distributing the social fund, at local level. We will also talk to local groups involved in credit advice and local poverty groups, as well as ensuring, ourselves, through the jobcentres, that those claimants get that advice. They will get that advice. We will work with them, identify them and ensure that they improve the situation they are in.
Will the Secretary of State explain why, when disabled people are justifiably being applauded the length and breadth of this land, he has chosen this time to close Remploy factories that employ thousands of disabled people? Will he withdraw those closures and put an end to that hypocrisy?
May I say to the hon. Gentleman that the process was started by his Government? It was they who closed 29 centres. The difference is that they never put in place any support measures for unemployed Remploy factory workers. We, however, are spending £320 million and adding another £15 million to that to ensure that, with the new programme, we try to get them back into mainstream work. It was the lobby groups that wanted us to do this, because they do not like segregated employment.
Creating a strong and balanced economy continues to be the Government’s priority. This means creating an environment in which entrepreneurs find it easy to start and grow a business, and pursuing demand management policies that stimulate growth and maintain financial stability.
There is also a role for an industrial strategy, which I shall set out in detail tomorrow. This means addressing the need for a long-term vision and having the courage to take decisions that bear fruit decades later, and focusing on the things we do best. There are two main themes, one of which is the need for long-term decision making. Many industries operate on that basis, including a company that I worked for, Shell, which thought in terms of decades. The other theme is the need for partnership between business and industry. Very few countries have a purely laissez-faire approach, and we should learn from their experience. We also should draw on our experience; I have learned much from some of my predecessors, particularly Lord Heseltine, who has an office in my Department and is contributing valuably to thinking on this subject.
We have identified several specific fronts on which Government action can have a real and early impact, including access to finance; partnership with specific sectors; support for emerging technologies; creating a pipeline of skilled workers; Government procurement; and the development of supply chains. In the short time available, let me say a little about each of them.
On access to finance, we are living in the aftermath of a disastrous banking collapse. Big firms, by and large, can raise short and long-term finance via capital and equity markets. The latest SME Finance Monitor, however, shows that in the last 12 months, 33% of businesses that applied for loans were rejected. The big banks, including the semi-state-owned banks, are preoccupied with repairing damaged balance sheets and there is a real shortage of long-term patient capital for business. We are tackling these issues by launching the funding for lending scheme, which reduces the cost of funding for banks that increase their lending; running schemes such as the enterprise capital funds and the enterprise finance guarantee to help early-stage businesses without a track record or collateral to access venture capital finance or bank finance; and stimulating the development of non-bank financial sources through the £1.2 billion business finance partnership. The big banks have launched the £2.5 billion business growth fund to provide equity. We are now actively looking at a proposal to establish a business bank that could work through alternative providers such as the new challenger banks and non-bank lenders to direct private capital towards growth and innovation and to corral our existing interventions, such as co-investment and guarantees.
Secondly, let me say a word on the sectoral approach. The second strand of the industrial strategy is to build on a collaborative strategic partnership with key sectors. Of course, different industries require different degrees of business support and collaboration. At one end of the spectrum, much of the economy flourishes on its own. Here our efforts are best placed on making the UK a good place to do business, with attractive policies on taxation, regulation and free and efficient markets. At the other end of the spectrum, there are sectors that require a long-term, strategic partnership with Government; the Automotive Council and the aerospace leadership groups are good examples. Tomorrow, my Department will publish a new analysis of UK sectors, setting out those areas where support should be focused—in particular, advanced manufacturing; knowledge-intensive services, professional services and higher education; and industries that provide key inputs to our internationally traded activities, such as the digital economy and the energy supply chain.
Thirdly, on technology, one of the most powerful levers at our disposal is the potential of innovative technologies. Ground-breaking technologies are often too risky or resource-intensive for individual companies to nurture on their own, so the Government have an important role to play in accelerating the journey from academic research to commercial application. The Government Office for Science is in the process of updating its Foresight report on “Technology and Innovation Futures”, taking a fresh look at technologies with the potential to support sustained economic growth over the next 20 years or so. The report has identified a number of technologies that can have a material effect on future growth rates. The Technology Strategy Board is now concentrating on supporting the nascent disruptive technologies that have the potential to grow into new industries within a decade or more.
We also need a long-term commitment to world-class skills. The Government have focused on apprenticeships, and we have seen a 63% increase in the number this year, with 400,000 new starts in the first three quarters alone. However, we recognise that we cannot rest on our laurels, and Doug Richard will report next month with ideas on how we can gain even more value from apprenticeships.
