Matt Hancock
Main Page: Matt Hancock (Independent - West Suffolk)Department Debates - View all Matt Hancock's debates with the Department for Education
(9 years, 6 months ago)
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The Minister for Business and Enterprise (Matthew Hancock)
You would not have believed it from the speech the hon. Member for Streatham (Mr Umunna) has just made, Mr Speaker, but a fortnight ago those of us on the Government side of the House put up the national minimum wage in real terms for the first time since Labour’s great recession. The national minimum wage is now at its highest level ever in terms of average earnings. Enforcement of the national minimum wage is stronger and because of the recovery the national minimum wage is set to rise. For the last half hour, the Opposition have talked about the past and the glory days of 1997, but I want to talk about the future.
Sheila Gilmore
Is the Minister suggesting, yet again, that the recession in Europe, the United States and throughout the world was Labour’s recession?
Matthew Hancock
I am certainly suggesting that we had one of the deepest recessions in the world because of the failure of the last Labour Government to regulate the banks properly and to mend the public finances in the run-up to the recession. That youth unemployment had risen by 40% even before the crash shows the failure of Labour’s economic policy. That is a theme to which I shall warm in my speech.
Matthew Hancock
I will come later to progress on raising the national minimum wage, but the central point, which Labour Members do not understand, is that we cannot have a strong national minimum wage without a strong economy.
Alec Shelbrooke
Does my right hon. Friend agree that the interventions we have heard from Labour Members show that the Opposition have learned nothing from their time in government?
Matthew Hancock
I could not have put it better myself.
The rise in the national minimum wage comes against a background of record job creation, the biggest fall in unemployment since records began—before I or my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) were born—falling youth unemployment, falling long-term unemployment, unemployment of fewer than 2 million and a claimant count of fewer than 1 million; and that is all part of our plan to build from the ruins of the past an economy that works for everybody.
Steve Rotheram (Liverpool, Walton) (Lab)
Will the Minister confirm whether, before the worldwide financial crash, he was asking for more or less regulation? Certainly his Chancellor was asking for a lighter-touch regulatory framework, not what, with hindsight, the Minister now claims.
Matthew Hancock
In 1998, when the Labour Government removed the requirement to regulate levels of leverage in the City, the Conservative party complained, and it was that removal which led to the crash being bigger in the UK. It was the result of poor regulation of the financial sector. Labour did not fix the roof when the sun was shining, but instead spent money they did not have even before the crash.
Instead of forgetting about the deficit, as Labour does, and ignoring Britain’s economic challenges, we know that a strong recovery underpins a strong society and that we cannot have a strong minimum wage without a strong economy.
Julie Hilling (Bolton West) (Lab)
I love the way the right hon. Gentleman is rewriting history. Will he explain why we had three years of a flat-lining economy and why it only started to recover when the Chancellor went to plan B and started to invest in infrastructure?
Matthew Hancock
The hon. Lady needs to look at the economic statistics: there was no double-dip recession and ours is the fastest-growing economy in the G7. Economic growth has been strong, the number of jobs is growing at a record rate, our economy is turning around and we have the fastest growth in the G7. Labour might want to deny it, but we want to support the plan and, crucially, ensure that economic growth reaches all parts of the country and that all can benefit. That is why we support and are strengthening the minimum wage. We know that the only route to higher living standards is not through more borrowing, more taxes and more debt, but through fair pay for a job well done.
Today was another test of Labour’s economic credibility, and yet again it was found wanting. Instead, the true supporters of the national minimum wage now reside on the Government Benches. First and foremost, a strong minimum wage requires a strong economy.
Matthew Hancock
I will give the hon. Gentleman a couple of examples. We have increased the budget for enforcement by 15%, while the Small Business, Enterprise and Employment Bill, which I am leading through the House, backs up those resources with tougher penalties for those who break the law. While we are at it, we are also tackling the scourge of zero-hours contracts—something Labour failed to do after 13 years in office.
If anybody has ever queried the idea that the plight of the low-paid is linked to the health of the economy, all they have to do is study what happened as a consequence of the great recession. When the economy shrank after 2008, the incomes of the lowest-paid took a hit, through jobs lost, hours cut and wages frozen, and our nation’s finances shrank by 6%, which inevitably had a profound impact on people’s incomes—after all, national income is merely the aggregate of individuals’ incomes. The need to turn that around is why our long-term economic plan is so vital.
