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Angela Eagle (Wallasey) (Lab):
It is a pleasure to follow the hon. Member for Yeovil (Mr. Laws), and I welcome his welcome for the success of the Government's policies, particularly their effect on the
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labour market, an area that I shall address in detail. His thoughtful speech, observations and interventions were more constructive than those of the hon. Member for Arundel and South Downs (Mr. Flight), which consisted of more scaremongering about imminent economic collapse. Every year when we debate the Budget and the subsequent Finance Bill, the Conservatives predict economic crashes, mayhem about to come and recessions made in Downing street—phrases with which we are so familiar. They have done it in debates on every one of the Chancellor's eight Budgets to date, and they have been proved wrong every time. I suppose that, like a clock that has stopped, they hope they will be correct at least twice in the next period. A stopped clock is correct at least twice every 24 hours, so they hope that sooner or later they will be accurate, but there is no sign of it yet. The Chancellor's institutional reforms may mean that stability is here to stay, as the hon. Member for Yeovil and my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) said.
Behind all the complexities of a Finance Bill as long and technical as this one—it has 309 clauses and 40 schedules—lie a few simple core values and aims, which are central to the task that the Government and the Chancellor have set themselves: to establish a strong and stable economy, and to use that as a platform to create the conditions for a fair society that provides opportunity for all and security for all. Opportunity may be jobs or the social programmes such as those that my hon. Friend the Member for Newcastle upon Tyne, North noted in his constituency. I could give a similar litany of positive developments in my constituency. Security for all may be the anti-poverty programmes that the Government have successfully launched and which they continue to strengthen and improve, or fairer access to improving public services such as health and education.
Those core values and aims can be seen running through the Bill like a seam of precious metal running through rock. The Bill resembles a wall of granite, but there are important gems in it that we need to take some care to identify, understand and retrieve from the morass of technical detail with which we are always faced when we look at a Finance Bill.
The Government's economic record is a major achievement. We have had an unprecedented period of stability, sustained by a bold institutional change that the Conservatives opposed, although they have now changed their minds. We have had astute stewardship of economic affairs, which has enabled the UK to navigate a treacherous international climate that has included economic shocks such as the Asian crisis, the Russian collapse and the high-tech bubble, all of which we have come through unscathed, whereas in previous eras we may not have been able to ride such rough waters unscathed.
Steady growth and stability have enabled Britain's torn social fabric to be patched up. It is good to see again, represented by some of the topics covered by the Bill, that work has begun to recreate that torn social fabric and put it back together in a way that will allow
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it to stand the test of time and once again guarantee security and fairness for the vast majority of the people of Britain.
There are many features that I could highlight in this Second Reading debate that have contributed to the generally successful economic picture that the Bill further promotes. Macro-economic stability has been mentioned in many of the contributions so far, and I am sure it will continue to be a theme, characterised by low inflation, low interest rates and a much more predictable environment in which individuals and companies can plan ahead. The promotion of enterprise, innovation and science is creating the best prospects for future developments in the economy so that we can maintain our general economic excellence and survive in a competitive world market. The increase in fairness that we have seen in our society in recent years is characterised by the Government's determination to tackle child and pensioner poverty, and the poverty of ambition and opportunities that have blighted so many of our fellow citizens in times past.
The ongoing major investment in our public services is often commented on—it is derided in some quarters—and Labour Members welcome it. After many years of neglect, our public services and infrastructure need renewal, and it is to the great credit of the Chancellor and the Government that they have managed to put aside substantial sums to invest in those important areas. It is clearly vital to ensure that every penny is spent as effectively and efficiently as possible, which is why I welcome the Chancellor's review of public sector productivity. I also welcome the efficiency reorganisations in the machinery of government announced in the Budget.
I shall focus on employment and the labour market, and show how dry economic indicators translate into transformed lives and new opportunities for my constituents in Wallasey and the millions of others in the UK who have benefited from the success of the Government's labour market policies, which will be strengthened by some of the clauses in the Bill.
