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6.10 pm
Mr. David Jones (Clwyd, West) (Con): It is a great pleasure to follow my hon. Friend the Member for Bexleyheath and Crayford (Mr. Evennett). Members on both sides of the House have spoken about the recession’s impact on employment in their respective constituencies and parts of the world. Indeed, the downturn has probably affected Wales and Welsh employment more severely than any other part of the country. In Wales, 100,000 people are now unemployed—some 7 per cent. of the economically active population, compared with the rate for the whole of the UK of 6.3 per cent.
In the time available to me, I wish to draw the House’s attention to two principal issues—the slow delivery of Government initiatives and the impact of the downturn on the building industry. The construction industry is of particular importance to north Wales. Traditionally, it has been a major employer, and a number of major regional builders have their headquarters there. The downturn has had its effect, however. Redrow Construction of Ewloe, for example, announced the loss of 350 jobs last year, and David McLean Holdings, another major employer, went into administration with the loss of 134 jobs. This pattern is being replicated on a smaller scale across the whole of north Wales.
Many small builders are no longer building, not because they do not wish to do so—and not even, ironically, because of a lack of demand for their houses—but in many cases because they are simply unable to
access funding from their banks. The principal of Beech Developments, a building firm in my constituency, tells me that he is anxious to begin developing a site near Colwyn Bay over which he has an option. His company has been in existence for more than 12 years, has never operated on an overdraft, and has an exemplary credit history.
Mr. Lee approached his bank, with which he has done business for very many years, but was told that it was impossible for him to obtain a loan to develop the site, because the bank had a blanket policy of not lending to builders. In fact, he was told that, because of that policy, it was not even worth approaching his bank’s head office. Since then, Mr. Lee has approached several other banks and financial institutions, including Finance Wales, but none has been willing to provide him with the finance he needs. Consequently, that development will not take place, with the loss of 30 skilled jobs on a project that would have lasted at least two years.
That pattern is being repeated up and down the country. Skilled building workers are unable to find work because the banks—in many cases, the banks that have received Government support—are operating a blanket policy of refusing to finance building projects. The construction industry is a major engine of the economy, and if that engine seizes, the upturn will be a very long time coming.
The banks are clearly concerned about assessing property values and about saleability. However, the problem could be addressed if the Government were seriously to consider a properly funded national loan guarantee scheme, which the Conservative party has proposed, properly funded, to the tune of some £50 billion. The Government have their own scheme, which the Secretary of State for Business, Enterprise and Regulatory Reform unveiled last January. It is a far less ambitious proposal, worth only some £10 billion. Worse still, however, is the fact that the scheme has not yet been implemented.
The Minister with responsibility for small businesses, Baroness Vadera, referred some time ago—somewhat optimistically, many thought—to perceiving signs of the green shoots of recovery in the economy. However, companies that are attempting to throw out green shoots in the current hostile landscape are finding that they are withering because of a lack of Government support. In truth, until the building industry gets going again, the economy will not get going either, and the prospects for employment in areas such as north Wales will be all the worse.
The Government have adopted the slogan “Real help now”, but the truth is that they are providing the vague promise of the potential of some help at some indeterminate period in the future. Initiative after initiative has been announced, but not yet implemented. A further example is the “golden hello” announced by the Secretary of State in January. We were told that it would provide an incentive of up to £2,500 for employers to recruit and train people who have been unemployed for more than six months.
I should like to give a practical example of someone who was credulous enough to assume that the policy was up and running. A constituent of mine, Ms Jan Ross, the principal of Merrall-Ross International Ltd, a company that provides professional indexing services, decided that she would try to take up the offer. She
found the experience most frustrating. Last week, I received an e-mail from her, which I think is worth reading:
“I am the MD of a company based in North Wales and actually wish to recruit some new staff! I noted Gordon Brown’s announcement of 12th January detailing ‘golden hellos’ for employers recruiting new staff. They seem to be elusive! I have tried the local Jobcentre Plus, the regional Jobcentre Plus, and they have tried a national Jobcentre office. I have e-mailed...the Department of Work and Pensions, the Treasury, phoned the Welsh Assembly, but alas no-one knows anything about it. Please can you take up my query and see if this was just pure hype by the Government or whether there is some substance to the announcement. What are the criteria and how does one go about obtaining help? We are a small SME, but growing, but need all the help we can get!”
