Jobs and the Unemployed

Mary Creagh Excerpts

Wednesday 7th July 2010 Commons Chamber

[Chris Grayling]

One of the disappointing things about the last Administration was that we kept hearing the then Prime Minister make promises about numbers of apprenticeships. Year after year, we looked at how many had actually been delivered, and saw that they never hit the target. I hope we will not make the same mistake, and I believe that the 50,000 apprenticeships we have announced will make a difference to a large number people who will take them up as part of the Skills for the Future programme.

[Mary Creagh (Wakefield) (Lab)]

Will the Minister give way?

[Chris Grayling]

No; I am going to wind up my speech now.

I want to end by making a point about the overall context of our proposals. We are trying to create an environment in which business can grow, develop and flourish. The Budget was about that as well. The Chancellor announced measures to stimulate growth, including a reduction in the main rate of corporation tax and the rate of corporation tax for smaller companies, a reduction in the main and special rates of capital allowances, an increase in the enterprise finance guarantee, the creation of a growth capital fund, and the regional support with which we intend to help private sector employers to grow and develop in our regional areas. We also stopped the Labour jobs tax. All those measures are designed to create an environment in which small, medium-sized and larger businesses can grow, develop and create jobs in the next few years, and they have all been welcomed by business groups.

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[Mary Creagh (Wakefield) (Lab)]

I was unable to intervene on the Minister of State on the role that big firms will play in creating the jobs of the future. I wondered whether he had seen the survey by the consultancy and accountancy firm Deloitte which concluded that big firms fear that a new recession will hit the UK. It said that business confidence has been knocked, in large part by the shroud-waving and fiscal hysteria from the Conservatives in creating the mood music for this draconian Budget. The survey of finance directors from 32 FTSE-100 companies and 93 UK companies accounting for 28% of the equity market showed that the net percentage of those who were more optimistic had dropped from 40% to 24%.

The hon. Member for Bedford (Richard Fuller) made a point about small business investment, but businesses need confidence if they are going to invest in the future. They will not invest in creating the jobs of the future if they are worried that this deflationary Budget, which will knock 1.3 million jobs out of the economy, will leave them high and dry. The money that they would otherwise invest could be kept for a rainy day or a potential future run on the bank.

[John Howell (Henley) (Con)]

The hon. Lady says that what business needs is confidence. I do not disagree, but most of all business needs money. It was her Government that deprived people of the money to make their businesses work.

[Mary Creagh]

That is an extraordinary allegation—that somehow the Labour Government took money away from businesses. I thought that it was the banks—[Interruption.] There was a failure of regulatory oversight, but it was not just in this country. It happened across the world. In future, economic historians will look at the psychological group-think that prevailed across the world in all Treasury departments. There was an economic orthodoxy that the level of growth was sustainable. In the end, the bubble burst and it was not sustainable, but we made the decision not to allow the collapse of a bank to mean that people lost their savings.

We also decided to follow the Keynesian route back to employment. For those Members on the other side of the House who are unaware of Keynesianism, I recommend an excellent article in The Independent by Robert Skidelsky, who was Keynes’s biographer. He is no left-wing madman: he is a sensible and respected economist. He has an interesting analysis of the Budget that makes sobering reading, and I recommend it to all hon. Members of whatever party.

[Mr Graham Stuart]

I am grateful to the hon. Lady for giving way. As ever, she speaks with passion if not on this occasion with quite so much knowledge. Business is struggling because when the economy was booming and it was necessary to curb the lending of the banks, the Labour Government did the opposite and loosened the conditions for lending. After the collapse, the Labour Government did the opposite and tightened the requirements on the banks so that they were unable to lend. That is how the Labour Government both fuelled the boom and boosted the bust and that is why business is struggling so much to recover from Labour’s disaster.

[Mary Creagh]

I am so grateful to the hon. Gentleman for that basic lesson in economics. He may not be aware of my past working as an adviser to small businesses and to MBAs at Cranfield university on how to set up small businesses. Our economic record between 1997 and 2005 was extremely good when it came to ensuring that new businesses were created—[Interruption.] Would he care to listen to my answer or does he just want to keep commenting from a sedentary position? He claims that we turned the tap on too fast and then turned it off. It is understandable that when Governments end up owning majority shares in banks, they want to ensure that credit flows to businesses—and we ensured that that was happening through the small firm loan guarantee scheme. Now, the banks are almost in a monopoly position, and we need more competition for high street banks and to change their risk aversion when it comes to lending to small businesses.

