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"is going to advise on making sure this accelerator space is attractive to spinout companies from academia and beyond. Indeed, they will be encouraging some of their own brilliant companies to be based here."
I very much welcome that. I look forward to those start-up companies being established.
What is the Exchequer Secretary doing about that? With the Bill, he is encouraging those companies to go elsewhere. Why is he not getting behind the Prime Minister's vision? The Prime Minister made it clear that it is not just Imperial college that is supporting it: McKinsey & Company is supporting it, and British Telecom has agreed to bring forward the roll-out of super-fast broadband so that we have the fastest internet speeds, as was rightly raised by the hon. Member for High Peak. The Prime Minister talked about Qualcomm providing expert advice, Vodafone's commitment to bring the Vodafone Ventures investment fund to the capital, and so on.
My question to the Exchequer Secretary is why the Treasury was not on that list of partners that support the initiative. Why is everyone getting behind the Prime Minister's vision, except him and his Department? The Prime Minister said:
"I want to thank each and every one of the companies and investors that has come together to do this. It's like nothing that has happened in our country before. It is a genuine innovation network-bringing together high growth start-ups, universities, investors and global companies.
And thanks to these efforts, we can help make East London one of the world's great technology centres".
The Prime Minister explained the contribution that the Government would make, including what UK Trade & Investment would do to support the vision. It is striking that in that speech he was not able to identify any help that the Treasury would provide for the initiative.
The Prime Minister made another excellent point in the speech:
"Of course, we will change laws where necessary so we break down the barriers to innovation."
Well, let us change this law. This is the opportunity to do so.
Harriett Baldwin (West Worcestershire) (Con): I am fascinated to hear the right hon. Gentleman make these points, because I do not remember you proposing a national insurance cut. Indeed, you went to the polls with a national insurance increase.
Mr Deputy Speaker: Order. I was not in the Treasury. I am getting a lot of your blame, and I do not like it.
Stephen Timms: I reassure the hon. Lady that when I was in the Treasury, I put an enormous amount of effort into supporting exactly this kind of initiative. I supported the Thames Gateway initiative specifically, as well as other regeneration initiatives.
The Government are now saying that they will not give grant funding, but instead will provide incentives. This is our one opportunity to boost the incentives for establishing the kind of business that the Prime Minister wants in east London, and it will be forgone unless the amendment is agreed by the House this afternoon.
I do not know exactly how things work in the Conservative party. Who speaks to whom, and who is on whose side is all closed to me. It may be that the Exchequer Secretary feels that he does not need to take much notice of what the Prime Minister says. Perhaps he speaks to other people in his party. Let me therefore point out that it is not just the Prime Minister who wants the initiative to go forward. I point him to what the Mayor of London said-perhaps he takes more notice of him that the Prime Minister, I do not know. The Mayor said:
"we can and must do more to cement our position as a global magnet".
"the Olympic and Paralympic Games will bequeath to London a vibrant new business quarter in the east of our city. We must do everything we can to support its development".
This afternoon, we have the opportunity to do something to support the Mayor of London's call to develop the vision set out by the Prime Minister. We must not let this opportunity pass us by.
Perhaps the Exchequer Secretary does not take much notice of what the Mayor of London says, either-again, I do not know about that. If that is the case, let me point out to him the position of the Department for Communities and Local Government. Its website states:
"The Government is committed to making a success of the Thames Gateway...we will promote incentives to invest and develop in the area, instead of grant funding specific projects."
That returns me to the point that I made a moment ago in response to the hon. Member for West Worcestershire (Harriett Baldwin). We understand that the Government are not now willing to contribute grant funding. We disagree with them about that, but are told that there will instead be incentives to invest and develop. Here we have an opportunity to provide just such an incentive. As far as I am aware, the Government have not come forward with any other incentive, and we can provide one along the lines of the policy that the DCLG has set out. We should take that opportunity, and I hope that the Exchequer Secretary will do so this afternoon by accepting the amendment, so that we can provide an incentive in an area that has been so specifically identified by the Prime Minister, the Mayor of London and the DCLG.
The DCLG website also states that the Government will
"work with other departments to identify how their programmes bear on the Thames Gateway and need to be adapted".
The initiative in the Bill clearly needs to be adapted to fulfil the Government's policy for the Thames Gateway. I hope that the Minister will tell us what representations he has received from the DCLG, because it is an extraordinarily disjointed approach for one Department to say that it will introduce incentives and initiatives in one area and for the Treasury to take not a blind bit of notice and send all the incentives somewhere completely different.
The previous Government used to talk about "joined-up government", and indeed we made important progress towards achieving it, so that all the different parts of Government were pushing in the same direction towards the same goal. Here we have a case in which the Prime Minister, the Secretary of State for Communities and Local Government and the Mayor of London are on one side, and the Exchequer Secretary and his colleagues
are on the other. I invite him to support what his right hon. and hon. Friends are saying, and not to stand aloof from the policies of the Government of whom he is a member. The Treasury should not be an island, cut off from everybody else and doing its own thing without talking to others or supporting what they are doing, but that seems to be the position with this Bill.
I invite the Exchequer Secretary to accept the amendment and agree that the incentive should be applied in places in which the Prime Minister has so clearly identified its importance.