My research reveals that the scheme that was announced those two long months ago is still not up and running, but that it might be in operation some time in April. I hope that the Minister who replies to the debate will indicate whether the scheme still exists, whether it is to be implemented, and—most importantly, from the perspective of Ms Ross and others like her—when that is to happen. Or is this a case not of real help now, but of jam tomorrow, or possibly the day after?
No one can deny that the problems besetting the country are worrying in the extreme. Hundreds of thousands of people right across the country live in constant fear of redundancy. No one can pretend, either, that the Government can possibly have all the answers, but the Government can help. Frankly, what they ought to be doing is not just promising again and again to introduce initiatives, but delivering real help. It is all very well for them to come up with rafts of new announcements and to unveil new initiatives, but if those measures are never implemented, they are worse than useless. They are cruelly raising the hopes of people who are already in a state of huge despair about their future. Those people need more than the promise of “real help”. They need the substance, too.
6.18 pm
Mr. Peter Bone (Wellingborough) (Con): It is a great pleasure to follow my hon. Friend the Member for Clwyd, West (Mr. Jones), who made a powerful speech putting the position in north Wales into perspective.
This debate has been interesting and wide ranging. I felt, however, that the Secretary of State got the mood of the House completely wrong in his opening remarks. Anyone who saw his performance, bouncing up and down at the Dispatch Box and taunting the Opposition, will have been very disappointed. We are talking today about the serious issue of unemployment, which really is not party political.
Before I became a Member of Parliament, I had the unfortunate duty to make people redundant. Telling people that they no longer had a job was one of the most difficult things I have ever had to do. Many of them had worked for me for many years, and it was not their fault that they were losing their jobs. The mood of the House today has reflected situations such as those, with the exception of the Secretary of State’s opening speech.
I do not want to speak too long, but I want to raise two specific points that have not been made in the debate. First, however, I need to set my constituency in context. Unemployment in Wellingborough increased
by nearly 100 per cent. over the past year. Jobcentre staff are doing an extremely good job, but it is very difficult for them to deal with what amounts to a 100 per cent. increase in their work load. They cannot provide the detailed support they would like to give to each claimant, as the hon. Member for Rochdale (Paul Rowen) said earlier. Claimants simply cannot be given the time and attention they deserve.
Unfortunately, unemployment in Wellingborough is now 26 per cent. higher than it was in 1997. I remember the pressures on the Government at that time—a failing Government as people saw them then—when there was such massive unemployment. We see the same happening now, but the present Government show no real concern about what is happening out there in the country.
My first point is about keeping people in work. Much of our debate has focused on how to help people who have lost their jobs, but it is important that we consider how to keep people in employment. I received a phone call yesterday from the managing director of a major employer in my constituency—I will not say who it is, but it is a major employer. This company has traded for many years and has run an extremely successful business. Like every other, however, it is seeing a downturn in demand—hardly surprising in the light of the recession expanding across the country.
The managing director told me that the banks, instead of helping him, were making his life a misery. He told me that he had been with his bank for 40 years and that it had made a lot of money over that period, but instead of helping the company and asking how to make its life a bit easier by reducing interest rates, which the Government have cut nationally, to make it less painful, his bank proposed to increase interest by 2.5 per cent. That means that the company will have to pay £750,000 extra in a year.