We are straying from the point, which is the effect of the Budget on unemployment. The OBR has had an extraordinary few weeks. It was set up and has published its little forecasts, but now suddenly Sir Alan Budd—who set it all up—is to leave. I have been in politics a few years now and when someone leaves unexpectedly, I try to work out why. Why is it that someone in a brand-new, start-up situation who wants to perform a public service is leaving? I wonder whether there has been a row. Perhaps in the future we will find out the real reason—perhaps that he was leant on for the employment figures, which are heroically optimistic. The OBR claims that more than 2 million jobs will be created in the private sector over the next five years, but John Philpott, the chief economist at the Chartered Institute for Personnel and Development, has said:

“There is not a hope in hell's chance of this happening. There would have to be extraordinarily strong private sector employment growth in a…much less conducive economic environment than it was during the boom.”

The hon. Member for Beverley and Holderness (Mr Stuart) says that we funded small businesses through the boom, but the OBR and the Treasury now claim that we will have a similar level of employment growth—another boom—but there is no credit to finance it and, by the way, they are cutting huge amounts out of the public sector. I will give way if any Member opposite can tell me how that will happen. I thought not.

[Mr David]

Does my hon. Friend agree that in many areas, including south Wales, there is a close relationship between the public sector and the private sector? Draconian cuts to the public sector will have knock-on effects on the private sector.

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[Mary Creagh]

My hon. Friend makes a good point, and many skilled IT workers and other professionals will lose valuable public sector contracts as the so-called bureaucratic back-office functions are scaled back.

One of the ways in which the Minister proposes to help the unemployed is by laying off 2,000 jobcentre staff in the next few months. It takes a particular sort of genius to do that in a recession, and I bow to the greater knowledge of the Conservative Members. How will they help people back into work with fewer people on the front line?

[George Freeman (Mid Norfolk) (Con)]

rose—

[Mary Creagh]

I will give way to the hon. Gentleman; perhaps he can tell me.

[George Freeman]

I thank the hon. Lady for giving way to the greater prowess on this side of the House. I appreciated her comments earlier about the importance of the private sector. The fundamental truth in this debate is that the private sector does something that the public sector does not—it pays for the public sector. It pays for itself and its profits pay for the public sector. The hon. Lady nods, which is nice to see. As she worked in the private sector helping small businesses, does she agree that the biggest fear of people in the private sector is not cuts to the public sector, but the threat of a rising debt crisis with interest payments alone—now she shakes her head—forecast to rise to £67 billion a year? The effect that that would have on the sovereign debt crisis and the threat of rising interest rates could plunge this country into a serious economic crisis.

[Mary Creagh]

I thank the hon. Gentleman for his point. We are in danger of rehearsing the arguments that we had at great length on the Finance Bill last night. I chose not to speak in that debate, because otherwise it might have dragged on even later than it did. However, I do not think that someone running a corner shop in south Wales is worried about the interest payments on Government debt. Interest rates on Government debt are historically low, and the repayment period here for such debts is, at 14 years, longer than in the US and Greece.

Government Members need to be very careful about the shroud-waving that they have done in connection with the Greek fiscal deficit. The UK is in no way comparable to Greece, which is an island economy based on tourism—[Interruption.] If the hon. Member for Beverley and Holderness (Mr Stuart) listens, he might learn something. Greece has 178 different public sector pensions, and none of them is funded. In addition, matrilinear succession means that the wife inherits when a man dies, and that the daughter inherits when the widow dies. Trying to compare Greece to the UK is absolute madness.

[George Freeman]

Will the hon. Lady confirm first of all that I did not mention Greece? She has mentioned pensions, but the second thing that concerns the private sector is unfunded public sector pension liabilities, which also saddle the private sector economy. She seems to talk as though the public sector can somehow carry on spending money, but it is the private sector that has to pay for it.

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[Mary Creagh]

In the end, we all end up paying for it. We made pension reforms to try and get people in the private sector to enrol in pension funds, because companies in that sector tend not to pay pensions or enrol their staff in stakeholder pensions. As a result, the taxpayer—the state—picks up the bill and we all end up paying for it. The important point is that the state is, in the end, the lender and the funder of last resort.

[Mr Graham Stuart]

Will the hon. Lady give way?

[Mary Creagh]

I will not take any more interventions, as this debate is turning into another Second Reading of the Finance Bill and I want to talk about unemployment and the future jobs fund.

In my constituency of Wakefield—which is well known to my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper)—700 places were allocated under the future jobs fund. We are not clear how many have survived the Government’s hatchet job, but I was privileged to welcome 50 young recruits to Wakefield council.

