Oral Answers to Questions

Alison McGovern Excerpts

Tuesday 27th January 2015 Commons Chamber

[Mr Speaker]

Last but not least, and very pithily, Alison McGovern.

[Alison McGovern (Wirral South) (Lab)]

Will the Chancellor confirm that he has ruled out a further VAT increase in the next Parliament?

[Mr Osborne]

Our plans do not involve a VAT increase, because we are prepared to make difficult decisions on public expenditure, including decisions on the welfare budget. The hon. Lady and her colleagues voted for £30 billion of consolidation. If they are not prepared to do that by achieving expenditure savings, they must be contemplating big tax rises. With 100 days to the election, we know the choice: it is between a competent Conservative plan that is delivering growth, and a return to economic chaos under the Labour party.

Childcare Payments Bill

Alison McGovern Excerpts

Monday 17th November 2014 Commons Chamber

Brought up, and read the First time.

[Alison McGovern (Wirral South) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

Amendment 12, in clause 11, page 7, line 8, after “may —”, insert—

“(a) repeal this section, or”.

Amendment 13, in clause 15, page 9, line 10, after “may —”, insert—

“(a) amend this Act to allow childcare accounts to be held by persons other than those specified in subsection (1),”.

Amendment 3, in clause 30, page 17, line 3, leave out

“an award of tax credit is or has been made”

and insert

“an award of tax credit which includes the childcare element is or has been made”.

Amendment 4, page 17, line 18, after “credit”, insert

“which includes the childcare element”.

Amendment 5, page 17, line 22, after “credit”, insert

“which includes the childcare element”.

Amendment 6, page 17, line 31, after “credit”, insert

“which includes the childcare element”.

Amendment 7, in clause 32, page 19, line 16, after “credit”, insert

“which includes the childcare element”.

Amendment 8, in clause 35, page 21, line 21, after “credit”, insert

“which includes the childcare element”.

Amendment 9, page 21, line 32, after “credit”, insert

“which includes the childcare element”.

Amendment 10, in clause 36, page 22, line 12, after “credit”, insert

“which includes the childcare element”.

Amendment 11, page 22, line 24, after “credit”, insert

“which includes the childcare element”.

[Alison McGovern]

It is a pleasure to speak in support of new clause 2, which stands in my name and that of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell). Before I continue, may I pause briefly to pay tribute to the outstanding work that my hon. Friend the Member for Manchester Central (Lucy Powell) did as my predecessor in this shadow position, and in particular to her scrutiny of the Bill in Committee?

In and of itself, this is not a bad Bill. We agree with its aims; it sets out to address serious issues relating to child care costs and affordability, which we recognise form a major part of the crisis hitting so many families in Britain today. Our concerns with the Bill are that, for all its good intentions in proposing this scheme for payments towards child care costs, Treasury Ministers have not thought through all the potential consequences.

Some of the Bill’s weaknesses may arise from the fact that, as far as the Government are concerned, this is purely a Treasury Bill; it has perhaps lacked some valuable input from those with a stronger experience of how the child care market actually operates—or, in far too many cases, fails to operate—in this country.

In oral evidence to the Committee, numerous organisations and experts raised concerns about the long-term effects of the Bill, and we have seen little movement from the Government to address those worries. The new clause seeks to go some way to rectifying that, by requiring the Chancellor to keep under review the impact the scheme has on issues of child care cost inflation and, thus, affordability.

Let me say a few words about the situation in which we find ourselves. There is, undeniably, a crisis in child care costs. There is no need to take my word for that or to rely on the testimony we hear on the doorsteps in our constituencies. The Office for National Statistics tells us that between 2010 and 2014 the cost of placing a two-year-old or older in nursery rose by 31%—wages rose by just under 4% in that period—and for under-twos the figure rose by 27%. [Interruption.] If the hon. Member for Taunton Deane (Mr Browne), who is sitting on the Liberal Democrat Front Bench, wants to intervene, he is welcome to. [Interruption.] I shall take that to mean he does not.

The figures also reveal that, as we have seen so often during the past four years, the areas seeing the least benefit from this weak and uneven recovery have been hit the hardest by child care cost increases. In my region of the north-west, costs are up by 46% in just four years. Over the Pennines, in the north-east, the figure is 47%. A family in my constituency is having to find, on average, £31 a week more to fund 25 hours of nursery for their two-year-old, three-year-old or four-year-old. That is a hefty sum in almost anyone’s money. When that is tied in with frozen wages, reduced tax credits, increased VAT and soaring housing costs, it all becomes a pretty desperate recipe—I hear testimony on that from my constituents week in, week out.

We know that not only are there regional biases to costs, but families with disabled children are being hit disproportionately hard as well. I pay tribute to my hon. Friend the Member for Stockton North (Alex Cunningham), who was a doughty champion for the parents of disabled children in Committee and who has tabled amendments 1 to 13 today. The cross-party parliamentary inquiry on child care for disabled children, of which my hon. Friend was a member and which was chaired by my hon. Friend the Member for North West Durham (Pat Glass) and the hon. and learned Member for South Swindon (Mr Buckland), produced some valuable findings on that point.

--- Later in debate ---

[Hywel Williams (Arfon) (PC)]

Does the hon. Lady accept that there are particular stresses on parents in rural areas, as the cost of travel has to be added to the cost of child care itself? The money could be better deployed in such areas in increasing the provision rather than the amount that child care providers get.

[Alison McGovern]

It is important for all of us to recognise the extra pressures on families in rural areas. People’s circumstances are different. We want to increase employment in rural areas as well as in suburban and urban areas. The hon. Gentleman makes an important point.

[Alex Cunningham]

My hon. Friend helps me to talk about the needs of parents with disabled children. When inflation and prices go up, the increase is felt particularly acutely by those families. Does she agree that the Government really need to think again about that particular element?

[Alison McGovern]

Again, I support the views of my hon. Friend. Too often, parents of children with disabilities are forgotten in our debates. They have the most important responsibility. Children with disabilities deserve all our care and attention. I hope that, by raising this matter, we can remind ourselves that their parents might not have the time to make these points, so it is important that we all remember the extra costs and the circumstances that those parents face. We all have an interest in this matter. It is why Labour is sceptical about the wisdom of a demand-side-only approach.

