Compulsory Jobs Guarantee

Jim Sheridan Excerpts

Wednesday 11th February 2015 Commons Chamber

[Stephen Timms]

I can answer that very directly: 5,000 employers are taking part in the Jobs Growth Wales scheme. The Federation of Small Businesses in Wales is a champion. I simply contrast the quote given by the hon. Gentleman with the experience of those on the ground, including the FSB.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

Many of the jobs that my right hon. Friend is referring to would come from small and medium-sized enterprises. One of the main problems faced by SMEs on my patch is cash flow—trying to get money from work that they have completed. Is there anything that a future Labour Government could do to speed up payments, so that small suppliers could get the money in and take on young people?

[Stephen Timms]

I have just mentioned the FSB. My hon. Friend will know how active it has been in demanding change of the kind he describes and makes a telling case for. I agree: more should be done to support small business in that way, and in other ways. We need to reform how the banks deal with their small-business customers too.

--- Later in debate ---

[Mr Duncan Smith]

I will make a little progress before giving way again.

The issue still remains for the Opposition which I thought this debate was about. I thought they would have a fantastic motion that answered all these questions, but they do not. These are the biggest questions: which businesses have signed up to the jobs guarantee, and how many jobs have they guaranteed to provide? In the absence of any answers, I will quote the OECD’s view of these kinds of make-work schemes. For the past 20 years it has demonstrated that such schemes are expensive and counter-productive. Its jobs strategy states that having

“large deadweight losses, displacement and substitution effect… direct job creation in the public sector has been of little success in helping unemployed people get permanent jobs in a more open labour market”.

That is probably the final word on the structure of Labour’s jobs guarantee.

Let us look at how the Opposition propose to fund their jobs guarantee, which I had thought would be dealt with clearly today. The right hon. Member for East Ham said something about it, but they seem to have gone back to their original position. Her Majesty’s Treasury has estimated that for 2015-16 the jobs guarantee would cost £1.54 billion for the over-25s and a further £540 million for the under-25s, so over £2 billion in total for only one year. To pay for it, the Opposition have proposed two measures.

First, they would restrict pensions tax relief for earnings over £150,000. Let us deal with that first. They originally committed that funding for the purpose of increasing working and child tax credits, so they seem to have done a little dodge. I have no idea whether they still plan to use it for that, but I am sure we will find out. Apparently it will now pay for the jobs guarantee. Never mind the fact that it would take—this is a real estimate from those who know—until 2018-19 to implement, leaving three years with no funding to cover the annual cost of £1.5 billion. They cannot just wave a magic wand and say, “The money’s there”; they also have to position the money at the right time. The right hon. Gentleman was forced by the shadow Chancellor to say that there would be no borrowing. Well, that looks to me like a chunk of borrowing.

That is even if the proposal raises any money at all, because the CBI has called it “simply unworkable”, the National Association of Pension Funds has warned that it is a “disaster in the making”, and the Institute for Fiscal Studies has said that it

“would be expensive to administer… unfair and would inappropriately distort behaviour.”

The Opposition would create a problem in the pensions industry and damage people’s savings, and all to fund a programme that simply would not work.

The second source of funding is repeating the one-off bankers bonus tax. I have to tell the right hon. Gentleman that no matter how many ways he cuts this, Labour has spent this money 11 times over. That is the 11 that I can find; I am sure my hon. Friends will find a lot more. There were proposals on reversing the VAT increase, at £12.75 billion; reversing tax credit savings, at £5.8 billion; more housing, at £1.2 billion; reversing the child benefit savings, at £3.1 billion; more capital spending, at £5.8 billion; and more child care, at £800 million. It is almost like one of those game shows—“Come on down, there’s another box to be opened and we’ll spend that money as well.” These sources go on and on and on; it is quite fascinating. Yet it has been said time and again that this is a one-off tax. When in office, Labour’s last Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said of the idea of repeating this tax that it is

“a one-off thing…because the very people you are after…will find all sorts of imaginative ways of avoiding it in the future.”

He had no time at all for the idea of a repetition of Labour’s bankers bonus tax. So there we have it: the cobbled-together nonsense of Labour’s jobs guarantee, destined to fail and wholly and utterly unfunded.

[Jim Sheridan]

On additional funding for the unemployed—I say this as someone who was unemployed for three years, so I know it is not a nice place to be—would this Government consider channelling any retrospective payments from people who have been found guilty of avoiding tax into fighting youth unemployment?

[Mr Duncan Smith]

Let me say to the hon. Gentleman that in my time before politics I was made redundant, and I know what it is like not to know where the next pay cheque is coming from. I agree with him: it is a terrible place to be, and no one, if we can avoid it, should be there. That is why we have said that, through the long-term economic plan, we have to make sure that the economy is stable and on a good, long trajectory, and that we get our debts and our deficits down. As regards chasing people who are avoiding tax, this Government, as my right hon. Friend the Prime Minister said today at the Dispatch Box, have done more to close tax loopholes than any other Government previously.

[Jim Sheridan]

Will you do this today?

[Mr Duncan Smith]

Hypothecated funding is a matter for the Chancellor, as the hon. Gentleman knows, but I will certainly pass his views on. Many of us in this House loathe the idea of some people being able to hide their money away. We think that hard-working taxpayers deserve a fair deal, and the unemployed do too. I am seeing the Chancellor later today, and I promise the hon. Gentleman that I will pass his comments on to him.

As regards Labour’s proposed programme, with the best will in the world, I say to the right hon. Member for East Ham that he could have done better on the back of a fag packet, having had weeks, months and years to figure it out. I suspect Labour Members had to come up with something for this debate and are therefore doing this now. This slot was probably destined for a debate on the health service, but because they have made such a Horlicks of that, they have decided to throw in this business instead.

Let me deal with the success of the employment programme and talk about what we in this Government have done. Universal Jobmatch has transformed how almost 7 million people look for work, with over 4 million average daily searches. Work experience is one of this Government’s great successes for young people, with half of participants off benefits at a twentieth of the cost of the future jobs fund. The Work programme is helping more people than any programme before. Over 1 million have spent time off benefit, and almost 640,000 have got a job, 368,000 of whom have found lasting work, with a third of them staying in a job for 18 months or longer. It is now the most successful back-to-work programme of all those that have been put forward. Performance is exceeding all our original expectations and is better than under any previous Labour programme.

Let us look at how much better the Work programme is than some of the programmes Labour had. More than twice as many people moved into work in the first two years under the Work programme as under the flexible new deal. Nearly three times as many people have been in a six-month job as under the flexible new deal. For recent and new employment and support allowance claimants, Work programme job outcomes are exceeding expectations and rising all the time, compared with Labour’s Pathways to Work programme—never rolled out fully—which had no statistically significant impact on employment outcomes and was assessed by the National Audit Office as poor value for money. The truth is that we are now doing more for people who have difficulties getting into work than the previous Government ever did.

Does the hon. Member for Edinburgh East (Sheila Gilmore) still want to intervene, as she has been trying to catch my eye? No, she is on her computer. I hope she was writing up a glowing review of my speech; I look forward to reading it on Twitter in due course. I give way to her.