Sheila Gilmore: As a Member from Scotland, I might be expected to give the Scottish whinge about how everything goes to the south-east and nothing comes to Scotland. I am not going to do that, because the way in which the Bill has been constructed has not been well thought through. It is not clear, at least to me, what are the intentions behind parts of it and what set of policies it is meant to fulfil.
Is the Bill about helping areas with high levels of unemployment, some of which have never fully recovered from previous recessions, or helping areas with high levels of public sector employment, which we anticipate will suffer greatly from what will happen over the next couple of years? They are not necessarily the same places. The constituency of my hon. Friend and neighbour the Member for Edinburgh South (Ian Murray) is at the top of the list provided by the Library of areas with the highest public employment. Most people would think that large parts of that constituency are fairly affluent, because the public employment is, I suspect, largely at the university. It is perhaps not perceived, certainly in Edinburgh or even in Scottish terms, as in particular need of employment support. My hon. Friend, who is sitting on my right, probably disagrees.
We must decide what we are trying to achieve. I am very persuaded by what I have heard from many colleagues, particularly in London but also in other parts of the south-east, which has a long history of difficulty. The south-east is by no means all affluent. It is important to create employment in the parts of London and the south-east where unemployment is high. Those places are suffering many problems and are now affected by the cuts in public expenditure. People there are being told that they may have to move because their homes are too expensive for them. Many things are coming at those areas, and I am persuaded by my colleagues' words and by what I have seen in London that there is a need to boost employment in many places.
I am not convinced that the particular cut of the cake for which the Bill provides is the best. I am not clear about the reasons for it. On Second Reading and in Committee, it was suggested that it was done to target places that need help most. I do not think that that is necessarily the case. At other times, it was suggested that we have to do what the Bill proposes because we cannot act everywhere-that would cost too much. We are then back to the arguments about the need to reduce the deficit and the speed at which that has to happen.
However, the best way in which to get out of recession is to grow the economy and create jobs, and it is important to do that everywhere. I appreciate that, in
terms of the amendment, we cannot ask for further expenditure at this stage, although we could review the position in later years. However, tax loss could be recouped quickly if new businesses grow and employment increases. It is important to build employment throughout the country. There is no particular reason for taking the route that has been suggested.
We are constantly told that we have to act in this way because the country is in such a mess and we must reduce the deficit more quickly. Labour Members do not accept either the Government's description of how and in what circumstances the deficit arose, or their prescription. We must build employment and provide the economic stimulus that we need in various ways-the scheme is only one method; there are many others. National insurance contribution relief is only one small, albeit important part of a bigger picture.
We need a continuation of the policies that, in early 2010, meant that unemployment did not rise as high as had been predicted and that the deficit was falling more than had been predicted before the election. It is not true to say that the deficit was increasing-it was falling under our policies. The growth in various quarters of 2010 was the result of the economic stimulus package that we put in place. We should continue the economic stimulus. National insurance contribution relief is one small way of doing that and, in my view, it should be country-wide.
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Kelvin Hopkins: I strongly support the amendments, which my right hon. Friend the Member for Delyn (Mr Hanson) moved so ably. As it stands, the Bill has crude, arbitrary and unfair discrimination built into it. The amendments would remove the unfairness and discrimination at a stroke and turn the measure into something that we could all happily accept.
I have to declare an interest: my constituency is in one of the excluded areas. The proportion of public sector employment in Luton North puts it at the top end of the table-number 48 out of 650 constituencies. Some 41.2% of employment in my constituency is in the public sector, so it will suffer substantially as a result of the Government's cuts in public spending. If 450,000 jobs go nationally, we could be talking about 1,000 jobs in my constituency at the very least. Already it is suggested that 500 jobs might be going in Luton as a result of the cuts, and a higher proportion of those will be in Luton North because of the degree of public sector employment there. I therefore have a vested concern and a constituency interest.
I am more concerned, however, about the overall principle, which will affect so many other people unfairly. My right hon. Friend the Member for Delyn suggested that because of the likely decline-certain decline, I think-in economic activity and rising unemployment, take-up will be much lower, owing to the fact that far fewer businesses will be formed in an atmosphere of the economy entering recession, with jobs being lost in both the public and private sectors. If the economy were expanding, of course, we would expect many more small businesses to be created, and therefore a much higher take-up. The take-up will probably be well below anything that the Government anticipate, simply because the economy is going to enter-I believe-serious recession as a result of their policies.
It is strange that the Government have chosen the British standard regions to discriminate in this way. They have actually played down regionalism-they are abolishing the regional development agencies-and are diminishing the regions as a basis for policy in other areas, but they are using the standard regions as a basis of policy in this area. That seems to be contradictory. If we are to provide assistance to industry and employment, it would be preferable to target it much better and in other ways. Given that the Bill will work in such a way, however, the only fair approach is to apply it across the country as a whole. As my right hon. Friend the Member for Delyn said, the costs would not be so great of including the three regions excluded in the Bill and ensuring that every small business across the country has the advantage of the subsidy.
Neil Carmichael (Stroud) (Con): Surely the whole point of the regional argument is that we should be focusing on the regions that need extra help to encourage the development of smaller business. On the hon. Gentleman's point about the state of the economy, it is the growth of new small and medium-sized businesses that will boost the economy. That is what we want to encourage through this legislation.