In general, better value for money and better outcomes could be achieved through a radical expansion of the free child care entitlement to three and four-year-olds, from 15 hours a week to 25, paid for by an extension of the bank levy. There is no better week than this to be making the argument about extending the bank levy, as once again we are seeing banks being taken to task for their poor behaviour. I make no apology for reminding Members about the importance of that bank levy, especially as it could pay for something as vital as child care.

As we saw from the debate on new clause 1, the Government are not about to accept the policy—more fool them—but we want to ensure that Ministers are required to keep track of the inflationary impacts. New clause 2 requires that within three months of the Bill’s becoming an Act and every three years subsequently, the Chancellor will have to review the impact of the subsidy on making child care more affordable, on what the average cost of child care for parents in work is and on whether supply-led measures could be more effective. That is not a massively onerous burden on the immense capabilities of the Treasury, but a very valuable canary in the coal mine regarding child care inflation.

In Committee, the Minister was consistently against any suggestion of hourly rate capping or other means of placing a brake on any inflationary pressures arising from the policy. A regular review might demonstrate whether the post hoc implementation of such provisions might in fact be necessary if the subsidy is to be anything more than a damp squib.

The Bill is a blunt instrument that fails to target Government funding and gives the most financial support to the best-off families. It will possibly provide some short-term relief for parents, but does little to deal with the underlying problems of inflation, supply and quality in the child care system. There are 40,000 fewer child care places in England than there were when the Government came to power and almost 4,000 fewer suppliers. Childminder numbers are down by 13%. For tens and likely hundreds of thousands of families across the country, the proposals in the Bill will mean little or nothing because they simply cannot find a child care place or access one that will offer the flexibility in hours to fit around work. We need radical reform of the broken child care market. This Bill does not provide it, but by supporting new clause 2 today Members can at least take a step that will help guard against its being a worse than a useless creator of child care cost inflation.

[Alex Cunningham]

My hon. Friend the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) has already talked about the complexity of the Government’s scheme. Amendments 12, 13 and 3 to 11 are all aimed at simplifying the relationship and interaction between the tax-free child care scheme and other sources of support, particularly tax credits and universal credit.

Members might be aware that I tabled amendments 3 to 11 in Committee with the intention of broadening the provisions of the Bill and allowing those households in receipt of tax credits that do not receive any support for their child care costs in their tax credit award to receive support from the tax-free child care scheme. My hon. Friend the Member for Wirral South (Alison McGovern) has already outlined that the working poor have been hit most by the policies of this Government and I would like that not to apply to child care.

Giving those people help will entail several minor changes being made to the clauses dealing with the special rules affecting tax credits and universal credit claimants: specifically clauses 30, 32, 35 and 36. In Committee, the Minister was very clear about the need to deliver a welfare system that is

“designed to encourage progression into work”.––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 223.]

However, that is not what will result from the Bill in its current form.

Let us take as an example a parent who is offered 15 hours of work a week on a low rate of pay. Most, if not all, of any gains from this employment could be totally lost in child care costs. They would not get any support from the Government to meet those costs and might therefore not be able to afford to take the work in the first place, and I for one would not be surprised if they chose to spend the time with their children instead. These amendments, however, would create a much greater financial incentive for people to start working part time.

It is important to be clear from the outset that the purpose of the tax-free child care scheme is to provide support for child care costs for those who are not eligible for help from elsewhere. As I mentioned when I raised the matter in Committee, there is an anomaly in the Bill if we are serious about encouraging people to go back into work or to stay in work—particularly those who are on the lowest earned incomes in our society.

The Bill as it stands says that the Minister recognises that there are some who do not get any help through tax credits but that the Government will do nothing to help. I am sure that that is not what she intends. Indeed, in Committee, she specified that the new scheme should not interfere with financial incentives for people to work more hours, let alone create perverse incentives, but that is precisely what the Bill will do.

Many parents who claim tax credits are both working and incurring child care costs, but they are not entitled to claim the child care element because, for instance, they do not meet the minimum number of working hours per week to qualify. Clause 30, however, makes it clear that any tax credit award will be terminated when a valid claim for the tax-free child care scheme is made, regardless of whether the child care element of working tax credit is received. Put into context, that means that households in which one parent is working full-time while the other works 12 hours a week will not be entitled to receive the child care element of tax credits to support them in the payment of child care costs. Similarly, single parents working 15 hours or fewer per week on average will also not be entitled to the child care element of working tax credit. Both would have to pay for their child care out of their own, potentially low, earnings.

--- Later in debate ---

[Alison McGovern]

The Minister mentions universal credit and making work pay—for too many families I only wish it did. Will she comment on the role of universal credit in discouraging dual earners? In the context of this child care debate, does she think the Government should look again at its operation?

[Priti Patel]

We had much debate in Committee on universal credit and the way in which the scheme interacts with it. The hon. Member for Manchester Central (Lucy Powell) made some strong and valid contributions in this regard.

Amendment 12, tabled by the hon. Member for Stockton North (Alex Cunningham), would allow regulations in future to permit parents to receive support under the new scheme and universal credit at the same time. As I have said, we must not forget that families in receipt of universal credit already rightly receive generous support with their child care costs. Child care support is offered to parents on universal credit as part of a welfare system designed to make sure that work pays and that those who need the support get it. Up to 300,000 more people are likely to be in work as a result of universal credit, and we expect a significant proportion of those to be households with children. But it is not right for a parent to receive support under the new scheme in addition to universal credit, when parents will receive 85% of their child care costs from April 2016. It will be easy for parents to access support that best suits their circumstances, so I reassure the hon. Gentleman that parents who are eligible for universal credit will be able to opt out and claim support under the new scheme should they wish to do so. We shall be supporting parents in making those decisions.

As we said in Committee—hon. Members have touched on it again today—we shall be launching the online support tools, the calculator and clear guidance. Draft guidance has been published well ahead of the launch of the scheme and shows our commitment to work in close collaboration with parents, child care providers and employers, and their feedback will ensure that guidance is tailored to meet their needs.

This is about ensuring that support remains focused on those on lower incomes, and the introduction of the scheme gives parents confidence that as they increase their income and move off universal credit, they will continue to receive Government support with their child care costs, which is vital.