As employers know better than anybody the long term-skills needs of their work force, we have launched an employer ownership pilot scheme which is giving business direct access to £250 million of funding for vocational training. Employers, working together in sectors or supply chains, have put together a wide range of innovative proposals to design and develop their own training programmes. One of the biggest long-term challenges will be the supply of engineers; we are chronically short of them at present, and have been for a long time. That is why we decided—as announced in the aerospace strategy—to fund, jointly with industry, 500 masters degree places in aerospace engineering between 2013 and 2016.
Lastly, on procurement, we acknowledge that we have a responsibility to take seriously the role that public procurement plays in creating the confidence that enables businesses to make long-term investment decisions—alongside, of course, value for money. We are overhauling the way in which the Government procure services in order to increase clarity for businesses, particularly small and medium-sized enterprises. In April we published data on £70 billion-worth of future Government contracts that are planned for 13 sectors over the next five years. We are also assessing what the 13 pipelines tell us about the strategic capabilities that will be required in the future.
Those are the broad contours of the industrial strategy on which we will work with industry in the months ahead. The strategy will contribute to the generation of the confidence that is needed to ensure that business invests for the long term, and I commend it to the House.
May I ask first why the Secretary of State is not setting out his strategy in full to the House of Commons, instead of doing so in a speech tomorrow?
Earlier this year, the Secretary of State rightly said that the Government lacked a compelling vision. Having made 15 speeches in which he told us that he wanted this strategy, he has at least set it out today. He said, as on previous occasions, that Lord Mandelson had bequeathed him a good platform on which to build such a strategy; for example, he has praised us for what we did in respect of the automotive sector. But why has it taken so long?
There is little controversy over the role of Government in creating the right business environment—improving infrastructure, access to finance, skills, corporate governance and so on—but an industrial strategy is about much more, which is why I broadly welcome the general approach that the Secretary of State has set out. We would not advocate a return to picking winners, but we do believe that Government can and should support and develop sectors in which we have a competitive strength and a comparative advantage. After all, success in the global economy will not come from being quite good at a lot of things; there is a premium on being the best.
It will, however, be impossible to implement the strategy without the unequivocal backing of No. 10 and the Treasury. Lord Mandelson was successful because he was fully supported by his Chancellor and Prime Minister. Can the Business Secretary say the same now? Does his strategy even enjoy the support of his ministerial team, let alone that of other Departments? While, in the 1970s and 1980s, he was working for the late great John Smith, his new deputy—the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Sevenoaks (Michael Fallon)—was working for Lady Thatcher, and it is her approach that the Minister of State was going around advocating over the weekend. That explains why, while at the back of the business section of yesterday’s edition of The Sunday Telegraph the Secretary of State was making the case for the strategy that he has outlined today, his Minister of State was saying, in an interview featured in the front of the main section,
“Deregulation and privatisation worked before”,
suggesting that that was the answer to the problems that we are experiencing today. Who is in charge of policy in the Department? Who should businesses listen to when trying to make sense of the Department’s direction of travel?
Above all, the Secretary of State must give business the certainty that will enable it to invest, and that means aligning Government support, Departments, higher education, skills and regional structures with his strategy. Sadly, however, all those have been thrown into disarray by the Government.
In the short term, we need the growth on which we can build the foundations of the future. The Government’s overall economic policy, which the Secretary of State continues to champion, has pushed the country into a double-dip recession, and that needs to change as well.
My opposite number challenges me to set out our approach to this in full, but I was trying to respect the conventions of the House, and in particular your emphasis on brevity, Mr. Speaker, which I have done. The hon. Member for Streatham (Mr Umunna) also quotes me as having said that his party bequeathed us a good platform. I cannot remember ever saying that, but I shall hastily correct the record if what he thinks I said is correct. Let me set out what that collapsing platform actually involved. In 1997, the share of industry in the British economy was 18% of GDP, yet when we inherited it, it was just over 10%, which represents the most rapid decline in any major western democracy. Employment declined even more, of course. On international trade, the share of British merchant goods in international markets halved, from 5% in 1997 to 2.5% in 2011, when we took over. That is the platform that we are trying to build from, and it is not a very strong one.
Of course, I acknowledge that there were good ideas, and Lord Mandelson, like Lord Heseltine and others, had a sensible approach to working with the public and private sector in a collaborative way. Institutions such as the Automotive Council are good, and I have been very happy to work on them and develop them.