If the Government's economic strategy has succeeded, their employment strategy has succeeded even more—indeed, unemployment has disappeared from the political equation in a way not witnessed for the past 40 years. The statistics are extraordinary: the latest figures from the Office for National Statistics show that 74.9 per cent. of the working age population participate in the labour market—the highest ever rate—and that an extra 183,000 people were employed in the last quarter. Overall, an extra 1.8 million jobs have been created.
Under the International Labour Organisation definition of unemployment, unemployment declined by 33 per cent. in the last quarter and now stands at 4.8 per cent.—the lowest rate since records began. As the hon. Member for Yeovil fairly pointed out, the claimant count is less than 900,000, the lowest level since September 1975. On top of those excellent figures, more jobs and job vacancies are being generated. The number of jobs has risen by 114,000 to 30.31 million—the highest figure since records began—and job vacancies have increased by 31,000 over the past year.
In my constituency, the figures are just as heartwarming. In 1997, Wallasey was burdened with 4,450 people on the unemployment register. In 2004, the
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latest available figures show that the total is down to 1,983, a fall of 55.4 per cent. since the Government took office. Overall, 5 per cent. of the working age population in my area are unemployed, which is close to the national average. In the Conservative years, the figure hovered between 10 and 11 per cent., and it was consistently twice the national average. Furthermore, youth unemployment has been virtually eradicated in my area.
Those figures illustrate an important point about economic growth, which partially answers the question asked by the hon. Member for Yeovil about whether growth has been distributed equally. The answer is that the distribution of growth has assisted those regions that have fallen behind in the past, but there is more to do. Between 1997 and 2004, the narrowing of the employment gap between north and south was faster than average in some northern areas—that is certainly true of the north-west, Yorkshire and Humberside, Wales and Scotland.
Underlying those figures are issues that some of the provisions in the Bill begin to tackle. In my area, for example, the 5 per cent. unemployment rate hides the difference between genders—there is 6.8 per cent. male unemployment and 2.7 per cent. female unemployment. That reflects the economic legacy of the area; its ship-building and maritime background created a pool of men in their 50s who spent a lot of time working in heavy industry and have not yet found a place in the employment market in this new phase of job creation. Thankfully, the Budget and the Bill concentrate on that problem.
Another regional issue is so-called gross value added, which will be considered by the Select Committee. Regional variations in productivity demonstrate that although employment in some of the northern regions has caught up faster than the average and the north-south gap has narrowed, the opposite has happened in terms of gross value added. We must ensure that we are able to create high-quality, high-value-added jobs in the regions. Again, I am happy to say that the Bill and some of the Budget documents contain good signs that the Chancellor is aware of that issue.
Adam Price: The hon. Lady usefully highlights the key problem of the productivity gap between the economic regions. Does she agree that it would be useful if the Government developed a regional perspective on science, technology and research and development policy?
Angela Eagle: The Select Committee will consider those issues, and I hope that we will be able to give the House a detailed report. In principle, the establishment of the devolved Governments and, in the English regions, of regional development agencies and, possibly, devolved assemblies shows the way in terms of creating institutions with a regional focus to deal with local issues. Sometimes, disparities in productivity, wages and employment levels within a region are even wider than disparities between different regions. Fairness and equal opportunities must apply more effectively throughout our whole economy.
The first phase of labour market policy is encompassed by the Chancellor's extremely good record on employment creation, which has increased the
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number of jobs in the economy and banished the scourge of persistent mass unemployment that did so much damage in the Conservative years. The next challenge is to refine, deepen and improve our labour market policies to take account of some of the issues of quality, access to opportunity, high productivity and high-wage jobs throughout the country.
If we look at how those achievements have been gained, we see the way forward in terms of deepening our labour market policy to create more fairness. We should applaud the role played on the demand side by the generally stable macro-economic conditions that have allowed jobs to be created in record numbers—and, incidentally, saved some £3 billion annually in unemployment benefit payments, which is now being put to far better use. We should also applaud supply side reforms such as the introduction and increasing of the national minimum wage and its extension to 16 to 18-year-olds.