Oral Answers to Questions

Alison McGovern Excerpts

Tuesday 4th November 2014 Commons Chamber

[Danny Alexander]

I agree with my hon. Friend that Labour’s plans would put at serious risk the jobs and stability that this coalition Government have secured. There is a lesson in what he says for all parties in this House, because economic credibility is hard to win and easy to throw away. Any party that does not put forward a plan to sort out the economy or offers unfunded tax cuts to the British people will put its credibility at serious risk.

[Alison McGovern (Wirral South) (Lab)]

On the deficit, the Chancellor and the Chief Secretary to the Treasury have failed the test they set themselves, which is to close the deficit by the end of this Parliament. Worse than that, they have failed the test that my constituents set for them, which is to put money back in their pockets. That was said to me this week by a grandmother who is desperately worried about her grandson, as he is on a five-hour contract and unable to afford to take a day off work. What will the Chief Secretary do about that?

[Danny Alexander]

The first thing that we are doing is delivering on what we promised to do when we created this Government in the first place, which is to repair the deep damage that the hon. Lady has to admit was done to the economy under her party’s stewardship. We have now got the United Kingdom into a position in which we are creating more jobs than in the whole of the rest of the European Union combined, and we have the strongest growth rates in the developed world. She should welcome that as something that creates opportunities for young people.

The Economy and Living Standards

Alison McGovern Excerpts

Thursday 12th June 2014 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

Before those interventions, the shadow Chancellor was making an extraordinarily important speech. Does he agree that the fundamental question we face is whether the link between economic growth and the living standards of people doing ordinary jobs in our country is broken or not? Will he return to such points, because those are the issues that my constituents fret about day in, day out?

[Ed Balls]

I will. This is the most vital and difficult issue. We have seen a rise in unskilled jobs in our country in recent years. That is a good thing, but it is not good enough. If that goes alongside falling living standards year on year for people not just on the lowest but on middle incomes, what will we end up with? We will end up with rising poverty among working people and record numbers of working people going to food banks, as well as rising alienation and a view that mainstream politics is not delivering. Unless Conservative Members wake up to that, they will see the consequences of it next year.

--- Later in debate ---

[Mr Osborne]

I was wrong? This is the man who presided over the deepest recession in British modern history and the biggest banking crisis since the Victorian age. He has the nerve to get up and say to the team that is turning the country around that we got it wrong. The truth is that he is the person who got it wrong.

There was a very interesting observation this week by Charles Clarke, who was the Home Secretary when Labour were in office. This is what he said:

“we have rested a great deal on assuming that the Conservative strategy wouldn’t succeed, that ‘plan A’…would not work and that has proved to be an unwise judgment because in fact, the Conservatives have succeeded in getting the economy onto a more positive path which leaves us”—

the Labour party—

“very little place”.

[Alison McGovern]

I think the Chancellor gave himself away at the beginning of his speech when he described “long-term economic plan” as just a catchphrase. He said he would close the budget deficit and he has not. If his policies are such a success, why not?

[Mr Osborne]

It is not a catchphrase; it is a plan that has cut the claimant count in the hon. Lady’s constituency by 45%. That is a plan that is working. The budget deficit has been halved. If her argument is that we should be cutting faster or trying to get the deficit down faster, that is a novel argument because it is not one I remember being made at any one of the economic debates when she and the rest of the Labour party trooped through the Division Lobby against every single change we have made to try to bring the public finances under control.

Oral Answers to Questions

Alison McGovern Excerpts

Tuesday 29th April 2014 Commons Chamber

[Mr Gauke]

The reality is that business investment is increasing, by 8% this year and by 9% next year. We have also just seen some very good figures relating to manufacturing growth over the last year. The Government continue to work to secure a balanced recovery, with the support of a number of measures in the Budget, but we are already making very good progress.

[Alison McGovern (Wirral South) (Lab)]

13. What recent representations he has received on reform of the Office for Budget Responsibility.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

16. What recent representations he has received on reform of the Office for Budget Responsibility.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Chancellor regularly receives representations on a wide range of matters, including the role of the independent Office for Budget Responsibility.

[Alison McGovern]

The Minister may have guessed that I am going to ask whether she agrees that the OBR should be allowed to audit the manifestos of all the main political parties, and I can probably guess what her answer will be, but can she explain why?

[Andrea Leadsom]

The hon. Lady can read my mind, Mr Speaker. Excellent!

This matter has been the subject of some debate, and, as the hon. Lady will know, it has been discussed by the Treasury Committee. I feel that, given that the Office for Budget Responsibility was established so recently, this is not the moment to start considering changing its remit. As has been pointed out by the hon. Lady’s party, it is essential for the OBR to be independent and to confer accountability on the Government, rather than becoming embroiled in party politics at such an early stage.

Finance (No. 2) Bill

Alison McGovern Excerpts

Wednesday 9th April 2014 Commons Chamber

[Debbie Abrahams]

It is a pleasure to serve under your chairmanship, Mr Bone. It is a pleasure, too, to follow my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I shall spend a few minutes building on the economic context that she described. Unfortunately, we have seen too much self-congratulation at the glimmers of economic recovery that the country is finally seeing, after three years of a flatlining economy. We need to look at the full picture. This is the worst recovery in 100 years.

The gross domestic product in quarter 4 of 2013 was 0.7%. That is 1.3% below the pre-recession peak in 2008. We would need to grow 1.6% each quarter up to the general election just to reach where we were at the end of 2010. Since 2010, we have had growth of 3.8%, compared with the US, where growth has been 8.4%. UK productivity is the second lowest in the G7 and 20% lower than the G7 average—the widest gap since 1992. Exports were down 4% in the last quarter of 2013 and the trade deficit in December 2013 stood at £7.7 billion. As we know, the Government will have borrowed £190 billion more than planned in 2015. Public borrowing in 2015 will be £75 billion. We know about the promises in 2010 that the deficit would be cleared.