We are not returning to picking winners, as it is sometimes called. As the hon. Gentleman kindly pointed out, I worked with the late—and, indeed, great—John Smith in the late 1970s. I worked in his office in the Department of Trade and Industry, and we saw evidence of the failures of picking losers. Vast amounts of public money were used in very unproductive forms of public intervention, but I think that subsequently the pendulum swung too far in the opposite direction. We must now get to a sensible middle point, often learning from the experiences of other countries, including South Korea, Germany and Finland, where there is a sensible balance between the role of Government and the role of the private sector, and that is what we are striving for.
The hon. Gentleman seems to imagine that there is some kind of one-size-fits-all policy for business, but there are many companies that do not want Government anywhere near them; they just want to get on with their job of making money. Large numbers of small companies are in that space, and we respect that and want to create an environment in which they can operate, but many others are quite different, such as those with long-term technological horizons and big and complex supply chains, and need a more collaborative approach, and we are seeking to develop that.
Let me just emphasise that this industrial strategy has the full support of the Prime Minister, the Chancellor and my colleagues behind me on the Treasury Bench, and that we shall be working together on a team basis to deliver it.
I applaud the Secretary of State for the work he has done with the automotive sector; we have seen the benefits in Stratford-on-Avon. He is rightly not going to be picking winners, but does he agree that what we should be doing is picking sectors where we can be world beaters, and improving and supporting those sectors?
My hon. Friend is right; we need to make that distinction. There are many examples. He chose the automotive sector, where Britain is now performing extraordinarily well. For the first time in a generation we have a trade surplus in the automotive sector, with £6 billion in new commitments of investment, but there are many other sectors whose experience also serves to illustrate the wisdom of Government and the private sector sitting down together, and one of them is the space sector, as my colleague who represents higher education, the Minister for Universities and Science, knows very well. Britain now has one of the most outstanding space sectors in the world, and a lot of that is a product of sensible collaboration.
I broadly welcome the Secretary of State’s comments, which in many respects are long overdue. However, can he reassure me, and organisations such as the Engineering Employers Federation, that the lack of political will of which his Government accuse past Governments on this issue will now change? What reassurances can he give us that the political direction will change, and that the new political backing will ensure this policy is rather more successful than the economic plan for growth introduced last year?
There is strong political backing for this. The hon. Gentleman refers to various industrial groups, and I am well aware that the Engineering Employers Federation, and, indeed, the CBI, have called for an industrial strategy of this kind. I will be working very closely with them and the other business groups.
If the Government have an industrial strategy supported right across government, why is HMS Ark Royal to be decommissioned abroad, rather than in the north-east of England, where she has a long association and where there are eight workers for every job available? The shipbuilding skills are there to decommission the ship in the north-east: why cannot that be done?
I am certainly very happy to talk to my colleague the Secretary of State for Defence about the cost-benefit analysis he will have undertaken in order to make that decision. Historic associations are not really a good base for business decisions; none the less, the right hon. Gentleman has made a case and I will try to establish why that business decision was made.
May I congratulate the Secretary of State on visiting the Sustainable MotoExpo in my constituency over the weekend, and on the support it demonstrated for green technology design and engineering, which the Government are already giving through bodies such as the Technology Strategy Board? I hope that that continues and increases.
My colleague reminds me of an event that took place on Saturday in Cheltenham that was a very good advertisement for the industrial strategy approach I am describing. The Government have put some £400 million into the development of electric vehicles, and my colleague the Secretary of State for Transport has supported the bounty for charging points. We are now seeing that technology getting to a take-off point. My hon. Friend showed me dozens of examples of small and large car makers in his constituency—led by the Nissan Leaf, which we have been supporting directly—that will make this a major industry in future years.
I certainly like to think I am a voice of progressive opinion. We are dealing with changes in the tribunal system that will help small-scale companies to deal with some of the issues they have. But as I pointed out to the House the other day, the specific proposal of no-fault dismissal is not something we are proceeding with.
With the Government accounting for 50% of the economy, I am sure the Secretary of State will agree that industrial strategy should be based not on more borrowing for more government, but on more encouragement for more entrepreneurs. Will his Department therefore look at the local enterprise funds initiative, which has the potential to galvanise people who can invest in businesses in their local community to do so, and which more than 83 Members of Parliament have already expressed an interest in setting up in their local communities?
