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Another fact that came out of the report is just how many families are dependent on tax credits. The Conservative party position on this issue is completely wrong. Several hundred families took part in the survey, and 60 per cent. of them were dependent on tax credits. That is an astonishingly high proportion. As we move
out of recession, we need to ensure that we have policies that support families in employment-in different patterns of employment-and that we can maintain living standards for families who are facing loss of work hours.
The report also found that people were hugely concerned about what would happen to their pensions. As women move into full-time work and men into part-time work, their pension entitlements cross over, and people understandably therefore become concerned about their future security of income in retirement. I hope the Government might look at some way of allowing people to pool their pension entitlements in the way they can pool their working hours so they get their tax credit entitlements. This is a complex point, but perhaps I could discuss it with Ministers after the debate? It is about couples being able to save for their pensions together just as they might pool family incomes and working hours for tax credit purposes.
Overall, the biggest concern that families had was about their children and specifically youth unemployment. Their worry is that, once the economy picks up, their children will be the last to get back on to the employment ladder. One issue that arose was children's ability to stay on at school, particularly when their parents are hit by unemployment. The education maintenance allowance, important though it is, is based on the parents' income over the last year. If their income has gone down in the last year because they have lost their jobs, such families cannot get EMA just when they most need it, to keep the children on at school. I hope that my hon. Friends on the Front Bench will look at a way of ensuring that EMA can become a real-time benefit based on families' present, rather than past year, incomes, so that we can ensure that people do not feel anxious about whether they can afford to keep their kids on at school and whether they can get the qualifications they need and the jobs they want.
The shape of the global economy and of the banks will of course change. I do not agree that we should break up the banks, but they will undoubtedly change. We also need to realise that as a result of this recession, just as happened with previous ones, the situation for our families will change and they will look for a very different kind of society. It is important that all our policies-not just economic, but welfare and education policies, for example-are changed to support families in what will be a very different society and economic age.
I hope that my hon. Friends on the Front Bench will deal with some of those points and look more closely at some of these suggestions. They came out of the direct experiences of families in my constituency, which were examined over a six-month period so that I could understand this issue and explain exactly what impact the recession has had on them.
7.32 pm
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): I am grateful for the opportunity to speak in the debate. In terms of welfare support-how we protect individuals and families and prevent them from slipping through the net during what I believe will be a long, slow slog back to the robust conditions that can create jobs in the private sector and sustain economic confidence-the recession is going to throw up major challenges for our country.
I do not believe that this Government have much to offer the people who are currently hurting. Do not take my word for it, Mr. Deputy Speaker: I recall the words of the former Labour Minister, the right hon. Member for Birkenhead (Mr. Field), speaking in this House on 17 March during Third Reading of the Welfare Reform Bill. He said that the Bill
"totally ignores the new poor: people who are already registering at jobcentres and who are desperate for work, scrambling for jobs, and willing to downsize in terms of the jobs and the wage packets that they accept because they think that work is so important. What does this Bill offer them? It offers them nothing."-[ Official Report, 17 March 2009; Vol. 489, c. 874.]
This Government have little to offer those newly unemployed and newly hurting in this recession-those who know the value of work and who might never have had reason to go into a jobcentre in their lives before. What, too, about the millions of people living in households where there has been no history of work for perhaps two or three generations, or the people who come back in front of jobcentre staff time and again, caught in the revolving door of moving between work schemes and benefits, and back into temporary work and then to benefits once more?
Even before this recession, the British economy was labouring under a truly massive welfare burden. In the past 10 years, the cost of welfare spending has spiralled upwards by close to £100 billion, with millions of people who could be working and creating wealth not doing so. We are talking about the millions of people often living on housing estates blighted by educational failure, worklessness, dependency on benefits, crime, and antisocial behaviour and substance misuse. In Britain today, more than 2 million children are being brought up in households in which no one works, and many of them when they reach 16 will join Britain's expanding pool of NEETs-those young people not in education, employment or training: the ones who slip through the net and are doing nothing constructive with their lives. This is Labour's lost generation of young people-nearly 1 million of them aged between 16 and 24.