We have been speaking about the implications of the fragile recovery for employment and unemployment. The Government are keen to mention absolute numbers, but the employment rate is still below pre-recession levels and most of the jobs created since 2010 tend to be insecure, part-time and low paid. The proportion of short-term contracts has increased by 20 times to 1.65 million, of which 655,000 are involuntary. The increase in temporary jobs accounts for more than half of the rise in employment. Nearly one in five—that is, 1.46 million people—work part-time because they cannot get full-time work. That is the highest level of underemployment since 1992. Four out of five new jobs are paid below the living wage. Another key issue is the geographical spread of these new jobs. Since 2010, 79% of them have been in London, with only 10% in the nine urban centres outside London. It is hardly a recovery for the whole country, is it?

My hon. Friend spoke in depth about unemployment. I am concerned that the true levels of unemployment are hidden. We have seen a sudden increase in self-employment, which, as I know from my role on the Work and Pensions Committee, has been pushed in jobcentres. There has been a 4% rise in self-employment in the last quarter, and a huge rise in inappropriate and punitive sanctions attached to social security payments since the benefit sanctions regime was introduced at the end of 2012. Members may not be aware that 5% of jobseeker’s allowance claimants are sanctioned every month for at least a month. Half of them do not even know they can appeal against that, let alone that they have to keep signing on to remain on the unemployment register. Five per cent. of 1.17 million JSA claimants equates to 58,500 people; we can get the picture from that.

A constituent came to see me who was a special needs teacher who had been made redundant in his late 50s. It had been suggested to him that he become a bingo caller, but he had to travel 70 miles to do that. There is real deskilling of a skilled work force, along with graduates undertaking non-graduate-level jobs. My hon. Friend mentioned the 900,000 young people who are long-term unemployed. A recent report talked about a hidden talent pool of young people. A total of 2.46 million—two in five—young people are unemployed, inactive, underemployed, in a voluntary job, in a Government scheme, or a graduate in a non-graduate role. It may be described as hidden talent, but I would call it a waste of talent.

As I have said before, the impact on these young people cannot be measured only in financial terms. The long-term implications for their future are very significant. A recent report by the Prince’s Trust showed that one in 10, or 100,000, unemployed young people believe they have nothing to live for, and that increases to one in five of those who have been long-term—

[Alison McGovern (Wirral South) (Lab)]

My hon. Friend is a respected member of the Work and Pensions Committee, so is she aware, as I am, that the DWP published its own report on the future jobs fund showing that it did tackle some of the crisis of self-respect and self-esteem that she is talking about?

[Debbie Abrahams]

My hon. Friend makes an excellent point. Yes, we need to be very clear about the interventions and programmes that can make a meaningful difference. I am sure that what we are suggesting in place of the youth contract, which is clearly ineffective, would fit the bill.

The report said that one in five young people who were long-term unemployed felt that they had nothing worth living for, and one in three felt suicidal. There is a moral imperative to act, not just an economic one. We cannot continue like this—it is completely unfair on the lives of these young people, in particular.

All this is happening at the same time as the top rate of tax has been cut for people on incomes of more than £150,000. As we have heard, bank bonuses are increasing again. Top-to-bottom pay ratios for the FTSE 100 stand at 300:1. We look at this in the context of the average family really struggling, with wages down by £1,600. The IFS has shown that since 2010 the average family has lost income of £974 a year.

The recent Oxfam report, “A Tale of Two Britains”, highlighted the growing gap between rich and poor, whereby the five richest families in the UK are wealthier than the bottom 20%, equating to 12.6 million people. Rafts of reports from the Equality Trust and others describe this situation. That gap matters, because overwhelming evidence shows that society as a whole benefits from more equality through better life expectancy, mental health, social mobility and educational attainment, and reduced crime—everybody gains. There is international evidence to support the existence of all these benefits.

I launched an Oldham fairness commission last year, to tackle inequality in my constituency. The commissioners are looking at inequalities in education, employment and income. We find it unacceptable that, in this day and age, someone who is white, able bodied and male is more likely to be in work than someone else with the same qualifications, and that a third of the jobs available in Oldham are paid below a living wage. That is not the way in which to achieve a sustainable economic recovery.

--- Later in debate ---

Our jobs guarantee will give hope and opportunity to young people and those aged 25 and over who have been unemployed for more than two years, whom this Government have clearly abandoned. We will work for a one-nation Britain, not the two Britains we are enduring under this Government.

[Alison McGovern]

rose—

[The Temporary Chair (Mr Peter Bone)]

Order. It would be helpful if the Minister was on his feet no later than 5.50 pm.

[Alison McGovern]

I want to discuss the relationship between how the banks and bank bonuses are taxed and young people. I think that anyone who has just listened to the speech by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) would agree that the two issues are intimately connected, even if they did not believe that to be the case in the past.

Levels of inequality in our global economy are unsustainable, but Members need not take just my word for that. It is not just me who thinks that inequality is a significant problem: no less than Christine Lagarde of the IMF has said that inequality is a huge challenge and a risk for the world’s future. If even the IMF, which is not known for taking lefty positions, is able to conclude that we must tackle inequality, I think that this House should be able to accept the challenge and seek to find ways to address the significant inequality in our own country.

The top of the economy in the financial services sector is fragile in terms of income distribution. Let me make a few remarks about the banks. The hon. Member for Warrington South (David Mowat), who, unfortunately, is no longer in his place, commented earlier on the issue of fixed versus variable income, which I will turn to later. Surely anybody who is trying to learn the lessons of 2008 would say that the financial services sector still has an unsustainable bonus culture and perhaps that is true of other parts of the economy as well.

Would not anybody who worries about that risk conclude that banks and the financial services sector rely on an implicit state guarantee, given what had to be done to ensure the economy kept working and people could still take cash out of ATMs? Would not anybody conclude that we must take very seriously the contribution to taxation that banks are expected to make, given the Government’s reliance on the financial services sector? I certainly think that that is the only obvious conclusion to draw from the global financial meltdown and the serious failures of the past. Banks cannot be allowed just to make their own decisions; we must take very seriously both the regulatory framework around the financial services sector and the contribution that the sector is expected to make to the Exchequer.

The corporation tax cut benefited a whole range of companies in the financial services sector, but small and medium-sized enterprises—especially those in my constituency that are struggling with, and wanting action on, business rates—find it hard to take or to understand why the Government have not looked more seriously at what banks are expected to pay to the Exchequer. I think the Exchequer Secretary said earlier that, by his calculation, the bank levy has brought in a net £2.3 billion.

