Amendment of the Law

Gavin Shuker Excerpts

Thursday 20th March 2014 Commons Chamber

[Vince Cable]

That is not actually true. All recoveries tend to start with consumer spending, but lack of investment is a deep-rooted problem in the United Kingdom, and it is a problem with which we are trying to deal. However, if the hon. Gentleman studies the figures from the Office for Budget Responsibility, he will see that business investment increased by 7% last year, and the CBI projections for this year are higher than that. Business investment is beginning to take serious shape.

I think that, when we speak of growth, recovery and productivity, it is worth our while reflecting on some of the 18 Budget statements to which I have listened and responded in the past. For more than a decade, Budgets were introduced by the present Opposition, and there was a very positive story every year until we reached 2008. We had 2% growth, and there was enormous triumphalist cheering about the wonders of the brilliant Government economic policy that had produced that achievement. Comparisons were made with the past which suggested that this was the greatest economic performance, if not since the Victorians, probably since the Georgians, the Tudors or even the Romans. However, we had to go back to the Greeks to find the word that captured the spirit of those early Budgets. It was the word “hubris”, which encapsulated the Opposition’s simple inability to understand that weaknesses were building up during that growth.

Our Government are confident that we now have recovery. We are positive about it, and proud of our contribution to it. However, we acknowledge that there are some deep-seated historical weaknesses that now need to be addressed, and the Chancellor did address them in a systematic way in the Budget yesterday. The first and most important way of dealing with those weaknesses—and the driver of productivity—is, of course, higher levels of investment. That is why the extension of investment allowances, which will substantially increase the incentives for small and medium-sized companies, particularly those in the manufacturing sector—over time and in terms of scale—is such a big step forward, and is so welcome.

[Gavin Shuker (Luton South) (Lab/Co-op)]

The Business Secretary is clearly confident that he could have run the economy better than Labour during the 13 years during which it was in power, and I suspect that that enthusiasm and confidence have continued into the present Parliament. Perhaps the right hon. Gentleman could outline some of the ways in which the economy would be run differently if he, rather than the right hon. Member for Tatton (Mr Osborne), were Chancellor.

[Vince Cable]

I find that many of my ideas have been incorporated in Government policy, and I am very pleased about the progress that we are making in that respect.

Of course, increased investment depends on business confidence. Because we are approaching the election season, a danger is posed by some of the comments being made by the Opposition. Sir George Cox, who used to be at the Institute of Directors and is now an adviser to the Opposition, suggested recently that the business-averse policies of the shadow Chancellor and his leader were doing serious damage not to their own credibility, but to confidence in the country. I would underline that. If we have policies that appear to commit future Governments to energy price freezes that prevent new energy investment, we are undermining investment. Of course it is not just the Opposition; the people who want to take Britain out of the European Union and want to take Scotland out of Britain are also undermining investment confidence. Political certainty requires at least literate policies from the Opposition, which in the area of price freezes certainly is not the case.

--- Later in debate ---

[Gavin Shuker (Luton South) (Lab/Co-op)]

It is extremely gracious of you to call me to speak in this debate, Madam Deputy Speaker.

I want to say a few words about a genuine long-term plan—Government Members seem to use the phrase “long-term plan” quite a bit—for work. It is clear that this Budget has ducked the key challenge of how we ensure that as the number of jobs in the economy increases, the quality of those jobs improves at the same time.

There has been much talk in this place over many years—not only by Government Members but by Opposition Members—about where improvements to the British economy will come from. There has been a lot of talk about entrepreneurialism, finance and different sectors of industry, but we tend not to step back to talk about the quality of work, even though work is fundamental to how we generate growth in our economy and how people find dignity during most of their waking hours in the day.

My broadest concern is that as we talk about the effects of this Budget—fiscal measures here, changes to taxation there—we may to a degree miss the point. We know that what makes work satisfying to people is autonomy, mastery and purpose. I fear that those three values are getting lost in the recovery that is under way. I shall suggest a few ways in which we might respond through policy to improve the quality of work for millions of people up and down the country.

It is a tragedy when people find themselves unemployed and when there is long-term unemployment. In Luton, 950 young people are without work and are claiming jobseeker’s allowance, and 1,300 people of all ages have been out of work for more than 12 months. Behind each figure is a human tragedy that affects many families. Older people who find themselves out of work find it incredibly difficult to get a job, and we know that many of them will not find one in the current economy.

At the same time, there is a cost of living crisis. Wages and prices have become decoupled. It is estimated that it will take 15 years for wages to recover and get back to the consumer prices index level of inflation. It is debatable whether they will ever reach the retail prices index level.

We need to tackle the issue at both ends: work and the quality of that work. On the quality of work, we have seen a tripling of the number of zero-hours contracts. More people are working in the economy, but many of them are on zero-hours contracts and have little job security. Those who are still in work have had their rights taken away. For example, there are the challenges with tribunals, which we have discussed in the House before. We cannot win in a race to the bottom. Many people still cannot get a job. There is a lack of dignity in not having a job, but there is also a lack of dignity in having a poor quality job. This is a long-term challenge not just for this Government, but for whichever Government find themselves in power next.

Labour’s jobs guarantee could be a necessary first step in allowing young people in particular to find work and get back into the rhythm and dignity of work. We then need to look at the quality of the work and the remuneration for it. That is why we need an expansion of the living wage. Our policy of a 12-month tax rebate for low-paid workers who are bumped up to the living wage for the first time, which would pay for itself over time, would be extremely helpful, as would the reintroduction of the 10p rate. That would be hugely important in encouraging people to get back into work.

We need action to meet the challenges of our economy. An alarming statistic that other Members have talked about is the productivity gap. Output per hour in this country is 21% lower than the G7 average. That hints at a lack of business investment in machinery and so on.

I return to autonomy, mastery and purpose. Where will the high-skilled jobs come from in this economy? When will we recognise the cost of living? Many people will look at the actions of the Government and conclude that in the Budget they have ducked the challenge. If they were running a business the way they are running the economy, they would be sweating the assets to get growth. I think it is fine to sweat the assets for a period, but we must recognise that the greatest asset we have is the people of this country, and they will not put up with a Government who sweat the asset that is their work.