In addition, with my right hon. Friend I met three future jobs fund recruits at the Able project, an environmental scheme that uses a piece of disused land owned by Yorkshire Water that lies next to a sewage treatment works. One could not hope to find a less glamorous environment, but the project has created something very beautiful. Its organisers have worked with Nacro and the mental health trust to get people digging, growing, learning and being out in nature. The land is between a sewage works and a railway line, but it is an area of environmental beauty. The project has become a green business, coppicing the hazel and willow that grows there.

I met two young workers there, and we were able to buy some of the honey that they had made. They told me that they had had an apprenticeship but that the collapse of the business meant that they could not carry on. After six months on the dole, they were desperate to get something.

My right hon. Friend the Member for Normanton, Pontefract and Castleford and I made the visit in March, and the young workers told us that they did not know what was going to happen at the end of the six months. They asked us to try and make the period a year, as that would mean that they had a year’s experience under their belts. One young man was working visiting schools and showing children how to build nesting boxes.

The Able project is run by a third sector organisation, but I was aware that, at the end of his time there, the young man I had spoken to would have carpentry skills and experience of working with children. He was going to have all sorts of facts about nature and growing things at his disposal, with the result that a range of different organisations in the area could employ him.

I feel really heartbroken that that young man, the person whom I also met who is a support worker at Reconnect, a project that befriends older people across Wakefield who are at risk of isolation, mental health problems and loneliness, and the three people for whom I was trying to find work as wardens in Thornes park, are all now facing an extremely uncertain future.

[Richard Graham (Gloucester) (Con)]

Does the hon. Lady agree that one of the challenges for the future jobs fund is that, because the placements last only six months and have been taken up almost entirely by the public and charitable sectors, they do not provide future jobs? I have spoken to several charitable organisations in Gloucester, just as she has in her constituency. They have got people doing things very similar to what she has just described. They make the same points that she does, but they recognise that these are not apprenticeships. They are different: they do not provide jobs, but really just take people off the unemployment register for six months.

[Mary Creagh]

The point is that they are entry-level jobs. The future jobs fund takes people off the unemployment register for six months, but the important thing is that those people then have a CV that does not say, “I’ve been on the dole and I don’t know how to get up in the morning. I don’t know how to set an alarm because no one’s ever taught me. I’ve got used to staying in bed till half past 10 and then watching daytime TV.” Instead, their CVs say, “I’ve been doing something productive and am able to get myself to work. I’m committed and I’ve developed my communication skills.”

The young people involved may have failed at school and may not be academically successful. They need every chance that they can get: they may need a series of six-month placements to build up two years’ worth of experience, because it may take them much longer to enter the employment market than someone with an Oxbridge degree.

[Several hon. Members]

rose—

[Mary Creagh]

I have not finished, but I will give way to the hon. Member for Gloucester (Richard Graham).

[Richard Graham]

Does the hon. Lady agree that a real apprenticeship that lasts three years, like the 50,000 new apprenticeships that this coalition Government are committed to providing, is a much more genuine gateway to a real job than a series of six-month benefits and training programmes that has no real guarantee of leading anywhere?

[Mary Creagh]

I think that we should have both. I do not think that 50,000 apprenticeships will be enough; nor do I think that cutting Peter to spend money on Paul is a fair way to allocate resources.

[Steve Rotheram]

I am a product of something similar to the future jobs fund. In the late 1970s, there was something called a pre-apprenticeship scheme. I did six months on that and was very fortunate to complete it. The scheme was not just academic, as it gave me some transferable skills. It taught me to get out of bed and it led me, in later life, to do a master’s degree in contemporary urban renaissance. That is the sort of opportunity that the future jobs fund is providing.

[Mary Creagh]

I thank my hon. Friend for that intervention. He truly is a renaissance man, and I hope that many of the young people whom we met who got their entry-level work through the future jobs fund end up sitting on these green Benches. I hope that they can make the same incredible progress and journey that he has made in his life.

I turn now to the Work programme set out by the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). I have a great deal of concern about it. In a speech on 27 May, the Secretary of State spoke about

“a single scheme that will offer targeted, personalised help for those who need it most, sooner rather than later”.

If it is a matter of sooner rather than later, why are we waiting until next year for it to come in? I suppose that that has to do with the fact that the Government want to set up what I presume is a national contract with large-scale training providers. I tried to intervene about this earlier, because the Government are asking those providers to bear the risk of training people even though their contract payments will depend on outcomes.