Kelvin Hopkins: I thank the hon. Gentleman for his intervention, but the Government have chosen to play down regionalism by getting rid of RDAs, yet have chosen regions as a crude way of excluding certain areas from the policy in the Bill. Within those regions, of course, some areas really require assistance, and by any standards, Luton is one of those. We have seen a massive loss of jobs there as a result of the decline in manufacturing industry. Fortunately, we have an airport, public sector employment and so on, which has helped, but we have also lost a lot of jobs and need assistance more than most other areas not just in the south-east, but elsewhere in the country.
Stephen Williams (Bristol West) (LD): The hon. Gentleman said that the Government have abandoned regionalism. It is true that RDAs are going, but they have been replaced on a more localised basis by local enterprise partnerships. If he and his colleagues have a really compelling case for investment in the Luton or greater Bedfordshire area, surely a bid to the LEP would benefit his town, even though it cannot benefit from the scheme in the Bill.
Kelvin Hopkins: I am strongly in favour of proper targeting, but the RDAs could do that: they could look at their regions, advise on which areas needed the most support and provide assistance in that way. I am in favour of targeting, but if we are to exclude areas, it should not be done regionally, because within regions there are areas that need strong support and other areas that need less support. As I said in earlier debates in the Chamber today, I would use that £1 billion in other ways and target it rather better. We in Luton feel unfairly discriminated against for the reasons that I have set out.
There is also a problem with regional boundaries, which have been mentioned before. In Committee I mentioned a regional boundary that goes right through a small conurbation not far from me, Leighton-Linslade. Linslade is to the south, in Buckinghamshire, and Leighton
Buzzard is in Bedfordshire. We therefore have a conurbation that is split by the regional boundary. How will people in that small conurbation feel about one side of the town getting a benefit and the other side not getting it?
I think I have probably made my point, and others wish to speak. The Government have got this wrong. I hope that they will accept the reasonable amendments tabled by my right hon. Friend the Member for Delyn and make this a fair Bill that we can all support.
Mike Gapes: Allegedly, we are all in this together. If so, why is it that those of us in east London, along with people in the 21 authorities in the Thames Gateway, which include authorities in Kent, where there is not a single Labour Member of Parliament-they are only Conservatives-and those in Essex, are excluded from the package that we are discussing? We heard earlier today about the Maoist chaos of the Government's regional policy. That is not the responsibility of the Treasury; it is the responsibility of its close allies and partners, and the Business Secretary. However, as we are all in this together, presumably the Treasury is also involved up to its neck.
We have also heard that, apparently, the Government are refocusing regional policy. Well, that regional policy refocus includes, in today's measures, discrimination against poor people in poor communities. My right hon. Friend the Member for Delyn (Mr Hanson) spoke from the Front Bench about a number of boroughs and constituencies that have high unemployment-higher than the national average-and where, at the moment, there are also high levels of public sector employment. Those areas will take a disproportionate hit because of the measures announced in the comprehensive spending review and the Government's policy to reduce, for ideological reasons, the size of the public sector so drastically and quickly.
So, we are not all in this together: some of us are in it much deeper than others. I suppose that we are a bit like the residents of Brisbane, Australia. When the tsunami or flood comes in, we hope that it will meet a certain ceiling point before going back down, and that the next day it will go no higher. Some people have a little footbridge or step to get them above the water, but others are pushed down below it. People in the small-business sector in my community-in Ilford and Redbridge, which is a Conservative-Liberal Democrat borough-will not benefit from these measures. When it comes to benefits, we are not in this together with those in Tatton or elsewhere. We will lose out.
Other Members represent poorer communities than mine, but I have wards in my constituency with very high unemployment. I also have a very diverse community. One of the interesting features of excluding London from the proposals is that it is not only discriminatory geographically; it could also be discriminatory ethnically. That needs to be taken into consideration, given the way in which the measures disproportionately affect different communities in different parts of the country.
I do not want to delay the House for long. I spoke on Second Reading in November. I hoped at that time that the Government would come forward with some changes to their proposals. I hoped that they would listen to the logic, but they did not. We have already had Committee stage and Report brings us to today.
The Thames Gateway Partnership for London, Kent and South Essex recently wrote to Members, urging us to make representations to the Minister- [Interruption.] He might wish to listen to this. It wanted us to write to him to point out the discriminatory nature of the proposals and to urge the Government, even at this stage-I say again, even at this stage-to see what they can do to help the Thames Gateway authorities. The partnership pointed out that there are 3.5 million residents in the Thames Gateway local authorities area and that it believes that in
"excluding London and the South East from the regional freeze on National Insurance contributions the government is failing to take proper account of local economies, particularly the challenges faced by the Thames Gateway growth corridor."
My right hon. Friend the Member for East Ham (Stephen Timms) has already referred to that.
The Bill is damaging to a potential growth sector of our economy. The Thames Gateway is part of the future of London as a global city. It is vital to the prosperity of our nation, yet this short-sighted, quasi-Maoist Government are operating in such a chaotic way that they cannot see the damaging consequences of what they are proposing. Next year, I hope, they will come seriously to regret what they are doing. I urge all local authorities in the Thames Gateway area to look very closely at the Division lists for today and to register which Members from Essex, Kent and London went through the Lobby in favour of such discrimination against London, Kent and Essex and which Members voted against it. Then, hopefully, those local authorities, councillors and communities will hold those Members to account.