One of the fundamental reasons why I believe this Government have nothing to offer both those groups-the newly unemployed or "executive unemployed", as they were referred to in Work and Pensions questions earlier today, and the millions of people in communities of worklessness and long-term unemployment-is that they are in denial about the scale of the profound and deep-seated problems in our labour market.
The Minister for Employment and Welfare Reform (Jim Knight): We are not in denial about the scale of the problems being faced. The hon. Gentleman is unusual in this House, in that he represents a constituency where unemployment has fallen, where youth unemployment has fallen, where long-term unemployment has fallen, where incapacity benefit claims have fallen, and where last month, the number claiming jobseeker's allowance fell. Does he celebrate all that?
Mr. Crabb: On many occasions in the past four and a half years since being elected, I have stood up in this House and welcomed the fall in unemployment in my constituency. I grew up in it and I remember times of high unemployment. I am not going to decry and object to improvements in the labour market locally, but unemployment in my constituency has increased by more than 100 per cent. in the past 12 months. That is a fact.
We have seen the same pattern in this debate and in Work and Pensions questions: denial on the part of Ministers of the extent of the problems here and now, and a retreat into historical revisionism, going back to statistics from the 1980s to throw up a smokescreen to avoid having to engage with the issues and the difficult challenges that we are discussing.
I want to focus my remarks on my home country of Wales, which faces the double whammy of a delusional Labour Government in both Cardiff and Westminster. In Wales, the pain of the recession is being felt acutely. There was a view popular among some Welsh Labour politicians about a year ago that, because of the relatively high level of public spending in Wales compared with other parts of the UK, it would be in for a soft landing during the recession-that somehow, the relatively large size of the public sector meant that Wales would be insulated during the recession. Professor Niall Ferguson, who owns a home in Wales, expressed that view to a newspaper, and those comments were seized on by Welsh Labour MPs and some sections of the Welsh media. The view was backed up by Ieuan Wyn Jones, Economic Development Minister in the Welsh Assembly, who said:
"Wales will fare relatively better."
Brian Morgan of the enterprise centre at the university of Wales Institute, Cardiff objected to that. He said that Wales would suffer worse than other parts of the UK and that, as one of the poorest parts of the UK, Wales is trying to absorb a recession from a weakened position, and the Government could not borrow indefinitely to prop up the public sector.
It is Professor Morgan who has been proved right. In the past 12 months, unemployment in Wales has soared. It has been increasing at one of the fastest rates anywhere in the UK. In the three months to August 2009, unemployment in Wales hit 130,000-a rise of 24,000. The rate now stands at over 9 per cent., one of the highest of any of the UK regions. Almost 100 people lost their jobs every day in Wales in the past 12 months. One in every three people in Wales on the dole has been claiming it for more than six months, and one in 10 has been doing so for more than a year. Long-term unemployment has not been abolished or solved-certainly not in Wales-as some Ministers have claimed in the past.
We need to get back to focusing on private sector job creation. In the past 10 years there has been a phenomenal increase in public sector jobs. I welcome employment in the public sector-it is great to see people working, whether they are in the public or private sector-but we need to increase the wealth-creating component of the economy and see jobs created in the private sector, not just the public sector. We need to return to focusing on how we create incentives for private sector employers to recruit more workers and to hold on to them during the recession.
It is estimated that since Wales won objective 1 funding from the European Union at the end of the 1990s, its public sector has grown from accounting for about 50 per cent. of its gross domestic product to about 54 per cent. In England, the public sector accounts for about 40 per cent. of GDP. Thus, one can see that the public sector is significantly larger in Wales, relative to the other proportion of the economy. Many of the employers in my constituency talk to me about their
frustrations at the barriers that they come up against in trying to recruit new workers, and many of those employers will do anything that they can to avoid taking on more workers unless it becomes absolutely necessary. It is a shame that so many small business men and women regard employing more people as a headache-they should see it as a sign of growth and it should be a wonderful thing for them to be able to recruit more people-because of the regulations attached to hiring workers and the personnel difficulties that many of them face.