That raises a series of questions. First, at a time when deflation, very low growth or even a double-dip recession are all possible, why does the Minister think that the private sector will turn to the banks for loans to cover this training given that, as we heard earlier, the banks are averse to risk and not very good at lending? Output-related funding is currently calculated on the basis that it takes six or nine months to get a person into work and then 13 weeks to ensure that he or she has lasted in that job. Why does he think that organisations in the private sector such as Capita or BT will line up to take on the massive risk involved in training people and employing them, when there is such a huge amount of uncertainty?

I have another question for the Minister, and I will give way to him if he can answer. How does he think voluntary sector organisations such as Nacro—the National Association for the Care and Resettlement of Offenders—will be able to do this? Such organisations have specialist programmes working with the most difficult, hard to reach and disadvantaged people—prisoners, young offenders and ex-offenders. They have the benefit of being present in and running training courses in prison and are then able to offer some sort of continuity when the offender leaves. I am also thinking of providers such as Rathbone training, an organisation that I had the privilege of serving as a trustee for seven years. These are small-scale organisations—Rathbone’s turnover when I left it in 2005 was £40 million. Why does he think that they will go to the bank—or their trustees would say that they should go to the bank—and borrow up to £20 million at a time, with a personal guarantee of the trustees, who are jointly and severally liable, who are for a programme when it is not clear that they will get the rewards from it?

[Chris Grayling]

I am happy to intervene briefly to confirm two quick points for the hon. Lady. The first is that, as she will recognise, this is an established marketplace that has grown. What we are talking about, in particular, is scale as a result of the incapacity benefit migration. We are pushing the envelope further than it has been pushed before, but established principles are involved. She is right about protecting voluntary sector organisations. I would be making another speech if I explained the full detail of how to do that, but I can assure her that I regard those organisations as important as she does.

[Mary Creagh]

I am relieved to hear that, but I am afraid that that was not an answer and I am unable to wait for another speech from the right hon. Gentleman to hear these plans emerge. Let us consider the position of an organisation 90% of whose budget depends on public sector contracts. Organisations are planning next year’s budget now. They will be signing off budgets that need to be ready in February and the finance directors will be making those budgets ready in October, November and December. How will such an organisation make plans for 90% of its funding—that could be £35 million, or £37 million at 2005 prices—without knowing what the system and financing mechanism will be for voluntary sector bodies? If the right hon. Gentleman is to grant the voluntary sector privilege, will he not be in danger of doing something about which we have heard a lot—will he not be risking crowding out the private sector? I shall leave those thoughts hanging in the air.

Rathbone training works with teenagers who have had chaotic homes lives and who have encountered poverty and unemployment. Many of them have failed at school and many have had babies early in their lives. Rathbone carried out a survey of those young people, asking them which profession they would like to pursue. Everyone in the Chamber will probably be relieved to hear that only a handful wanted to be footballers, pop stars or WAGs. Instead, the majority of Rathbone trainees preferred more everyday jobs such as car mechanic or office worker. That was summed up by a 17-year-old lad from Newcastle, who said:

“I’m happy at the moment training to be a bricklayer.”

I just hope that he has a job to go to in the construction industry when he finishes his bricklayer training. On the current prognosis, I am sceptical about that happening.

I am concerned about the incapacity benefit reforms and the assertion that such a one-size-fits-all approach will be better. Why will it be better than programmes run by people in the public sector? I am not so sure that it will be. I am concerned that we are going around in a circle—we are going back to the 1980s, as my right hon. Friend the shadow Secretary of State said, and back to the 1930s. We are going into the failed Thatcherite schemes of the 1980s—a youth training scheme mark 2. In the current plans, however, there is no enterprise investment scheme—and that did exist in the 1980s. We have heard a lot about the need for a vibrant and flourishing small business sector, but these reforms contain nothing, as yet, that allows would-be entrepreneurs in constituencies such as Wakefield and Normanton, Pontefract and Castleford, as well as those in Liverpool, to set up their own businesses. I hope that the Minister, who is no longer in his place, will examine that.

[Mr Graham Stuart]

Does the hon. Lady regret the devastating effects on manufacturing of the past 13 years under the Labour Government? Does she have any thoughts on what can be done to encourage manufacturing? This is not just about construction and other private sector jobs, because we need to restore and rebuild manufacturing, which was growing in the last few years of the previous Conservative Government but has been devastated during the past 13 years under Labour.