Dr Creasy: I want to talk about three things in my comments on the amendment, the first of which is the test set by the Opposition about what this policy is designed to achieve. Secondly, I shall explain why the amendment is needed to ensure that the policy achieves what is intended. Thirdly, I shall say a little about the evidence base for the policy, which was a matter of great concern to me in Committee-and the Bill is still found wanting in that respect. I shall show how the amendment addresses some of those challenges.
The test we set for this policy and, indeed, for this Government, given our concerns about their economic approach, relates to jobs. At the heart of what we do as a Parliament must be the concerns of our constituents, and I know that one of the main concerns of my Walthamstow constituents and those of many other Members is jobs. How are people going to keep a roof over their heads, keep their families fed and ensure that their families stay together? Those concerns relate to the jobs people have and the support we can give to them in their jobs. Job creation is, as my hon. Friend the Member for Edinburgh East (Sheila Gilmore) ably set out, absolutely key to how we judge this policy.
In that context, the symptoms are not good. We know that unemployment is rising and that it has hit 2.5 million-it has been suggested that it is likely to increase further, especially in areas currently excluded from this policy-so job creation is a critical aspect of what the Government can and should be doing. Six people are chasing every vacancy in this country; if there were ever a time when we needed to create more
jobs for which people can apply, it is now. We cannot have a jobless recovery; that is not sustainable. Indeed, the cost to the public purse of doing so would be tremendous. It is worth noting that every extra 100,000 people on the unemployment register is half a billion pounds of welfare expenditure that has to be found. There is a great cost to us of not doing something about rising joblessness.
We therefore look at this policy and ask how it will meet the test that the Minister set. In Committee, he said that the purpose of the policy was specifically "the creation of jobs". It was to
"help the wealth-creation sector in regions currently reliant on the public sector". --[ Official Report, National Insurance Contributions Public Bill Committee, 2 December 2010; c. 47, Q167.]
That is the second test that we put: does this policy affect not the regions but the people it is designed to help? If we look at the people test, we see that, as currently constructed, the policy does not meet it; it fails on that basis.
Many Members have named areas in which some of the public sector workers most affected by the Government's cuts are living. My constituency is already among the top 100 in the unemployment league. Our current unemployment rate is 8.5%, and it is rising as we speak. About 24% of people living in Walthamstow work in the public sector. They are losing colleagues, and they are worried about themselves. My surgeries are full of people asking for help after receiving redundancy notices. I ask the Minister what I should tell those people. What will this policy offer them? The task of Government is supposedly to support people and create jobs in the economy. What can I tell those people in Walthamstow who work in the public sector and risk losing their jobs, or have already received redundancy notices?
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Ian Murray (Edinburgh South) (Lab): As was pointed out by my hon. Friend the Member for Edinburgh East (Sheila Gilmore), my constituency is at the top of the league in terms of public sector jobs, yet unemployment is less than half that in the constituency of my hon. Friend the Member for Walthamstow (Dr Creasy). Does that not highlight the discriminatory nature of the Government's policy?
Dr Creasy: That is a very good point. I am talking about the public sector workers who are most at risk of redundancy. The people who live in my constituency may not do the same jobs as those who work in the public sector in Edinburgh. They are teaching assistants, nurses, and people working in inclusion units and Sure Start. They are losing their jobs because of the cuts that are being made in local and national Government. People such as civil servants-who knows, perhaps they include the admin assistants in the Minister's offices-fear for their jobs. They are looking to the Government, who say that the private sector will pick up the pieces following the cuts in the public sector, and they are asking how that will happen. In my region, the answer is very unclear.
This policy could be part of the remedy, and that is the aim of the amendment. It asks, "How can we generate jobs? What are the motives that lead people to set up businesses and industries that generate jobs in the private sector?" Many of us share an interest in whether
the private sector could generate jobs as part of the recovery. We think that the policy has failed that test, and needs to be amended. Excluding London and the south-east means excluding a key wealth-creating element of our national economy, and we feel that that is remiss.
I also think that the Government have been remiss in excluding the voluntary sector and charities, and in Committee I supported amendments seeking their inclusion. According to the National Council for Voluntary Organisations, if the voluntary sector could benefit from the change of policy on national insurance holidays, an extra 2,500 charities could be created. Perhaps even more could be created through the big society, given the interest in how the voluntary sector could work in public sector commissioning. Cruelly, however, they have been excluded. The questions "Who are the people who are generating jobs?" and "Where are the places where people who are losing their jobs in the public sector can best find employment in future years?" have not been answered; the test has not been passed.
I ask the Minister to consider amending the policy in the way we have suggested, not least on the basis of his own evidence. He will recall that, in Committee, I was particularly concerned about the way in which the Government had constructed the policy, and the evidence on which it was based. He himself has described it as an uncertain benefit, and his officials have admitted that they did not have much evidence on which to assess whether they could reach all the people whom they wanted to reach, or involve all the businesses that the Minister had hoped to involve. In the impact assessment, the Minister said that he hoped that the policy would help 400,000 businesses, but he has admitted today that only 1,500 have applied so far. In Committee, one of the officials suggested that the number of applications would increase at the remittance stage, but that is not job creation. The jobs would have already been created, and people would be applying retrospectively for remittances. That suggests a challenge to the status of the policy as a job creation measure.