The tax credits system has helped millions of people, as has the national minimum wage. Facilitating self-employment is important in the context of the new diversity of employment issues. The new deal has also been an effective instrument on the supply side. Together, those measures have made work pay and removed the practical and psychological barriers to the labour market that many people who had been excluded from it experience.
We now need to introduce the second phase of our labour market policies. We must deepen and strengthen them and move entirely from the understandable initial concern with the quantity of the jobs created to focus on their quality. We must concentrate on facilitating moves from low skilled work to higher skilled and higher paid work, which adds more value to the UK's economic performance overall and creates a fairer and more equal distribution of opportunity and income.
The Bill's enabling clauses facilitate the gear shift from the quantity to the quality of jobs. For example, on the supply side, clauses 25 and 26 maintain a low tax regime for businesses, enabling them to continue to focus on creating more employment, which is also, hopefully, quality employment. Clause 78 makes child care vouchers tax relievable, which enables the enhancement of lone parent job prospects. Clause 79 allows employers to invest in their employees' skill acquisition by loaning them computer equipment without tax liabilities. That helps to upskill employees.
The measure provides for increases in capital allowances for small businesses that wish to invest in plant and machinery, which would enhance skills or value added by re-equipping the existing plant. There are many other tax incentives on the supply side and my right hon. Friend the Chief Secretary outlined some of them in his opening remarks. They will create a more benevolent environment for investment in highly skilled, quality employment.
On a broader scale, the Budget documents contain more detail about the new deal for skills, which strengthens learning opportunities for many people who are currently without NVQ level 2 or equivalent qualifications. The new deal has done a remarkable job in removing barriers to work from those who were disadvantaged in the labour market. Clearly, it should not be abolished, as the Conservative party wants, but
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broadened and refined to assist those who continue to face barriers to employment to take the plunge and get into work.
The recent skills strategy paper, with its welcome focus on upskilling for the low skilled and the expansion of the employer training pilot, which was announced in the Budget, will help to bolster the drive for quality jobs. I should like the pilots to be extended countrywide as quickly as is practicable.
I welcome the Budget's focus on policies to get economically inactive people who want jobs back into work. Achieving an increase in employment and opportunities for disadvantaged groups in the labour market is key to our approach to fairness and equal opportunities. The new disability rights Bill, which will be introduced soon, will assist disabled people. Equal pay provisions will assist lone parents who have child care and continuing tax credits. Ethnic minorities need equal access to training and skills opportunities and protection against discrimination when they enter the labour market. Much remains to be done on that. People who are over 50 face discrimination in the labour market and the protections against age discrimination, which were agreed in the European Union, have yet to be implemented. The low skilled clearly need to be assisted through an enhanced skills agenda to set them on the road to higher paid, more productive employment.
I welcome the welfare reforms that were announced and covered in some detail in the Red Book. They facilitate the move to sustainable work and opportunities for those who have been inactive through disability or illness.
The experience of work, work-life balance and rights at work have been equally important in improving the quality of jobs and opportunities, which in turn will make our economy more productive. It is also important that, in areas where there are still problems of discrimination, self-organisation and strong trade union organisation allow people to fight low pay, arbitrary treatment or bullying in the workplace. I therefore welcome some of the moves that have been announced recently on freedom from bullying campaigns.
The next phase for Labour's employment policy should involve a deepening of quality in the labour market, and a deepening of rights, opportunities and chances. I am glad to say that, judging by the announcements in the Budget documents—particularly on the skills agenda and on some of the supply side issues that I have mentioned—the Chancellor and his Treasury colleagues are well aware of the need to proceed in that direction. We have solved the problems relating to the quantity of jobs in the economy; we now need to focus much more on quality.
Labour market flexibility should mean a highly skilled work force who are adaptable, ready to retrain or move, and eager to work. It should not mean a casualised, low-paid, alienated work force with no rights and no commitment to an employer. The Bill and the Budget have recognised that basic truth and begun to put in place the policies that we need in order to ensure that flexibility means good, high-value opportunities and well-paid jobs that will benefit our economy and our levels of social justice and prosperity.
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4.46 pm
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