Mr. Philip Dunne (Ludlow) (Con): On the question of banks, particularly those that are majority-owned by the Government, helping businesses before they get into difficulty, the Wrekin Group was today tragically put into administration with a loss of 530 jobs, including 260 in Wrekin Construction on the edge of my constituency. The managing director is quoted in local newspapers as saying:
“It’s cash that we have run out of effectively and there has been a total lack of support from our bank RBS.... We offered the bank shares in the business, the chairman offered to stand down but the bank was only intent on the cash. It’s heartbreaking”.
This is a story from today about a bank that is now owned by the Government; if the Government had implemented the scheme they announced in early December, that bank might well have been able to provide the facilities that the company—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I have to say to the hon. Gentleman that we have a very tight time schedule, so making a very long intervention is unfair to those who have been waiting some time to speak.
Mr. Bone:
Thank you, Mr. Deputy Speaker, but I understand why my hon. Friend wanted to make that intervention, because what he told us is significant and tragic news for his constituents. I wish all those who have lost their jobs well. This reminds me of some of
the problems I faced when I was in business. Leaders of a company—the chairman of the board or the managing director—sometimes have to fight desperately to keep it going, trying to find solutions by offering shares, for example, only for the bank to do the absolute opposite of what it should. It makes life more difficult and, in the case mentioned my hon. Friend the Member for Ludlow (Mr. Dunne), the bank has forced the company into liquidation or administration.
I remember my business receiving a £500,000 cheque from another company for some advance work, and the bank involved happened to be one of the now nationalised ones. It happily entertained me and took me to the very best cricket matches, irrespective of whether the company was doing well, yet just when we needed the money, the bank was not there. It did the opposite of what it should have done, demanding more fees and more interest. I am afraid that, as of yesterday, that is now the position of the company in my constituency. I do not want it to finish up in the same circumstances as my hon. Friend the Member for Ludlow described. I repeat that it is one of the nationalised banks that is taking this action. I know that Ministers are also concerned and I also know that there is no magic wand, but I am highlighting a real problem in my constituency. If we could get such problems sorted out, the potential to save jobs would be enormous.
My second point deals with the other end of the scale, when people have lost their jobs. I had an Adjournment debate on the subject recently, but the point is worth making again. Forty people lost their jobs last December in a well-respected company in my constituency, which had been in business for more than 100 years. The only way it could survive in business—by saving £600,000 a year in salaries—was by making those people redundant. Some of those employees had worked many years for the company—more than 30 years in some cases—so there was a £250,000 redundancy bill to pay. If it attempted to pay the redundancy money, the whole company would have gone under, with the remaining 80 people losing their jobs, too. The company therefore failed to pay the redundancy money, but the 40 people, who have been most restrained, have still not received their redundancy money.
I do not blame the company for not paying it—if it had, the whole company would have gone under—and I do not blame the Government, but there is a loophole in the law. The most obvious solution would have been for the redundancy payments office to step in and pay the redundancy money, subsequently claiming it back from the company over a number of years. In fact, there is a Government scheme that would have allowed that, but the problem is that the company has to approach the redundancy payments office first and negotiate with it; if the RPO is satisfied that the company is in financial need, it should pay the money.
In reality, however, when people are fighting to save their family businesses and face circumstances that they have never faced before—when they are trying to deal with banks to get extended credit and to keep the company going while having the horrible job of telling people that they have lost their jobs—they are not going to go to the redundancy payments office to negotiate a settlement.
My suggestion is to make a simple change in the law so that the RPO can be proactive and say to a company, “You’ve got a problem here; we’ll pay the money and we’ll try to get it back from you over a number of years if you trade out of the problem”. That is not going to cost the Government any more money, because if the company fell, the Government would have to pay the redundancy money. In this case, the company went into administration and the RPO will pay the workers in due course. In my view, however, the workers should have been paid in December because the company would have had more chance to trade out of its difficulties. Such a change in the law or change in attitude would not cost the Government anything, and would benefit many people.