According to the Minister's own analysis, the inclusion of London and the south-east might well make possible the creation of an extra 300,000 businesses. Before he says that there is no extra money, let me suggest to him that the creation of those extra businesses might enable him to meet his target of 400,000 over the three years. He could then return to the House and reassure all of us who are concerned about the efficacy of the policy that it had succeeded in generating new business in the United Kingdom and forming a key part of our recovery. Let me also encourage him to consider the extra tax take that the Treasury would gain as a result of the creation of all those new businesses, as well as the fact that all the extra national insurance funds could be spent on the national health service or on pensions, as he desired. There are many benefits in considering how the Bill could be amended to include London and the south-east. Let us think about all the people who would be affected by the jobs that this would create, the money it would bring into our national Exchequer and, above all, the economic recovery it could help drive.
I therefore hope the Minister will accept the amendments and acknowledge that they have been tabled in good faith. They are motivated by a genuine desire to make sure this policy is effective. Whether or not we agree with the Government-and we certainly disagree with many of the changes they want to make-I hope the
Minister will understand and share our concern that jobs must be the first priority of any British Government in the current economic climate.
Gavin Shuker: I believe these amendments would make a real and fundamental difference to people in my constituency who wish to start their own businesses-to people who are creative and dynamic, and who want to have the opportunities that come from not being at a disadvantage to those running businesses in other parts of the country.
This Bill seeks to bring about a social benefit. There is a reason why national insurance contributions are going up. They are going up to help bring down the deficit, which is important. The structural deficit needs to be tackled over time. There is a further aspect to the Bill, however: it is also about trying to rebalance the economy.
The Minister has been very clear about his desire to see public and private sector employment rebalanced in various regions, but I personally do not have a problem in this regard, because for me a job is a job. I do not think people in the public sector should be in any way disadvantaged or looked down upon because they work in the public sector rather than the private sector. We accept that private sector jobs should be generated, however, because Opposition Members believe that economic growth is the way to tackle the deficit, not slash-and-burn economics.
We accept that under the Government's plans to reduce the number of public sector workers by about 500,000, those of us in areas with high public sector employment will need more businesses coming up and through. My point is simple, therefore. Across wide swathes of the greater south-east, including the Luton seat I represent, there are areas of very high public sector employment and high unemployment, and the Minister would do well to accept these amendments in order to ensure that we are not disadvantaged, which we are. That would be a positive step.
I agree that legislation has a role to play in helping to moderate behaviour. We want more businesses coming up and through. In Committee, the Minister made a number of salient points about the complexity that might be added by including regions such as the greater south-east, but we are not just in politics to administrate. We are in politics to make a difference. We are in politics to ensure that everyone in this country has a job they enjoy and through which they can generate both wealth for their family and self-worth, and it is unfair to the people in my constituency, and to others in the east, the south-east and London, that they should be exposed to this great disparity.
We in Luton have a number of particular issues with this proposed legislation. First, we have great transport links, which is a positive. It is why businesses like to locate in Luton. However, those same transport links also allow people to travel outside Luton to set up their new businesses, meaning that people in Luton who need a job cannot find employment. We have a young and creative work force; they are the kind of people who want to get stuck into building new businesses, and I am constantly amazed by the range of new businesses I see in my constituency. They are innovative, professional young people who want to establish businesses and set out on their own path, but they are going to be disadvantaged by these measures.
Luton has areas of deprivation, and we also have high public sector employment; that is certainly the case in the constituency of my hon. Friend the Member for Luton North (Kelvin Hopkins), as well as in Luton South. It would be deplorable to say to the people in my constituency that if they move 15 or 20 minutes up the train line or on the roads they will get a £50,000 golden hello, which they would not get if they set up their business in Luton.
Labour Members who represent seats in the greater south-east are willing to make a stand. We want to stand up for our constituents and constituencies, and to talk about our creative people. I hope that the Government will support these amendments, and that Conservative Members will want to stand up for their constituents as well, and say that this disparity is wrong.
In Committee, the Minister discussed why this exemption is being applied and spoke of a constrained budget. We could tackle that in a number of ways, and the amendments take account of them. Obviously, we could address the amount of time on the scheme, the number of businesses that engage in it, the percentage rate of take-up and the number of employees that the businesses take on. I urge the Government to re-examine the matter and find a way to bring include the greater south-east in this arrangement.
I make my final point to ensure that we are not in any doubt. The Committee took evidence from the assistant director of Her Majesty's Revenue and Customs, who made it clear that it is possible to check where people are in the scheme. There was a high level of postcode accuracy about businesses, so it would be possible to re-examine this. As his first point in thinking again, I urge the Minister to consider the greater south-east as a region. It has great disparity between parts and constituencies, containing areas of deprivation, areas with high public sector employment and areas with high unemployment. He should say that those areas are just as deserving as the others represented here today.
Mr Gauke: In this group of amendments, the right hon. Member for Delyn (Mr Hanson) has returned to a matter that was debated extensively on Second Reading and in the Public Bill Committee. I commend him on his persistence, but I expect that he will not be surprised with my response, given the Government's position, which I have set out in the earlier debates.