[Mr Gauke]

That is the payroll tax.

[Alison McGovern]

For the purposes of Hansard, I thank the Minister for correcting me from a sedentary position. In any event, it is really evident that the bank levy is not good enough. We heard repeated claims about how much it would bring in, but it has failed to reach those levels. The public do not understand why that is, and they want us to take very seriously the position of the financial services sector, given the impact that we all felt and that people are still feeling from the events post-2008.

Bank bonuses are the best representation of the culture that led to the economic meltdown in 2008. A great deal of work on the culture has been done by Members of this House—I am thinking of my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) and others who served on the Banking Commission—and we do that work no service if we give up the idea of a bank bonus tax.

The problem with bank bonuses is the clear connection between the fact that compensation balloons so greatly, and depends on a big bonus at a certain point in the year, and extraordinary risk-taking. A kind of groupthink develops in an organisation, with people forgetting their responsibilities to those outside it. The insider culture accepts reimbursements that are far and away above anything that people in society ordinarily expect. We in this House, if nowhere else in our community, should understand the danger of such groupthink. Have we not all seen it at times, and do we not all want to end it? Therefore, we should not give up the idea of a bank bonus tax.

I remind hon. Members of Martin Wheatley’s recent comments:

“Incentives are used ideally to reward ‘good’ performance. However, as we saw with the mis-selling scandals which have had such a profound impact on financial services…a poorly designed inducement can result in consumers ultimately being worse off.”

Even if we were not worried about the impact on the Exchequer of the bank bonus culture—given the responsibility to ensure that the financial system can continue to do business no matter what—we should absolutely be concerned about the impact on consumers. In the past, consumers of financial services often had a poor deal. The mis-selling of endowments and, more recently, payment protection insurance caused massive problems for families in our country. We cannot allow a culture to persist in which there are incentives that, as Martin Wheatley said, may result in consumers ultimately being worse off, as that would be very dangerous. That is why our amendment probes the issue and seeks to find a way to consider whether more could be done, which is important.

Although I am the first to say that simply bashing one part of our economy—financial services—is not the approach we should take, far from it, it does not mean that inequality is not a serious issue. I do not think that the inequalities in the financial services sector will pass by the people who earn the minimum wage cleaning a local bank branch and who are worried about whether that branch will be there for much longer or those who, if they are lucky, earn the London living wage from working in security or in other ways supporting banks in the City of London. We must address that inequality for people who work in banking and in the financial services sector.

Finally, I will follow up on the remarks on young people made so ably by my hon. Friend the Member for Oldham East and Saddleworth. We cannot lose sight of the difference between a jobs guarantee and work experience. We learned that lesson in the 1980s, when youth training scheme-style programmes were a revolving door for young people, who went in and out of businesses with no proper jobs. That was not fair then, and it certainly is not fair now. The future jobs fund worked with organisations such as Age Concern and other good third-sector organisations in my constituency to provide work opportunities that often led not only to growth in a young person’s skills, talents, self-esteem and self-respect but to growth in the organisations themselves.

I point Members in the direction of a report by the International Labour Organisation from as long ago as 2010 that compared a range of interventions for young people without work. The report said that the last Labour Government had a huge amount of which to be proud, such as the new deal for young people, the future jobs fund and the efforts to get people into work. I believe absolutely that we cannot offer young people only interminable work experience in which they turn up to the jobcentre week after week to be sent on CV writing courses or to gain work experience that does not get them a proper foot in the door. We need a true jobs guarantee so that people know that, however difficult the circumstances in which they find themselves, the situation will come to an end. We need to offer young people that guarantee, and of course we would expect them to take it up without much choice—[Interruption.] If Members wish to intervene, they are welcome to do so.

We still have insufficient numbers of apprenticeships, and we have genuine worries about the quality of some apprenticeship programmes. I am sorry if I repeat this so often that I bore Members—I try not to bore Members—but the issue is vastly important. The prevalence of zero-hours contracts in our society affects young people more than anyone else. Young people are much more likely to have less experience, which means that they cannot get a proper full-time, permanent job with the hours that they want. Of course students might want flexible hours that they can take up when they want, but that is not the case for many young people across the country who feel that they have no alternative but to accept a zero-hours contract.

I am afraid that Conservative Members have swallowed the Treasury’s rhetoric about the number of jobs that have been created and the claimant count, without learning the lessons of their economic policies of the past. Of course the claimant count will fall if there is a sanctions regime that makes going to the jobcentre so difficult and unhelpful that people will do anything not to claim.

Budget Resolutions and Economic Situation

Alison McGovern Excerpts

Wednesday 19th March 2014 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

It is an honour and a pleasure to follow my hon. Friends the Members for Rotherham (Sarah Champion) and for Chesterfield (Toby Perkins), both of whom made thoughtful contributions. Those of my constituents who watch Parliament Live TV—some of them do—will have heard their speeches and know that Labour Members are standing up for their concerns. My Merseyside constituents have had three really tough years, and listening to the Chancellor today, I have to ask myself what his message was to them. It is hard to know what he thought he was offering the people of this country. Economic growth is still behind the projections made by the Office for Budget Responsibility in 2010.

I know that economic forecasting is a somewhat interesting art, shall we say—it is not always the easiest thing to do—but it is a little tough to take from a Chancellor who has set great store by his intervention in the world of forecasting that he has effectively not met the test he set himself. He has failed on growth, failed on the deficit, is still behind where he said he would be, and is now trying to rewrite the record ahead of an election. The British people are not so foolish: they will not buy it. They know that the Chancellor said he would cut and cut and cut to protect the credit rating—and, lo and behold, lost the credit rating in any event.

Today’s macro-economic picture shows that the Chancellor is failing the tests he set himself and reheating and re-announcing a whole bundle of things, many of which were actually initiatives of the last Labour Government. Nobody is going to be fooled. Worse than that, he has totally missed the genuine problems in our economy. There is fragility at the lower end of the income distribution scale, and I have real concerns about what is happening at the top. Meanwhile, people in the middle are being squeezed yet again.