That is an extremely good suggestion and I am very happy to talk to the hon. Gentleman in more detail about how he sees this happening. Of course, we have the local enterprise partnerships—perhaps they have a key role in making that happen. However, his premise is correct: it is entrepreneurs in the private sector who will drive recovery, and they are fundamental to the industrial strategy.
There was no mention in the Secretary of State’s statement of the defence sector, yet we have had some notable losses of export opportunities, a lot of rhetoric and very little action in the last two and a half years. Will he set out what lessons he thinks he can learn from the United States and France in the way they work with, protect and promote their defence industries?
Of course, the defence sector does have an important role to play in the approach I am developing, particularly in procurement and in research and development. We want that approach to be fully cross-government, and it will include defence. We work closely with the French, as the hon. Lady knows, in the aerospace sector and we learn from their experiences, not all of which are successful, one has to say.
Does the Secretary of State agree that as well as having an industrial strategy we need to do everything we can to encourage business confidence and that at this moment we need everyone to get involved, including the Opposition?
The Secretary of State spoke about the supply chain, a sectoral approach, training, bank lending, a new bank and the importance of procurement. They are all important, but he said precious little about fiscal policy. He will remember that the industrial buildings allowance boosted manufacturing and tourism in the past. Indeed, the agricultural buildings allowance did the same in that sector. Does he see a role for such fiscal change to leverage private investment and grow capacity on the supply side?
The Chancellor is doing a great deal of that. Indeed, he is trying to create an encouraging tax environment for business. Of course, what we have to do—and what he is doing—involves a trade-off between specific incentives and producing an over-complicated tax system, about which I know that the hon. Gentleman, with his detailed knowledge of the sector, would be the first to complain.
Given that growth is a key objective, will the Secretary of State cut at least some of the funding for infrastructure projects, as we cannot export bridges, roads or houses, and instead fund tax cuts for small and medium-sized enterprises to encourage them to grow? That is a more sustainable way of reducing unemployment, particularly if the dead weight of regulation is reduced, too.
Both the right hon. Gentleman and the Deputy Prime Minister have made quite clear their opposition to regional pay, which is welcome. What are he and the Liberal Democrats doing within the Government to stop regional pay coming in by the back door in 20 NHS hospitals in south-west England?
The Government have made it clear that we support local flexibility. The model we have studied was introduced by the Labour Government in the Courts Service. It does not involve large-scale regional differentials, but does involve giving parts of the public sector the opportunity to vary their pay to reflect performance and local conditions.
There has been some discussion in the press this morning in the north-east of England about the Deputy Prime Minister establishing a new inquiry into the growth of the north-east as an economy, involving people such as the chief executive of Northumbrian Water and the Bishop of Durham, with Lord Adonis as the chair. What does the Secretary of State think he can do in conjunction with an inquiry of that nature to grow confidence in the economy so that British business starts to invest the £700 billion that it is sitting on?
I recognise that there are severe problems in the north-east, as I have been there many times and I have talked first hand to representatives and to the business people involved. The north-east has one potentially major advantage in an economy that is rebalancing, as manufacturing forms a high proportion of its total economy, as do exports. I was last in Newcastle a few weeks ago, and there are many good, positive new industrial developments on the Tyne. That might be an indication of better things to come, as might developments in the car industry in that part of the country.
I welcome the Government’s announcement of a commission to consider strategy for the north-east economy, chaired by Lord Adonis. May I impress on my right hon. Friend and the commission the importance of the A1 road link and of maintaining the Government’s commitment to renewable energy, both of which are important to industry in the north-east?
My right hon. Friend is a formidable advocate of north-east interests. He makes two specific points. I have heard the point about the road link many times. I do not know quite where we have got to in the process, but I will check up on it. He also emphasises the importance of renewable industries and will be aware that industries are beginning to revive on the Tyne, involving rigs for the North sea, that were previously in the oil and gas sector but have been adapted to renewables. We will see a great deal more such work on the east coast and, of course, it has explicit Government support, financial and otherwise.
The manufacturers’ organisation EEF has called for an industrial strategy after criticising the Government’s approach to growth so far as inconsistent, incoherent and unaccountable. It was not clear from the Secretary of State’s contribution whether tomorrow marks a step change in his industrial strategy or more of the same. Which is it?
We are of course dealing with a gradual evolution of policy; business wants certainty and clarity, rather than sudden changes. I return to the point I made in response to the hon. Member for Streatham: we are starting from an inherited position on the manufacturing industry that was very weak after a long period of decline. Turning that around will not be easy.