The amendments relate to the regional nature of the national insurance contributions holiday, a matter that was raised during all the earlier stages of our consideration of this Bill. Amendments 1, 2, 3 and 4, if taken together, would make the holiday a UK-wide scheme. The NICs holiday is aimed at helping the formation of new businesses employing staff in those countries and regions most reliant on public sector employment. The reason why the Greater London, east and south-eastern regions are excluded is that the proportion of the population in public sector employment is lower in those regions as a whole than in any other part of the UK. We also estimate that a national scheme would increase the costs by about 70%.
Joan Ruddock:
Before the Minister goes into more detail-I warn him that I might seek to intervene again then-can he tell us whether any assessment was made
of the impact of this on ethnic minority communities? The real observation has been made that the proportion of ethnic minority people who are great entrepreneurs and who wish to set up a business may well be greater in London and parts of the south-east than in some other regions.
Mr Gauke: Of course the Treasury examined all these matters in respect of its policies as a whole, its budget announcements and so on. I must point out that although the excluded region as a whole is diverse, the areas that will be included are equally so. I am not strongly persuaded by the arguments that have been made about this being discriminatory. When listening to these arguments, I was struck by the fact that it is worth reminding the House of what we are seeking to do. We are seeking to reduce the amount of NICs that will be collected, because we believe that in the way that we are doing so, we will be able to help to encourage business-
Mr Gauke: I want to develop this point, but I shall give way after I have done so. We want to encourage the creation of new businesses and more jobs. That issue has been raised in some of the earlier remarks. The hon. Lady discussed the importance of jobs and the hon. Member for Ilford South (Mike Gapes) discussed the impact that failing to reduce NICs might have on the Thames Gateway. The conceit of the speech made by the right hon. Member for East Ham (Stephen Timms) was that there was some division between the Treasury and No. 10. I do not know whether he was thinking of his own lengthy period in the Treasury rather than of the current circumstances, but let me assure him that there is no great tension between the Treasury and No. 10. I know that that has not always been the case in recent years.
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Stephen Timms: Will the Minister give way?
Mr Gauke: I will give way on that point, but the central point I want to make is that all Labour Members fought the last election-indeed, the right hon. Gentleman was the Minister responsible-on a policy of increasing national insurance contributions throughout the entire country, which would have done harm not just to the Thames Gateway, east London and Walthamstow, but across the country.
Stephen Timms: I am grateful to the Minister for giving way. On 6 January, the Prime Minister spoke-I think at No. 10-about
"nurturing small clusters of innovative companies and web start-ups, as we are in the new Tech City-our own Silicon Valley-in East London."
Why is the Minister not contributing to this nurturing of start-ups in east London? This is his one opportunity.
Mr Gauke:
The Government are doing a great deal to help London. We need only consider the transport infrastructure as well as the fact that we are protecting investment in Crossrail, in upgrading the tube and in Thameslink. We are taking a number of steps. I think it is astonishing that Labour is complaining about the fact
that some businesses will not receive a reduction in their national insurance contributions when its policy at the last general election was that businesses should be paying more.
It is very helpful to look at the well-remembered interview with the shadow Chancellor on the "Today" programme on 4 January, when he said that we need to get the structural deficit eradicated and that there was no argument about that. He recognised the existence of a structural deficit and did not particularly differ from the Government's position on the size of the structural deficit. There was a disagreement on timing-I think he disagreed with his own policy on timing, but he disagreed with the Government's, too. He said that the balance between public spending cuts-we do not know which of our proposed public spending cuts the Opposition support-and tax rises should be 60:40. I think that the proportion for tax rises was 40%, although it was not entirely clear.
The shadow Chancellor was asked by Evan Davis:
"In principle you would like VAT not to go up and instead, at some point, not now, National Insurance to go up by more?"
The shadow Chancellor's response was, "Yes." He said that that was the Labour party's argument at the general election and that it was still its argument now, because national insurance is a better tax. That is the Opposition's position-they want to increase employers' national insurance contributions. They oppose all the cuts and they oppose our VAT increase, but they want to increase national insurance contributions. Yet when we have a Bill in this House that provides a reduction in national insurance in some areas, their biggest complaint is that they want to do it in more areas. How incredible is that? How lacking in coherence is that policy?
Mr Hanson: Will the hon. Gentleman tell the House why the net benefit of this Bill as a whole is a £1.42 billion increase in national insurance for employers, even after the thresholds he has introduced?
Mr Gauke: The right hon. Gentleman knows the state of the public finances that we have inherited. We have pursued the policy that we set out in our party manifesto before the general election and have reversed the most serious effect of Labour's jobs tax. The Opposition's policy is to go further-they want a bigger jobs tax. The increase in the rate for employers' national insurance contributions, which is mitigated by the increase in the threshold, involves the rate going up from 12.8% to 13.8%-I say that for the benefit of any Labour Members, including the shadow Chancellor, who are not quite aware of that. To raise the same amount of tax as the VAT increase would have done, Labour would have had to increase that rate not just to 13.8% but to 16.7%. What do hon. Members think that the impact on the Thames Gateway, east London and jobs in Walthamstow would have been if we had pursued that policy, which the Labour party believes in? It does not have much by way of economic policy, but that is one of them.
Ian Murray:
Let me give the Minister a little of my experience as a business owner with up to 12 staff. Small entrepreneurs and people who run small businesses in Edinburgh are, like me, far more concerned about the impact on our businesses of the number of customers
not coming through our doors because of the VAT rise than they were about any increase in national insurance that the Labour party proposed before the election. I would gladly pay £30 a week more for each member of my staff than have no customers left.