The evidence shows that the plan is working. Record numbers of jobs have not been created by accident, but because the economy is growing, but we are keenly aware of the risks that remain and the costs that would be paid, especially by the low-paid, if we abandoned the plan. Those who truly support the minimum wage also support the plan to tackle the deficit and repair the health of the economy, and that is why Government Members are the true supporters of the national minimum wage.
Guy Opperman
Is not the most crucial point, as well as raising the minimum wage, the need to address and examine the issue of tax? This coalition Government have raised the minimum threshold and actually given people on the minimum wage more money in their pockets. Will he set out in detail the effect it will have when we elect a Conservative Government and introduce a £12,500 tax threshold?
Matthew Hancock
Of course, it is post-tax income that matters to families. Having raised the threshold to £10,500, we are proposing to raise it to £12,500, meaning that no one working full time on the national minimum wage would pay any income tax at all. That is the sort of action we can get only if we have the grit to deal with public spending and leave more money in people’s pockets, thereby supporting the low-paid.
True supporters of the minimum wage also know that it is a partnership with business.
Richard Fuller (Bedford) (Con)
My right hon. Friend has rightly talked about post-tax income, but for people on low incomes, what matters is post-tax and post-benefit take-home disposable income. The shadow Secretary of State did not say what his policies would be on tax credits. Does he agree that that is an important part of the debate about how we improve living standards?
Matthew Hancock
The shadow Secretary of State could not even explain his own tax policy when he was asked by my hon. Friend the Member for Elmet and Rothwell. On the other hand, we are clear about ours—[Interruption.]—and I am delighted every time the Opposition complain about it. They should put it on their leaflets. We will increase the threshold to £12,500 so that anybody on the minimum wage doing 30 hours a week will not pay a penny in income tax.
Alec Shelbrooke
Labour Members chunter about VAT, but does my right hon. Friend find it surprising that Labour increased VAT by 2.5% and doubled taxes on the lowest-paid workers while, by comparison, we have put VAT up by 2.5% and raised the tax threshold?
Matthew Hancock
We know what would be most damaging for the low-paid—if we lost control of the economy and had another great recession like the last time Labour was in office.
Julie Hilling
I want to return to the Minister’s point about the number of new jobs being created. I asked him once about this matter and got the following reply:
“Information regarding the number of jobs created is not available. As an alternative…estimates relating to the net change in the number of people in employment are available… Unfortunately the requested information on duration of employment is not available”.—[Official Report, 12 November 2013; Vol. 570, c. 578-9W.]
The Government continue to talk about the number of jobs created, but they do not have the evidence to back it up.
Matthew Hancock
The evidence was published at 9.30 this morning. It showed that record numbers of jobs had been created and that in the hon. Lady’s constituency the number of unemployment claimants fell by 32% in the last year. If I were her, I would look at the statistics before complaining about our record on jobs.
True supporters of the national minimum wage know that it is a partnership with business. Jobs cannot be created without job creators. Business is a force for social good, not only because it creates jobs, but because business prospers by finding solutions to other people’s problems. It is something for something, and it is what the British people mean by fairness. After all, the Low Pay Commission was set up because the minimum wage relies on consensus to keep the support of both employers and employees. In fact, the hon. Member for Streatham made that point in his speech, but then sadly undermined it with a policy that I think was probably pushed on him by his leader.
Mr Bain
On the issue of fairness, does the Minister agree that people should be treated equally under the minimum wage legislation? Will he take this opportunity personally to disown the distasteful comments made by his ministerial colleague, Lord Freud—that some disabled people were not worth the full rate? Is that not an outrage; should not the Government apologise?
Matthew Hancock
Yes, of course, everybody who is in work should be paid the minimum wage.
Mr Umunna
I must say that the comments to which my hon. Friend the Member for Glasgow North East (Mr Bain) referred were absolutely disgraceful and that Minister must answer for them. The Minister talked about how the Low Pay Commission does things and how it works through the tripartite model and we absolutely want to see that go forward into the future. The Minister did not say it, so I will: the issue that some people worry about is the possible politicisation of the Low Pay Commission. I think that can be avoided, in much the same way that having a 2% target for the Monetary Policy Committee did not lead to the politicisation of that process.