Manufacturing has been touched on, and I wish to echo some of the remarks made. We need to speak up for British manufacturing. I represent a rural constituency in west Wales, where manufacturing is a very small sector of the economy, but even down there we have some success stories that we need to celebrate. For the past 10 years, manufacturing trade associations, the CBI and the chambers of commerce have been warning consistently about the erosion of competitiveness of the UK manufacturing sector and about the loss of jobs-almost 2 million have been lost from UK manufacturing in the past 10 years. As the overall employment level was increasing during that period, Ministers did not have to engage fundamentally with the difficult challenge of a loss of private sector manufacturing jobs. That is one reason why I say that Ministers are guilty of being in denial and of being complacent about the loss of jobs in the UK economy.
Finally, on the question of young people, hon. Members and organisations outside the House have been warning about the profound long-term problem of youth unemployment. I have even heard a Minister say that youth unemployment has been abolished under this Government. What an arrogant thing to claim, given that one can go to any town centre up and down this country in the middle of a working day and see young people simply doing nothing constructive with their lives. Youth unemployment has not been abolished; we face deep-seated challenges. Unless there is honesty on the part of all parties in the House and, in particular, the Ministers who are running the show at the moment about engaging with the issue and recognising how deep-seated the problems are, we will not make much progress.
Last week, I went to a reception held on the Terrace that was put on by the Salvation Army Housing Association, where I met some of the young residents of the foyer schemes that it runs. These were young people from Rotherham, in the north of England, and young people from the south of England who were getting supported accommodation provided by the SAHA and training. Those young people had been rough sleepers on the street, and some of the young ladies had been sex workers-I am talking about people with profound problems. It is organisations such as the SAHA, which are at the coal face of working with the hard core of unemployed young people, from whom Ministers need to learn. They should engage with those outside organisations, because they have something special to offer. The young people whom I met downstairs last Wednesday afternoon are a testament to the expertise in these organisations. I am thinking about not only the Salvation Army, but the Prince's Trust, Fairbridge and
so on; a range of organisations have been doing such work for a long time. When I talk to my regional Jobcentre Plus and to Ministers, I sometimes think that they should engage more with some of those organisations and learn from their expertise.
7.43 pm
Kelvin Hopkins (Luton, North) (Lab): It is a great pleasure to speak in this debate. First, I thought that the speeches made by my right hon. Friends the Members for Holborn and St. Pancras (Frank Dobson) and for Oldham, West and Royton (Mr. Meacher) were brilliant-I need not add to anything that they said, because I agreed with every word of it. However, perhaps I might fill in a few gaps and express a few of my own views.
The Conservative motion is pretty feeble. It just contains footling supply-side changes and a coded reference to squeezing benefits, and it proposes a little bit of tax advantage for business. That does not really address the major problems that the economy must face over the coming years. The right hon. and learned Member for Rushcliffe (Mr. Clarke) again came with the old canard of flexible labour markets and driving down wages, which would just deflate demand even further and would not solve any of the problems.
The motion refers to competitiveness, which is important. I have argued for a long time that the pound was substantially overvalued relative to other currencies, particularly the euro and the dollar. One of the good things that has happened over the past year is the severe depreciation-a serious depreciation-of sterling to a more reasonable level, and we have started to improve our competitiveness on that basis.
Mr. Bone: I agree entirely with the argument that the hon. Gentleman is making, but would it not be better if the Government said from the Dispatch Box tonight that they will drop their policy of joining the euro, so that we can continue to have a currency that devalues.
Kelvin Hopkins: I did not know that we had a policy of joining the euro, but I think that the most sensible thing that the Prime Minister did in his years as Chancellor was not to join the euro-I applaud him for that. Had we joined it, we would have the same problems as Ireland, which has a massively overvalued currency, so what he did was very sensible.
The other component of competitiveness is, of course, investment. Private companies invest when they can sell things. If demand has been deflated in the economy and they cannot sell anything, they will not invest. Thus, the crucial component, beyond having an approach that ensures an appropriate value for one's currency, is to have a good market: a good level of demand in the domestic economy, as well as the international one.
Mr. Binley: I am listening to the hon. Gentleman with great interest. Does he understand that in order to invest, companies, particularly small and medium-sized enterprises, need working capital, and they are being starved of it at the moment?