I say to those Members who are considering crowing about this Government’s record on unemployment that they seem not to have learned the lesson of the 1980s on the claimant count. It is perfectly possible to reduce the claimant count just by getting people not to claim what they are entitled to, and not to turn up at the jobcentre. If anyone wanted to solve the unemployment problem by getting people not to claim benefits, the DWP’s current strategy would be an excellent way of going about it. The culture there is not about helping people to find a job, but making them feel as though they are there to be judged, dictated to and sanctioned. As everybody knows, the Work programme is failing.

Thanks to you, Mr Speaker, in Westminster Hall this afternoon I was able to raise an issue that I have raised time and again: the iniquitous zero-hours contracts and the massive increase in part-time and self-employment, all of which is clouding the true picture of what is going on in our labour market. In speaking up for my Merseyside constituents, I should point out that we have not seen a rebalancing. It was interesting to hear what was said about the Cambridge city deal, which I am sure is wonderful for the people of Cambridge—but Cambridge was doing pretty well anyway. I really do not understand how investing in Cambridge was supposed to amount to rebalancing.

Meanwhile, the north-west is doing pretty well and I am really proud of it, but much of the credit for that goes to the leadership of the cities of the north-west rather than to the Chancellor. Where is the north-east—[Interruption]—and Yorkshire in all this? No effort is being made to address the economic problems there. I urge Conservative Members to look at their history: they will not reconnect with the people of the north of England by ignoring us and pandering to those who view us as unreconstructed, or to the Tory think-tanks that believe we should have a managed decline. But that is not what is happening, and the reality is that the Treasury seems to be straightforwardly ignoring the people of the north of England.

For those in the middle, it is deeply unfair that even skilled people such as nurses are not getting pay rises. Many small business owners raise with me the question of business rates, which my hon. Friend the Member for Chesterfield mentioned, but again that issue seems to have been totally left to one side. Action must be taken on business rates, on energy prices and on the other problems that trouble families in my constituency, who still need to have conversations around the dinner table about how to manage the family finances and who still worry about getting to the end of the month.

At the top end of the income distribution scale, the Chancellor clearly has not learned the lessons of the 1980s, and certainly not of the big bang in 1986 and its legacy of exposing our country to risk in the City of London. I am afraid that is not good enough. Because the Help to Buy scheme covers properties worth as much as £600,000, it risks creating a similar bubble, and many commentators are fearful about what is going on in the housing market. The Bank of England now says that the City might reinflate itself to between nine and 15 times the size of our economy. If that does not look and sound like a genuine risk to the stability of our economy, I am not sure what does.

The Chancellor mentioned broadening the LIBOR investigation, which is a real worry to me, because we have not yet got a handle on the culture in financial services. Plenty of people work in ordinary jobs in financial services, and I am not criticising the sector as a whole. However, the high levels of inequality and the poor culture at the top do not benefit the ordinary people who work in bank branches and call centres, helping people with their banking every day. They, like everyone else, want the sector to be controlled. There are real problems with people on low wages.

It would be nice to have some recognition for the reinvention of the modern apprenticeship in 2003. My hon. Friend the Member for Rotherham is absolutely right that we need to do much better when it comes to the number of apprenticeships.

We have problems at the bottom; we have a squeezed middle, and no answer has been proposed to their problems; and I have genuine concerns about the long-term stability of our economy.

Zero-hours Contracts

Alison McGovern Excerpts

Wednesday 19th March 2014 Westminster Hall

[Alison McGovern (Wirral South) (Lab)]

It is a pleasure to open this debate under your chairmanship, Mr Dobbin. My contribution will not be terribly lengthy, which will enable other hon. Members to intervene or contribute, and to hear the Minister. I would like to start by referring to an e-mail that was sent to me recently. Knowing that I had secured this debate, quite a number of people got in touch with and wrote to me, as they feel so strongly about zero-hours contracts.

One gentleman who got in touch explained his life, saying that he lives to work and enjoys work, and wants to feel good about himself and perhaps own a house one day. He is signed up with an agency and has had various problems. Anyway, the agency felt that it could get him a job as a refuse collector. He has written me a long e-mail, explaining how he has turned up for work only to be turned away. He has had the odd day here and there, and he feels that the situation is like something from many years ago, where someone turns up not knowing whether he will be given work. He said that, when it started, he was “a little annoyed”, but “confused more than anything”. He said there were

“about 50 lads in that day and only 40 had work.”

He continued:

“It just carries on like this. I have been here two months now, and only ever had one full week; to cover a holiday, it looks like. And you daren’t take a sick day; not like I would anyway if it could be helped…you would just lose your place and start at the bottom of the pile.”

Reading that, as I did last night, brought it all back to me as to why my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my right hon. Friend the Member for Knowsley (Mr Howarth) and I started a campaign and a discussion on zero-hours contracts last summer. I will go on to talk about the numbers of people whom we do not know are on zero-hours contracts.

The issue is about people who are facing a difficulty in the workplace. It is about how that makes them feel. The indignity of feeling useless through unemployment is very bad, and we must never let up on our passion to get people into work and see the difference. However, it is no better to feel the indignity of turning up for work and being turned away. Zero-hours contracts can be used to make people feel as if their efforts are for no good at all and that they are not wanted. The issue is not just a fact of economics, but a moral question about how people are made to feel by certain features of our labour market. That is why we need real action. I want to say a couple of things about understanding the phenomenon of zero-hours contracts; about what the Government are or are not doing, and what they might be doing; and about such contracts as a symptom of other developments in the labour market.

Regarding counting, the Office for National Statistics said that the most recent labour force survey suggests that there are close to 600,000 people—I think the exact figure is 582,000—on zero-hours contracts in the United Kingdom. That is up from its previous estimate earlier this year of around 250,000. We knew that there was a problem with the survey’s counting of zero-hours contracts, because in a parliamentary response to me, the Minister of State, Department of Health, who has responsibility for care, explained that a national survey of care workers estimated that more than 300,000 people working in social care were on zero-hours contracts. There cannot be 300,000 people on zero-hours contracts in the care sector when there are only 250,000 nationally across all sectors. Therefore we knew that there was a problem, and now the ONS has said that there is.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on bringing this important issue to Westminster Hall. Does she agree that the recent figure of 500,000 zero-hours contracts is quite conservative? Other analysis suggests that there are more than 1 million people on such contracts. For those 1 million people, there is no production or wages, and they have no economic input whatever. If we have 1 million-plus people on zero-hours contracts, is that not a way of fiddling the employment or unemployment statistics that we are currently being fed by the Government?