The Secretary of State had a starring role in the Channel 4 programme “Bank of Dave”, in which I made a brief cameo appearance. He talked today about access to finance being a key part of an industrial strategy. I hope he agrees with me that local banks such as Dave’s bank have a key role to play in that.
I thank my colleague for that. I have met Dave. He is an impressive entrepreneur and very public-spirited and, as I understand it, is doing a great job in Burnley in channelling savings directly to local businesses. That seems an extremely attractive model that could well be reproduced elsewhere.
With the gap between the south and the regions widening, I am disappointed that the Secretary of State has not included a regional element in the industrial strategy. Does he now regret the hasty decision to abolish the regional development agencies and replace them with the impoverished local enterprise partnerships and the incoherent regional growth strategy?
The gap between north and south, which is of course a good deal more complex than the hon. Gentleman suggests—there are parts of the north that do extremely well—has been widening for many years, in spite of the regional development agencies. I am absolutely satisfied that the structures we have introduced, the local enterprise partnerships, are more relevant to local geography, much more business focused and, together with the city deals, will give an energy to the development of some of the areas which have been struggling that they have not had for many years.
The hon. Gentleman is right. As I said in my brief introduction, there is a serious and declining trend in business lending to SMEs. He is also right that certain kinds of businesses find borrowing extremely difficult. Creative industries are a good example, because they do not have physical security and the banks are extremely risk-averse, which of course is difficult for companies engaged in international trade. That is all the more reason why the Government have to intervene to support lending in such instances.
The Business Secretary mentioned innovation, but does he not recognise that the share of national income spent on research and development has declined over the past three decades? Why did he not advocate in his statement measures to increase Labour’s research and development tax credit to ensure that we do not continue to lag behind Germany, France, America and Japan?
One of the things the Chancellor has done is improve and focus the R and D tax credit, taking it to below-line research expenditure, which was hitherto a major inhibitor. One of the things I very much want to see arising from this work is a much bigger commitment to R and D, particularly the role of the Technology Strategy Board, which I think is one of our best institutions.
I, too, welcome the Secretary of State’s comments. Today the Associate Parliamentary Manufacturing Group released a think-piece on modern industrial policy, which is available to Members online. It states that we need a formal strategy document, created by the Government and overseen by a dedicated Minister for manufacturing, delivered to Parliament regularly and created in full consultation with industry, trade unions, all political parties and parliamentarians. Will he meet the group to discuss these ideas and how we might be able to integrate them into Government policy?
I am certainly very happy to meet the group. A key part of the industrial strategy relates to manufacturing. However, it is important to stress that the modern economy is much more complex than the old sub-divisions. Much of the value in manufacturing these days derives from what are called intangibles—intellectual property, for example, and IT work. The services sector in its modern form contributes massively to our economy, which is why one of the areas we want to focus on is services that can be sold overseas and that have a large knowledge or technology component.
Following on from a previous question, SMEs regularly tell me that they find it difficult to access funding from the big banks, and in some cases the banks are actually obstructive. The question therefore arises: where will the industrial strategy succeed, where the Merlin agreement apparently failed?
The Merlin agreement did not fail. It was not sufficient, but it did have the effect of stabilising lending to SMEs by banks above the level it would otherwise have reached. I am often critical of the banks, but to be fair to them, a major factor is the change in the system of regulation—much of it taking place internationally—which is forcing the banks to hold more capital and to weight their risks in a different way. That has the effect of discouraging lending to SMEs. We are proceeding with a whole lot of interventions that are designed to counter that trend.
I welcome the Secretary of State’s focus on the aviation sector, particularly from the point of view of engineering. However, does he agree that a proper strategy for industry requires all aspects of engineering to be considered by most companies involved in any form of manufacturing and that we also need to give engineers a boost at boardroom level?
The hon. Gentleman is absolutely right, but that requires a big cultural change, and that is beginning to happen. We see from university applications this year that engineering was the most popular subject among applicants, which suggests that we have been successful in recognising that engineering is an essential discipline.
The Secretary of State will be aware that there is a plan for a major wind turbine plant in my constituency and that there are major plans for offshore wind turbines off the east coast of Scotland. I therefore welcome what he said to the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) about support for renewables. However, people in those industries are asking questions about the commitment to the renewables industry of other people in the Government. Will the Secretary of State take this opportunity to dissociate himself from those in the Government who question the role of renewables in our industrial revival?
