Queen’s Speech

Lord German Excerpts

Thursday 4th June 2015 Lords Chamber

[Lord German (LD)]

My Lords, before I address the remarks made by the noble Lord, Lord O’Neill, in his excellent opening speech, I should like to add a supporting measure to the comments on tourism made by the noble Baroness, Lady Liddell. As a Minister for economic affairs in Wales with responsibility for tourism, I resisted every attempt to push that portfolio into the culture and sport portfolio. The main reason for that was that tourism is an economic driver and contributes 7% of GDP in Wales. A huge amount of its growth is possible through tourism and it was important to maintain it as an economic driver.

I wish to address my remarks to the comments made by the noble Lord, Lord O’Neill, and many other noble Lords about the productivity issue, particularly the need to see it as one of the principal inhibitors of growth in our economy. I shall focus on one factor on the issue of increasing productivity, and that is in-work progression—helping people to progress within work both financially and in self-esteem. I wish to link these remarks to the full employment and welfare benefits Bill and to address some of the wider implications of that Bill. As the Bill has both the words “employment” and “welfare benefits” in its title, and as it spans the responsibilities of BIS and the DWP, I apologise if I stray across the subject areas scheduled for debate both yesterday and today.

The elephant in the room facing Treasury Ministers is the proposed £12 billion cuts in the welfare bill. I shall not venture into the landscape of where the Government are going to make those savings—after all, all efforts to find the answer to that question failed during the general election, as they did in this House yesterday—but the Prime Minister’s announcement a few days ago that child benefit and child tax credits will not be touched leaves the only credible answer to the question of where the cuts are to come as housing benefit and disability benefit. In themselves, these cuts will work to the detriment, with job-related impacts, in particular relating to in-work progression.

These issues are closely linked to the real progress that we can make on ensuring employment opportunities for our country. The challenge for the Government will be not only to get people into jobs but to ensure that they can have in-work progression in the number of hours of work they are offered and in their rate of pay. The full employment and welfare benefits Bill presumes that the savings in the welfare benefits element will go in part or in full to pay for the promises in the full employment element. The Treasury question to be asked at the outset is whether the envisaged cuts in welfare are savings to contribute to deficit reduction or savings to be reallocated to other areas of government.

The information we have so far on the Bill is that the savings from the welfare element are specifically to fund new apprenticeships and to increase support for the troubled families initiative. The IFS’s analysis of the matter is that that would account for £130 million a year to put to those issues. Is the £12 billion still a separate amount? I would value an answer to that question from a Treasury Minister.

The Government’s Bill is about a series of sticks and carrots, incentives and sanctions, to meet their policy objectives but there appear to be more sticks than carrots. The policy of providing more opportunities for jobs is laudable, but it requires an appropriate mix of incentives and sanctions. There is no doubt that the previous Government achieved a great deal in sourcing jobs and getting people into work, but the challenge now is not only getting people through the doorway into work but ensuring that they have an income which permits them not to fall back on to state benefits.

The current statistics are stark. The noble Baroness, Lady Drake, mentioned £30 billion of tax credits and, according to the House of Commons Library, over £5 billion last year was paid out in housing benefit alone to people in work. The figures and the numbers are growing and this is a recurring feature of universal credit as it is rolled out. I agree that work remains the best route out of poverty and that is why universal credit is so important. Its successful implementation will mean a route into meaningful employment.

However, there are potential incentives the Government can provide to assist working households to increase their earnings. That might mean through a continuation of the Access to Work programme of support to get people into work and to help them to get the skills and self-esteem that they need to progress within work.

As to the sector facing the most difficulties in accessing a job—those with disabilities—yesterday in your Lordships’ House the noble Baroness, Lady Campbell, told us that 52% of working-age people with a disability are out of work and that many wish to work. There are some incredible examples of where people with a disability have found work and are contributing fully to the economic life of our country. However, for many there is a need for support. The Access to Work programme paints disability with a single brush and the Government intend to make this worse by trying to get more users out of the same amount of money.

Each person with a disability has different needs. For a deaf person it could be the provision of sign language; for a wheelchair user it could mean physical adaptations, including widening doors and putting in ramps. The Government’s ambition is to halve the disability employment gap. Does that mean that the Government’s target is that 25% or less of people with disabilities will be unemployed? More importantly, what is their target? Is it to increase the rate of employment among people with disabilities from 48% to 75%? That is a big challenge.

The big challenge of improving productivity is closely linked to these elements of work progression. The dramatic cuts which are threatened to in-work benefits will have a major impact not only on helping people into work but on enabling them to progress in employment and creating that sustainable productive economy which is the wish of all Members of this House.