Mr Gauke: I do not want to reopen the whole argument on everything that should be done to reduce the deficit, but we have to get it down. I am not sure whether the Labour party grasps the need to get the deficit down, but there is no doubt that it has to be eradicated at some point-even the shadow Chancellor agrees with that. The Labour party believes that national insurance contributions are the best tax by which to do that, but all we have heard from Labour Members this afternoon is why they want a cut-and they want a bigger cut than we are offering.
Mr Gauke: I shall give way to someone who has not been advocating cuts in national insurance contributions.
Kelvin Hopkins: The chief economic adviser for the Chartered Institute of Personnel and Development has said that
"the VAT hike will prove a far more significant 'tax on jobs'"-
"than the hike in...National Insurance contributions".
That outside organisation estimates that 250,000 jobs will be lost because of the VAT rise.
Mr Gauke: I recommend to the hon. Gentleman the radio programme "More or Less", which recently pointed out that the national insurance contributions increase would have raised only a quarter of the tax revenue that the VAT increase will raise.
Stephen Timms: Has the Minister received representations from the Department for Communities and Local Government about the inclusion of the Thames Gateway area in this incentive?
Mr Gauke: Not that I am aware of, but as the right hon. Gentleman knows, tax is a matter for the Treasury. I must say that the Thames Gateway would have been hit by a much greater jobs tax if the Labour party were in power.
Both today and in earlier debates, I have understandably been asked about take-up and whether there is a plan, if take-up is lower than expected, to expand the holiday to cover the whole of the UK. Let me reiterate to the House and Opposition Members that this is not just about cost; it is also about the policy rationale for the holiday, which is to target incentives on new businesses in regions with high levels of public sector employment. In their evidence to the Committee, representatives of the Federation of Small Business and the British Chambers of Commerce made it clear that the south-east is more resilient than the rest of the UK and that new business formation would not be harmed significantly because the holiday would not be available there. I should also mention to the House, and particularly to the right hon. Member for Delyn that all new and existing businesses in the south-east will benefit from the increase in the employers' national insurance contributions threshold,
which I assume the Labour party will oppose when we bring it forward, and from the reduction in corporation tax rates, as compared with the increase that Labour was going to bring in for small businesses.
Mike Gapes: The Minister refers to the FSB. Will he confirm that it wrote before Christmas saying that his proposal is
"a crude assessment as it does not account for areas within these regions that would really benefit from policies that would help bolster employment"?
That remains the position of the FSB.
Mr Gauke: That is the same Federation of Small Businesses that said that the Labour party's policy to increase national insurance contributions would cost about 52,000 jobs just among its own members.
We have touched on the fact that labour markets are much bigger than ward, borough or constituency boundaries. It is not quite clear what the Labour party would do if it were to extend the scheme. Its policy seems to be that it would remove the scheme from some parts of the regions that would currently benefit. It is not quite clear how the Labour party would do that. I do not know-perhaps the right hon. Member for Delyn could explain-whether the plan is that the scheme would be available in Flint but not in Prestatyn. I am not quite sure what the Labour party has in mind. Perhaps it thinks that the scheme should be available in Oldham but not in Saddleworth. I really do not know what the Labour party wants to do with the scheme, but it clearly wants to increase national insurance contributions, not to reduce them, despite what we have heard this afternoon.
The NICs holiday is targeted at regions and countries with the highest proportion of public sector dependence, to encourage new businesses to start up and take on employees. Expanding the holiday to the whole economy would undermine the policy rationale. I therefore ask the right hon. Member for Delyn to withdraw the amendment.
Mr Hanson: We have had a very good debate, and my right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friends the Members for Walthamstow (Dr Creasy), for Luton South (Gavin Shuker), for Ilford South (Mike Gapes) and for Luton North (Kelvin Hopkins) have put the case strongly for their constituents to be included in the scheme.
The scheme does not do what is says on the tin. It will not fulfil the Minister's objectives. It will not help regions and areas with the highest public sector employment. I reiterate for the House's benefit that 23 of the top 100 constituencies in the country for public sector employment will not benefit from the scheme. The Minister knows that we have suggested alternatives, and my hon. Friend the Member for Luton South mentioned in his contribution a range of ways that we could cut the cake to include London, the south-east and east, so that those areas of high deprivation with high public sector employment could benefit from the scheme. I am not satisfied with the Minister's response. We need to ensure that the scheme is fair and equitable. I therefore intend to press the amendment to a Division.
Question put, That the amendment be made.
The House divided: Ayes 92, Noes 271.