[Mary Creagh]

I can perhaps turn the question around on the hon. Gentleman by asking him whether he regrets what happened to cities such as my birthplace of Coventry, where I grew up in the 1980s. All the car factories that I grew up around—the Massey Ferguson tractor plant, the Carbodies taxi plant and the Alvis plant, which used to make tanks, and the Coventry Chain Company—were all replaced, either by housing or by retail parks. The factories were all shut down during the short few years between 1984 and 1989, when thousands of incredibly skilled workers in those factories were lost. In addition, does he regret the fact that the previous Conservative Government shut down the coalfields of Wakefield, which could now be doing something to reduce our dependence on foreign energy supplies? I shall leave that matter for another debate.

I am concerned about the effect of benefit cuts on women. I am keen to hear from Conservative Members about the move to employment and support allowance and to jobseeker’s allowance. A little piece in the Red Book says, “After you have been on JSA for more than a year, your housing benefit is cut by 10%.” I am keen to hear from the Conservative Front-Bench team whether women with children—these children may be only a year old—will be affected by that proposal. If they are affected, that is an incredibly draconian policy.

I have no problem with women who have children going out to work. I am a mother of two children and I came back to work here when my child was six months old. I have no problem with encouraging mothers to get out of the home and into the workplace, and expecting them to begin the search for work when their child is three and has access to the free nursery place is very important. The idea that one can say to a mother with a babe in arms, “You have to put the baby into child care and go out to look for a job otherwise your housing benefit will be cut by 10%” is, as my right hon. Friend the shadow Secretary of State said, a return to the Victorian values of the workhouse and the notion of dividing the poor into two segments: the undeserving poor and the deserving poor. I leave that thought with hon. Members.

I shall now discuss the issues associated with people moving house to find work. I have no problem with mobility, because people should look around, think and open their horizons in the search for work; my parents are Irish and they came to this country on the boat—not on a bicycle—in the 1960s, finding gainful employment in Birmingham and then Coventry, where they settled and got married. However, we need to examine carefully the psychological impacts of asking people to leave their homes to look for work. One of the great untold stories of the Irish diaspora is the psychological impact that emigration has on the mental health, the alcohol dependency and the level of premature death of a particular community. The Irish are the only community whose life expectancy decreases upon emigration to this country. That is perhaps a little-known fact, and I can see the hon. Member for Beverley and Holderness (Mr Stuart) is thinking it through.

That is what happens when people move away from their communities, so it is very important that we ensure that we have the structures in place so that people can be supported if they want to move. I would turn the question around by asking another one. Let us consider what would happen if someone from Wakefield or a high unemployment area wanted to move in order to work, found themselves a job in London and went to one of the city centre local authorities, such as Hackney, Camden or Islington, asking to be put at the top of the housing waiting list. What would that do to the Islington, Camden and Hackney residents waiting to get out of overcrowded accommodation? How would seeing people coming in from outside and getting houses affect them? Would any such provision have to involve a minimum time that someone keeps a job? Would people have to stay in their job for three months, six months or a year? If they lost the job after 12 months through no fault of their own, could they keep the house or would they be expected to make the long train journey, or the long car journey back up the M1, to the city that they left?

I conclude by discussing unemployment and what it means to Opposition Members. For us, unemployment is not a theory, an abstract thing or a thing that has to be tackled. For us, unemployment is what happened to our families, friends, communities and, in the recessions of the ’80s and ’90s, ourselves. As for the idea of the big society, I say to Government Members that our society is not broken. Over 13 years, our Labour Government spent a lot of time, energy, money and thought trying to mend the broken society that Thatcher and Major bequeathed us in 1997.

In 1979 there were 1 million people on the dole, and the Conservative party won that year’s election with the posters of unemployment queues and the slogan, “Labour isn’t working”. Three years later, 3 million people were on the dole, a level of unemployment that had not been seen since the depression of the 1930s—a particular type of genius that the Conservative party has in pursuing flawed and deflationary economic policies.

I remember, during my childhood, coming down to breakfast and hearing the figure for the number of cities where riots had taken place in 1981, and I could not believe the number of places where people had spontaneously gone out and created mayhem and anarchy because they were tired of being left behind. I remember the songs, such as “One in 10”, about the one in 10 unemployed, and the song about my city of Coventry, “Ghost Town”. It was a ghost town. That is how I grew up, and I do not want any child or constituent of mine to grow up in a ghost town. Opposition Members will continue to focus on unemployment, because, as my right hon. Friend the Member for Normanton, Pontefract and Castleford said, for us it will never be a price worth paying.

[Several hon. Members]

rose—