[Alison McGovern]

My hon. Friend has pre-empted exactly what I am going to say. It is interesting that a Department for Business, Innovation and Skills Minister will respond to the debate, but we could do with having the Health Minister here, given how rampant zero-hours contracts are in the care sector. We could also do with the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), who has responsibility for employment, because I want to know exactly how many people we have forced to take jobs with zero-hours contracts to get them off the claimant count.

[Mr Andrew Smith (Oxford East) (Lab)]

I join the congratulations to my hon. Friend on securing this enormously important debate. On the care sector, does she agree that such vulnerable contracts are exactly the opposite of what we need to build the status, training and career structure of care workers? Is it not a scandal that care workers are often not paid for travelling between one job and another, and are therefore being paid below the minimum wage for the hours they are working? Does Her Majesty’s Revenue and Customs not need to start enforcing that?

[Alison McGovern]

My right hon. Friend has hit the nail right on the head. There is no better word for that than “scandal”. I will come on to say a few things about the care sector. He and I are as one in thinking that we need to develop the skills of our care work force.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate my hon. Friend on securing the debate. It strikes me that we are going back to a 19th century approach with zero-hours contracts. Going back to the ’30s, or even before the first world war, dockers or miners would turn up at the gates of a factory or the docks, a tallyman would throw something in the middle of them, and whoever was lucky enough to pick it up got a job. Whoever did not get it did not get a job. Zero-hours contracts are a 19th century approach. I was disappointed that nothing was said in today’s Budget to address zero-hours contracts and the cost of living. People on zero-hours contracts are badly affected by the cost of living.

--- Later in debate ---

[Alison McGovern]

I agree with my hon. Friend. Given the plethora of things that found attention in today’s Budget, it was a surprise that the Chancellor did not want to talk about zero-hours contracts, which seem to be at the heart of the Government’s approach to economic recovery.

I want to return briefly to the numbers. If the Minister has not yet clocked the problem, she ought to. The ONS has effectively said that previously it was undercounting due to the definitions in the labour force survey and/or a problem with people’s awareness that they are on zero-hours contracts. We now cannot tell what the trend is. The latest statistics may or may not represent a massive spike in the use of zero-hours contracts—I do not know. We cannot tell whether the statistics show a rise or a fall, because it is clear that the ONS has been undercounting previously. I would therefore like to know what further research DBIS has commissioned. As policy makers, we are in an awful situation—there is a phenomenon in the labour market, but we do not know what is happening. What further research has been or will be commissioned by DBIS, because unless we know whether the phenomenon is radically and exponentially increasing, how can we know what measures should be taken to tackle it?

Secondly, I would like to know what the Government are doing. The Minister will probably stand up and say that they have talked about preventing exclusivity clauses, which is okay and fine, but there is a raft of other ways in which the Government need to tackle the phenomenon, not least the one mentioned by one of my hon. Friends in relation to the Work programme and jobcentres. For example, are jobs on zero-hours contracts routinely being advertised through Jobcentre Plus and are claimants then sanctioned if they do not take them? I am afraid that it will not be enough for me to know whether a policy document exists. I would like to know whether the Minister believes that people are routinely being sanctioned for not taking jobs on zero-hours contracts, because it would be terribly serious if that were the case.

I have always said that if a small business offers opportunities on a zero-hours basis, as and when, and the person taking that job is in no way penalised if they turn down the hours—either they are a student or they just want to keep their hand in with a job but do not want lots of hours—that would be okay in my book. However, the problem is that we are in a world in which Jobcentre Plus is being directed to get the claimant count down, and we know that there are significant problems in the DWP and in that organisation. I am very worried about the idea that my constituents and others are being forced into employment on a basis that they do not really want or feel comfortable with because of current policy decisions.

I stand in this Westminster Hall debate today, proud of Wirral council, the local authority in which I am a Member of Parliament, because it has tried to adopt Unison’s ethical care charter. The council has said—to respond to the points made by my right hon. Friend the Member for Oxford East (Mr Smith)—that in its commissioning, it wants to adhere to standards to ensure that, in the very important work of looking after older people or those who are vulnerable and need a bit of help, it is not participating in a race to the bottom. That involves moving away from zero-hours contracts, paying properly for travel time, trying to get to the living wage and ending 15-minute appointments.

Without going deeply into the care sector, we need to look at the role of central and local Government in preventing zero-hours contracts, in both their commissioning and procuring roles. We can try to lead from the front. I would like to know what conversations the Minister has had across DBIS on procurement and commissioning, and across the Government on moving away from zero-hours contracts and saying, “In general terms in our economy, it is not a hugely helpful phenomenon to have people with unpredictable levels of income at the end of each month.” Will the Government lead the way in trying to set the standard in the labour market? What conversations has the Minister had about that?

This issue has been mentioned, but I would also like to know what the Government are doing to enforce the minimum wage properly. It seems to me that there is a group of—not universally, but broadly—women in society who are at risk of not being paid the minimum wage. They are in a workplace in which they are not necessarily powerful, and they often have child care or other caring responsibilities alongside their job, and cannot be expected to expend the time and effort to take their cases forward. It falls as a duty on us in this House and on the Government to ensure that we stand up for those people and ensure that they get the minimum wage.

Without focusing universally on the care sector, there was further new evidence this week that it is becoming more difficult to have a predictable or the same carer all the time. Part of that is about the use of zero-hours contracts and their unpredictability. I repeat my question to the Minister: what cross-Government conversations has she had to find out what actions DBIS needs to take to lead in response to the phenomenon?

I do not know whether the Minister is aware, but zero-hours contracts are not the only problem in this sphere. Often, they go alongside the use of agencies and other ways in which people find loopholes to get around their responsibilities. I would not want us to bear down on the use of zero-hours contracts only to see the problem pop up in another guise. The Minister should be aware of that problem as we move forward. It should not be about closing down one way of getting around employers’ responsibilities, only for the problem to raise its head under another definition. The Minister needs to think carefully about that.