Matthew Hancock
Unfortunately, the hon. Gentleman says one thing and his party then proposes something quite different. The Low Pay Commission was set up to support that consensus, to ensure that the minimum wage has the support of both employers and employees and to ensure that the low paid are not priced out of work. When politicians such as the hon. Gentleman’s boss get on a soapbox and undermine the Low Pay Commission consensus by clearly stating an amount that should be achieved by 2020, they undermine the very people they claim to support. As the Federation of Small Businesses says—the hon. Gentleman can address this when I give way to him,
“the decision on what the rate is should be set only after consultation with the Low Pay Commission.”
Labour’s proposal, according to the FSB, “does the opposite”.
Mr Umunna
As I said, I believe it is possible to move towards a new framework without leading to politicisation and to address the concerns that some have raised. I am taken aback when the Minister says that the Leader of the Opposition’s talk about achieving a certain rate for the national minimum wage undermines the Low Pay Commission, when that is precisely what the Chancellor of the Exchequer did when he talked about a £7 rate.
Matthew Hancock
No, because every year the Government present evidence to the Low Pay Commission of what level of pay the economy can support. In fact, I can go further. Today, we are publishing the economic evidence that is going in to the Low Pay Commission. It shows what level of pay the Government believe can be supported. It shows that the recovering economy is creating jobs, with unemployment falling faster than any country in the G7. Indeed, the Low Pay Commission has said that it can raise the national minimum wage in real terms this year only because of that recovering economy. Government analysis underpinning today’s evidence projects that on the Office for Budget Responsibility’s economic earnings forecast, the minimum wage is set to reach £8.06 by 2020—only because of the recovering economy.
Mrs Main
Did the Minister note—I am sure he did—that the shadow Secretary of State said that there would be some “flexibility” in the plans, but without saying what that flexibility entails? It seems to me that this is a fudge; there is not really any particular figure that he is looking towards.
Matthew Hancock
I was going to come on to that. The hon. Member for Streatham made an important admission today. I think it is the first time that Labour has admitted that if the £8 target was going to damage the economy, there would be “flexibility”, as my hon. Friend said. Within a month the hon. Gentleman has completely undone the promise that was made with such loud cymbals at the party conference. It was a promise made for a party conference by a desperate party leader who is struggling to get his message across. Today, it has been completely undermined by the man who wants to replace him as party leader after Labour loses the next election.
Mr Umunna
I have to say that this is really desperate stuff from a desperate Minister. In the same way as there is flexibility for the Monetary Policy Committee in setting the interest rate target, there would be flexibility in our system. The Minister talks as if this were some new revelation. What I have said is absolutely no different from what the Leader of the Opposition has said. The Minister can pick holes in what we have suggested, but he has come forward with no proposals whatever to evolve or move on the national minimum wage—none.
Matthew Hancock
I certainly can pick holes in what the hon. Gentleman said, and I intend to do exactly that. I would say that today’s admission that there is no £8 target from the Labour party because there will be “flexibility” around it shows that Labour has nothing to say on low pay, just as it has nothing to say on any other area of economic policy. The grin of the hon. Member for Streatham as he came to the Dispatch Box after the discussion about who will be the leader of the Labour party after the next election demonstrates, I think, that undermining his leader was part of his job today—and he has done it brilliantly.
Andy Sawford
Clearly, the Opposition have initiated this debate on the minimum wage, so it is quite bizarre to suggest that we do not have anything to say about low pay when we put it on the agenda. However, perhaps one of the Minister’s colleagues has had too much to say about the minimum wage by suggesting that disabled people are not worth it. Can the hon. Gentleman confirm whether Lord Freud is still a Government Minister? How can his position be tenable?
Matthew Hancock
I have said that everybody should be paid the minimum wage. That has been our policy throughout the whole period of this Government and it will continue. In fact, we are strengthening it—an issue I want to come on to. We have rejected the Opposition’s advice that the national minimum wage should be limited to £8 by 2020, not least because, on the central projection from the OBR’s earning figures as reported in The Sun, the national minimum wage will, under the Government’s plans, reach £8.06 by 2020—but only so long as we continue the economic recovery and not if we put that recovery at risk by adopting Labour’s plans.