There is complete support in the Government for what is happening in offshore wind, which is what the hon. Gentleman was describing. I introduced, with the support of my colleagues, a new centre to promote research and development—in Scotland, as it happens—and I was recently in Edinburgh supporting one of the new ventures there. The Government are fully behind the industry, which is building up on the east coast of Scotland and England in particular, taking advantage of the opportunities in the sector, which has enormous potential.
Developing new sectors is vital, but does the Business Secretary agree that it is equally important to maintain and pass on viable manufacturing skills, some of which have been established over generations? Will he therefore join me in congratulating management and workers on the reopening of the former Ideal Standard factory site in Middlewich, under the new name of Ours Sanitary Ware Ltd? The site is creating valuable new jobs in the UK ceramics industry and bringing back to Cheshire the manufacturing and production of bathroom ware, which has a proud tradition in the area, but was sadly run down under the previous Government.
The hon. Lady is right that a lot of manufacturing capacity was run down under the last Government. We can be positive not just about some of the more sophisticated, high-tech manufacturing, but about traditional sectors—she cited ceramics as one example. The first industrial visit I made as Secretary of State was to a bicycle factory, which was doing extraordinarily well, expanding and exporting to China. With access to good process innovation, traditional manufacturing can do just as well as some of the newer and more sophisticated forms.
The Secretary of State mentioned procurement, yet the Government are, for example, giving away major train manufacturing contracts abroad. Yesterday it was reported that civil servants in the Department for Transport are trying to nobble their new Secretary of State for having the temerity to back British train manufacturer Bombardier in Derby. Will the Secretary of State back his colleague, put those disloyal civil servants in their place and stand up for British industry—and, indeed, for the policy that he has just enunciated?
I do not think there is any question of disloyalty; the public service has a set of different obligations in relation to procurement, one of which, of course, is to obtain value for money. Another is to observe the law, which we all have to follow. My colleague the previous Secretary of State for Transport worked closely with me in developing a more strategic approach to the procurement of trains, and we have begun to see that in the framing of the contracts that are now happening.
The chief executive officer of Alcan UK has recently said that differentially high energy prices are a much bigger issue for his business than the eurozone crisis. Energy prices have not been discussed so far in this urgent question. Does the Secretary of State agree that it is hard to have an industrial strategy based on more manufacturing when our energy prices are potentially higher than those of our neighbours, such as France?
The hon. Gentleman is right that there is a real problem. That is why, in the last Budget, we agreed to proceed with a scheme that will effectively compensate energy-intensive producers, in the metals industry and elsewhere, for the relatively high cost of electricity that they face. We have been through a process of consultation, which has recently finished, on how that complex set of problems should be dealt with. We fully recognise the problem.
The Secretary of State has placed great emphasis on the regional growth fund. Is he not embarrassed and concerned that, 20 months after the first-round bidding has closed, companies are still waiting for the money, and facing the prospect of a further 12 months’ wait? What is he going to do about that?
I am not the least bit embarrassed about the regional growth fund, which is a major success story. Wherever I go around the country, I get strong appreciation for the contributions it has made.
The hon. Gentleman knows very well that, once a decision in principle has been reached, there has to be due diligence, which is not necessarily quick. Very often the companies change their own plans, which then have to be negotiated; some fall by the wayside. There is a very large number of projects that not only have disbursed finance but are up and running and creating large numbers of jobs across the country.
I thank the Secretary of State for his personal support for the life sciences sector in east Kent. If there is to be public money behind any partnership, will he particularly consider equity so that the taxpayer can share in the success? Will he also consider the idea that the proposed industrial bank should be the business growth fund retasked, expanded and floated for the future?
It is certainly true that in developing the idea of an industrial business bank, we need to take account of existing mechanisms of funding and bring them together in a more rational way.
I thank the hon. Gentleman for what he said about east Kent, which is a good example of how, even in successful growth industries such as the life sciences, technologies change, competition is intense and companies close. A large part of government is dealing with the painful restructuring that has to happen. We cannot stop markets working.
The Secretary of State mentioned Lord Heseltine, who is credited with the vision of developing London docklands and beyond. He also rightly mentioned the importance of infrastructure. How does his industrial strategy relate to the construction industry—in particular, possible support for east London river crossings, without which we will not be able to maximise the potential of Canary Wharf, Stratford and the Thames Gateway?