My final point is not at all party political. My constituency has had unemployment over a longer period and has seen immigration from central Europe. The problem is that some unemployed constituents blame the fact that they do not have a job on immigrants. This multi-ethnic area, which has had wonderful community relations in the past, now faces the problem of the British National party, which we never had before. We have to start talking about the issues and explaining what we are trying to do to solve the problem, but we cannot ignore it. We cannot say that there is not a problem and that people are not linking immigration with the fact that they do not have a job.
Derek Twigg (Halton) (Lab) rose—
Mr. Dai Davies (Blaenau Gwent) (Ind) rose—
Mr. Deputy Speaker: Order. Two hon. Members wish to contribute before the winding-up speeches begin at 6.40 pm. If they were minded to share the available time, that would be helpful. I shall call the hon. Member for Halton (Derek Twigg) and then the hon. Member for Blaenau Gwent (Mr. Davies).
6.30 pm
Derek Twigg (Halton) (Lab): I shall be brief, but I want to make a couple of key points. First, I welcome the almost £2 billion of assistance that the Government are providing to the unemployed, the golden hello scheme to help employers to recruit and train the unemployed, the help for people to become self-employed and the general help towards skills training.
It is important that the Government, in helping businesses and companies, recognise that a number of them might be struggling at the moment, but will still have a market after the recession. We should be focusing on them in providing help and maintaining the skills that I have in my constituency.
I want to comment on a couple of areas, including apprenticeships. We must train more apprentices and work with companies and organisations, as well as the public sector, to get as many apprenticeships as possible. There are some gold-standard apprenticeships—for instance, those from the Ministry of Defence and Network Rail. I have visited both organisations to see the work that they are doing and there are tremendous training opportunities for young people. The overall package to provide support with education, training and skills training, as well as help for employers, is key to trying to work through a very difficult situation.
I also want to make a point about local authorities. The difference between now and the 1980s and early 1990s is that there is a much more vibrant, focused approach to economic development and regeneration in many areas of the country, often led by the local authority. In my constituency, Halton borough council, which is one of the smallest councils in the country, is involved with some of the biggest schemes to create employment and regenerate the area. I shall give some examples.
Daresbury science park in the borough of Halton is working with the Northwest Regional Development Agency, the science authorities and research councils to achieve some significant new jobs over the next five to 10 years, particularly in science and related industries. The 3MG project—a massive rail freight development—is working with Stobart’s and O’Connor Container Transport to create many hundreds of jobs over the next few years. That is another example of a local authority working strongly with its partners in the community and in the region. The proposed Mersey gateway bridge will create 4,000 jobs, as well as 500 construction jobs, if it gets approval via the public inquiry that is due to be held shortly. Again, the project is driven by the local authority.
In this difficult period, local authorities have a crucial role to play in engendering the regeneration and taking the lead in working with various bodies. I know that they are working with partners—primary care trusts, the chambers of commerce or citizens advice bureaux—to provide help for the unemployed as well. They have a key role to play and the Government must do more to recognise that.
I am conscious of the time, so I shall finish by saying to the Opposition that I recall my constituency during the 1980s, when unemployment was regularly around 18 or 20 per cent., and youth unemployment was over 60 per cent. Halton was fifth worst in the country for youth unemployment and no real help was provided. In addition, we should not forget that a lot of people were deliberately directed on to incapacity benefit, so many thousands more were involved.
I hear the Opposition talking about working in partnership and working together. I welcome that, but I remember what the Tory Government were like back in the 1980s and early 1990s. No real help came forward to help the people of my constituency. This Government have put lots of effort into skills training, improving the jobcentre service with Jobcentre Plus, and providing help for colleges and schools. We also see capital spend—whether on hospitals, schools or other things—being brought forward through infrastructure projects to deal with this situation.
I welcome what the Government are doing. Of course they have to do more, but I also ask them not to forget what local authorities can do to help the unemployed and to lead the way on economic regeneration.
6.34 pm
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