Mr Umunna
I am grateful to the Minister for giving way, which provides me with the opportunity to remind him of what I said earlier, which is that the claim he made in The Sun was complete and utter nonsense. He should have rewritten his speech before delivering that passage.
Matthew Hancock
On the contrary, Government analysis underpinning today’s evidence projects that, on the OBR’s earnings forecasts, the minimum wage is set to reach £8.06 by 2020.
Alec Shelbrooke
I am sure that we all want the facts to be right when we have a debate, so let me quote directly what the Leader of the Opposition said as reported in the Sunday Mirror:
“I am delighted to be able to tell Sunday Mirror readers that we are going to raise the minimum wage–if we win the election–in the next Parliament to over £8 an hour.”
There was no qualification in that statement.
Matthew Hancock
Absolutely. I concur strongly with what my hon. Friend says. Today’s Labour U-turn on low pay policy shows that ours is the only party and this is the only coalition Government strongly supporting the national minimum wage. We are the ones who are raising the minimum wage, putting it up in real terms at record levels when compared with average earnings, while at the same time reducing taxes. It is those on the Government Benches who support the minimum wage, and it is particularly the Conservative party that is the party of the low-paid.
Mr Iain McKenzie (Inverclyde) (Lab)
I would like to tempt the Minister to say more about our proposal for “make work pay” contracts and partnership with the Government and business. Does he not think that business would embrace such contracts in order to promote investment in their employees’ skills, providing not just jobs but a career for their employees?
Matthew Hancock
It is absolutely true that the long-term and fundamental way to support the increase in productivity is to ensure more rigorous education and more skills, which is why we increased the number of apprenticeships. We are on track to have 2 million apprenticeships started in this Parliament, and we are clear that we will deliver 3 million in the next Parliament. The hon. Gentleman is absolutely right that education and skills underpin the long-term advance of prosperity for everyone in this country. I suggest that he would support the Government’s policies to strengthen education if he was truly interested in supporting a long-term increase in productivity.
We have discussed enforcement, the increase in the budget for enforcement and the Small Business, Enterprise and Employment Bill. We have quadrupled the maximum penalty to £20,000—per worker, not per firm. As a result, the amount from enforcement has increased from £2.6 million in 2003 to £4.6 million today. We know that a strong minimum wage must be properly enforced.
My third and final point is that the true champions of the low-paid know that the minimum wage is only one tool among many. We are reforming welfare so that it supports people into work rather than trapping them in poverty, and we are letting people keep more of what they earn. Thanks to our rise in the tax threshold, a typical taxpayer already pays £700 less income tax than in 2010. The tax bill of someone working a 30-hour week on the minimum wage has been cut by two thirds. In the next Parliament, we will abolish income tax for those working full time on the minimum wage. We can do that only because we are prepared to make difficult decisions on spending.
It seems that the Labour party does not want to make those difficult decisions. Perhaps the shadow Minister will explain why all we have heard from it is taxes on jobs, taxes on business, taxes on homes, pensions, investments, taxes on driving and now even taxes on death.
Mr Russell Brown
Does the Minister recognise that the economic recovery he talks about is not being witnessed in many parts of the country? He talks about people coming out of the tax bracket, but the reality is that in many parts of the country less than half the work force works anywhere near enough hours to pay tax.
Matthew Hancock
Absolutely. I recognise that as we get the recovery moving we must ensure that it benefits all parts of our country. That is why we are ensuring that the jobs recovery is spread throughout the country. This morning’s jobs data show that unemployment is falling in all regions, and in the hon. Gentleman’s constituency it has fallen by 28% in the last year. Instead of pointing fingers, he should congratulate the Government on that effort.
The Labour party forgets that we do not support the incomes of those at the bottom by making the whole country poorer. Tax cuts and welfare reform are both essential, but ultimately must go hand in hand with strengthening education and skills.
The Government support work and our record shows that we deliver work. We have a plan that will work. A strong minimum wage is possible only with a strong economy. We passionately support the minimum wage, not for a headline, but for the benefit of those who rely on it. It is just one part of our long-term plan to restore the health of the British economy from the ruins of the past. Instead of that past, we will build an economy that works for all and secures a brighter future for Britain.