[John McDonnell (Hayes and Harlington) (Lab)]

Before my hon. Friend concludes, I want to congratulate her not only on today’s debate, but on the significant work she has done over the past two years. She has concentrated to a certain extent on the care sector, but may I point her towards the fast food industry? With the bakers’ union, we have just launched a campaign in the fast food sector not only for the living wage, but to oppose the imposition of zero-hours contracts, because they are used by managers to intimidate workers. For example, if a worker seeks to join the union or seeks to exercise or make representations about their rights, they will be denied work under zero-hours contracts for the following week. We are seeing them being used as an intimidatory tool, as well as one of exploitation.

[Alison McGovern]

My hon. Friend is right. One of the worst things about zero-hours contracts is what I call “zero-hours contracts as a management tool”. People have brought cases to me where, for whatever reason, somebody’s face did not fit and they did not end up getting any hours. That is no replacement for the usual practices of good management and all the rest of it, so it is something that we absolutely need to be aware of.

Another thing that employers can practically do to help us to deal with the situation is encourage people to join a trade union—I would say that, being a Labour MP. People will not always have the capacity to raise such issues themselves, but with workplace representation, they can, and we can help on low-paid work issues, such as getting people skills and boosting their abilities. I am sorry to be so predictable—being a Labour MP and supporting people joining a trade union—but there is a reason for joining a union. A union is a practical bit of infrastructure that can help businesses to give their workers a sense of being involved in the leadership, and help to tackle some of these problems. I think good employers would agree with me on that.

I want to take the opportunity to thank parliamentary colleagues who have taken the time to come along to today’s debate. Most importantly, however, I thank every single person who has been in touch with me over the past week or so since I was awarded the debate. I also thank all the people who have been in touch with me over the past six months to share their experience. I felt the experiences of people working on that basis were totally hidden. They are not hidden now. The question is: what can we do about it?

Football Clubs (Insolvency)

Alison McGovern Excerpts

Tuesday 18th March 2014 Westminster Hall

[Damian Collins]

My hon. Friend makes an extremely important point. The taxman lost his preferred creditor status in 2003. An informal arrangement exists between HMRC and football, and I will come to that, but the taxman is not a preferred creditor. The only preferred unsecured creditors are people within the game of football, who must be compensated in full under the rules of the Premier League and Football League. Other creditors get only pence in the pound. For example, when Crystal Palace went into insolvency, football creditors were paid in full, but non-football creditors received 2p in the pound. When Plymouth Argyle went into administration, again, football creditors were paid in full, but non-football creditors received less than 1p in the pound in compensation for the debts that they were owed.

[Alison McGovern (Wirral South) (Lab)]

The hon. Gentleman is making an excellent speech, and he is owed much credit for raising the issue. Given what he just said about the impact of insolvency on non-football creditors in a local community, does he agree that the rule does much greater damage to the reputation of the game of football than perhaps is understood by those in the sport at present?

[Damian Collins]

The hon. Lady makes an extremely good point. It does enormous damage to the credibility and reputation of football. That point was made by Niall Quinn, a former player and club chairman of great distinction, when he gave evidence to the Select Committee. How can it be right that in a community where a club has gone through insolvency, a small business that prints match programmes or paints the stadium receives none of the money that it is owed, while watching a player paid tens of thousands of pounds a week drive out of the gates to the ground in a smart car, having received every penny he was owed? It makes no sense at all. It is seen as a massive injustice and, given the huge amounts of money within the game of football, it cannot be justified in any way for football to reserve preferred status for its own creditors.

The Select Committee called in its 2011 report and its follow-up report in 2013 for the football creditors rule to be scrapped. Numerous debates have been raised in the House about both the generalities of football governance and finance, and specific cases relating to clubs such as Coventry and Leeds. Members have raised their concerns about such clubs in particular. Often in those debates, we have been reassured that the Government’s view is that the rule is one whose time has come, that we should move on and that we should not allow it to continue. I secured this debate to ask the Government where they stand on the football creditors rule.

I am grateful that the Minister with responsibility for consumer affairs, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Cardiff Central (Jenny Willott) is here to answer the debate. Often, when we have had such debates, the Minister responding has not been the Minister responsible for insolvency laws in this country. Today we have the insolvency Minister here to answer the debate.

Holiday Pricing

Alison McGovern Excerpts

Monday 24th February 2014 Westminster Hall

[Mr Mudie]

I would not challenge the last part, but I still think that we would leave the regulators with a difficult job unless there was a specific factor—the Olympics were mentioned. We would have some difficulty. As has been suggested, we must take the issue in the round.

It is easy to criticise the people running the business, but they have to make a profit to stay afloat. If they are running below capacity in the other 46 weeks of the year, they have to even things out when they hit capacity, just to stay in business. Therefore I see some genuine difficulty in doing that.

I would like to come on to the Department for Education, because that is where I think the problem lies. I thank and congratulate the people who started the e-petition. Interestingly, the individual who is famous for starting the e-petition was not complaining about foreign holidays, but Center Parcs, in this country.

[Alison McGovern (Wirral South) (Lab)]

My hon. Friend is making an excellent speech. I want to flag with him another sort of case that has been raised by a parent in my constituency who has an autistic child. They struggle to go on holiday abroad when it is busy and when there are lots of other kids, so they are in a specific position. I am not sure whether that would be deemed to be exceptional, but that example makes the case that there needs to be more flexibility in the education system, as he has said.

Does my hon. Friend agree that, if we are to be proper in our analysis, while we must think of the cost that is lost from the amount being paid for a child’s education, we must also think of the opportunity cost of that child’s time with their parents?

[Mr Mudie]

I will answer my hon. Friend when I come on to the DFE. I was thanking the people who have signed the petition, because they have performed a great feat in putting the matter in the public consciousness and the political arena. However, we would be making a grave mistake if we chased after the Department for Business, Innovation and Skills. From the answer it gave to the e-petition, I am sure that the Department would not bother if we chased after it, because its answer is quite dusty, but I have some sympathy for it, as the people who should be answering are in the DFE.