Kelvin Hopkins:
I thank the hon. Gentleman for his intervention. I would have supported the policy that I fought on in the 1983 general election, which was to nationalise the banks at that time and introduce a thing called the "alternative economic strategy". Had we done that, we would not be in the mess that we are in
now but, unfortunately, we followed the apostles of neo-liberalism and the free market, who are so evident on the Conservative Benches-sadly, some in my party also followed that misguided route-and we have arrived at this situation. Those who still speak in favour of globalisation, liberalisation, privatisation, marketisation and deregulation have had their day and it brought us to the edge of a catastrophe.
We must go back to having a more regulated world, where we manage our economies sensibly, we ensure that they work and we guarantee full employment, above all. Between 1945 and 1970-before the post-war world collapsed-we had heavily managed economies and they worked. I can remember that as a young man-the hon. Member for Northampton, South (Mr. Binley) and I may be of similar age, so perhaps he also remembers these times-one could walk alongside a row of factories and see vacancies in every single one. One could almost go into any one of them and be given a job. That is the world that we used to have, and it is the one that I want to have now for all the young people in my constituency in Luton who cannot get a job. A range of jobs, both skilled and semi-skilled, were available, and there were apprenticeships by the thousand. That is the world that we had, but we have thrown it away because we fell for this foolish world of neo-liberalism. I think that we will rebuild back towards that world one day.
Investment comes about through having a good market in which to sell things. The Government amendment, which I strongly support, refers to the "new industrial activism", and I applaud that absolutely. The Minister for Business, Innovation and Skills, who spoke from the Front Bench on behalf of Labour Members at the beginning of the debate, has had a role in helping to save the Vauxhall plant in Luton-I am extremely grateful for that. I thank him for his work there, together with the Secretary of State, who has also visited Luton and done a good job for us. So, the Government are doing something for manufacturing.
As Conservative Members have said, we have fine manufacturing companies in Britain-that applies in my constituency. They have had difficulty in selling because of the overvaluation of our currency, but they represent superb quality manufacturing. The problem is that we do not have enough of it. We have had a massive trade deficit for a decade and more simply because of the overvaluation of sterling. Since the depreciation, over the past year-from the second quarter of last year to the second quarter of this-our trade balance in goods has improved by £1 billion a month. I hope that that continues and that we improve even further. We still have a big deficit, but we are moving in the right direction and there is a real opportunity for manufacturers to take advantage of the new situation.
Mr. Lee Scott (Ilford, North) (Con): Does the hon. Gentleman agree that at the very time that small businesses need investment and need the help of their banks, the banks are not doing what the Government have asked them to, which is to help small businesses out in these troubled times?
Kelvin Hopkins:
I have to say to the hon. Gentleman that I am a traditional socialist and that I would be much more interventionist than even my splendid comrades on the Front Bench. I would order the banks to do that
and would have Government representatives at a management level in those banks, too. Indeed, I think that that is where we ought to go. I do not appreciate this arm's length approach; I do not accept it. I would have a much more interventionist approach with the banks and would ensure that the investment funds were forthcoming for companies of all sizes. If this were the situation in Germany or France, they would make sure that those things happened.
Let us consider Germany-it has its problems, like we do, but the Germans have managed to protect, defend and advance the manufacturing sector through a collaborationist approach between unions, management and Government over a prolonged period. They made sure that German manufacturing was strong with a high level of investment. Can anyone imagine Germany allowing BMW to be bought by Rover? No, but we just gave away Rover for a pittance-for £400 million-because British Aerospace wanted a bit of extra cash. That is utterly irresponsible and, I would say, unpatriotic too.
Mr. David Drew (Stroud) (Lab/Co-op): One of the ways that the consensus in Germany, in particular, works is to ensure that people are able to stay in jobs in the downturn. That is very important, because when we get to the upswing, Germany will have people in manufacturing, ready to be employed. Sadly, in this country we will not, which is an argument for wage compensation.
Kelvin Hopkins: There are so many differences on which I would like to focus, but in the short time available one cannot do that.
The point on which I want to focus is the attempt by the Conservatives to frighten us about the size of our debt. The point has been made very strongly by my right hon. Friend the Member for Oldham, West and Royton: historically and internationally, our gross national debt is not high. It is not a problem, even for those who manage the debt. Mr. Robert Stheeman, the chief executive of the Debt Management Office, was reported in a newspaper only last week as saying that there is
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