AYES
Abbott, Ms Diane
Alexander, Heidi
Ali, Rushanara
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Banks, Gordon
Bayley, Hugh
Bell, Sir Stuart
Benn, rh Hilary
Betts, Mr Clive
Blackman-Woods, Roberta
Brennan, Kevin
Brown, Lyn
Burden, Richard
Clark, Katy
Coaker, Vernon
Cooper, rh Yvette
Creasy, Dr Stella
Cryer, John
Cunningham, Tony
Darling, rh Mr Alistair
David, Mr Wayne
Davidson, Mr Ian
Denham, rh Mr John
Docherty, Thomas
Eagle, Ms Angela
Efford, Clive
Farrelly, Paul
Fitzpatrick, Jim
Fovargue, Yvonne
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Green, Kate
Griffith, Nia
Hanson, rh Mr David
Harman, rh Ms Harriet
Hepburn, Mr Stephen
Hillier, Meg
Hodgson, Mrs Sharon
Hopkins, Kelvin
Jones, Helen
Jones, Mr Kevan
Jowell, rh Tessa
Kaufman, rh Sir Gerald
Khan, rh Sadiq
Lammy, rh Mr David
Lazarowicz, Mark
Leslie, Chris
Lucas, Caroline
Lucas, Ian
Mahmood, Shabana
Marsden, Mr Gordon
McCabe, Steve
McCarthy, Kerry
McFadden, rh Mr Pat
McGovern, Jim
McKechin, Ann
Miller, Andrew
Morden, Jessica
Morris, Grahame M. (Easington)
Murphy, rh Mr Jim
Murray, Ian
Nandy, Lisa
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pound, Stephen
Raynsford, rh Mr Nick
Robertson, John
Rotheram, Steve
Roy, Lindsay
Ruddock, rh Joan
Seabeck, Alison
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, Nick
Spellar, rh Mr John
Straw, rh Mr Jack
Stuart, Ms Gisela
Thomas, Mr Gareth
Timms, rh Stephen
Trickett, Jon
Umunna, Mr Chuka
Vaz, Valerie
Watson, Mr Tom
Wicks, rh Malcolm
Williams, Hywel
Winnick, Mr David
Woodward, rh Mr Shaun
Tellers for the Ayes:
Mr Alan Campbell and
Phil Wilson
NOES
Adams, Nigel
Aldous, Peter
Amess, Mr David
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Tony
Baldwin, Harriett
Barclay, Stephen
Barker, Gregory
Baron, Mr John
Barwell, Gavin
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brake, Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Mr Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Bruce, Fiona
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, Mr Simon
Burrowes, Mr David
Burstow, Paul
Byles, Dan
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clappison, Mr James
Clark, rh Greg
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crouch, Tracey
Davey, Mr Edward
Davies, Glyn
Davies, Philip
de Bois, Nick
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Edwards, Jonathan
Ellis, Michael
Ellison, Jane
Elphicke, Charlie
Eustice, George
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, Michael
Featherstone, Lynne
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Gale, Mr Roger
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Green, Damian
Greening, Justine
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hammond, Stephen
Hancock, Matthew
Hancock, Mr Mike
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Nick
Haselhurst, rh Sir Alan
Hayes, Mr John
Heald, Mr Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Hinds, Damian
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Jones, Mr David
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lamb, Norman
Lansley, rh Mr Andrew
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Mr Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Karl
McIntosh, Miss Anne
McPartland, Stephen
McVey, Esther
Mercer, Patrick
Metcalfe, Stephen
Miller, Maria
Mills, Nigel
Morris, Anne Marie
Morris, James
Mowat, David
Mundell, rh David
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Opperman, Guy
Ottaway, Richard
Parish, Neil
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Rees-Mogg, Jacob
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Russell, Bob
Rutley, David
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Shepherd, Mr Richard
Simmonds, Mark
Skidmore, Chris
Smith, Henry
Smith, Julian
Smith, Sir Robert
Spelman, rh Mrs Caroline
Stanley, rh Sir John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, Andrew
Sturdy, Julian
Swales, Ian
Syms, Mr Robert
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Noes:
Miss Chloe Smith and
Mr Robert Goodwill
Question accordingly negatived.
4.9 pm
Mr Gauke: I beg to move, That the Bill be now read the Third time.
We have reached the final stage of the House's deliberations on the National Insurance Contributions Bill. The first part of the Bill, on which we perhaps spent less time, introduces a 1% increase in the class 1 employee and employer and class 4 self-employed rates of national insurance contributions from April this year. As some hon. Members will remember, that was announced by the previous Government in the 2009 pre-Budget report. Although not part of the Bill, we intend to reverse the impact of the previous Government's
tax on jobs by increasing the employer national insurance threshold and income tax personal allowance. Those changes are part of a progressive package of measures that shifts the burden of Labour's taxation away from lower earners and lower-paid jobs.
First, I remind the House that the provisions will increase the employer rate from 12.8% to 13.8%. That is a fact I am sure we should all get right. That 1% increase will also apply to class 1A and 1B contributions that are paid by employers on benefits in kind and pay-as-you-earn settlement agreements. Secondly, the Bill will increase the employee main rate from 11% to 12%. The same 1% rise will also apply to class 4 contributions paid by the self-employed, which will rise from 8% to 9%. Thirdly, the additional rates of employee class 1 and self-employed class 4, payable on earnings or profits above the upper earnings limit and the upper profits limit respectively, will rise from 1% to 2%. Compared with the plans that the Government inherited, more than £3 billion a year is being returned to employers through the threshold rise, and even more to individuals through the increase in the personal allowance.
Our actions will mean that some 880,000 low earners in the UK will be taken out of income tax altogether. Around 950,000 low earners will no longer pay national insurance contributions, although their benefit rights will be protected. Employees earning under £35,000 a year will pay less income tax and national insurance contributions and employers will pay less national insurance contributions on all workers earning less than £20,000 a year. We are keen to reduce the burden in this area although, as I set out earlier, it appears the shadow Chancellor wants substantially OT increase that burden.
I turn now to the regional employer national insurance contributions holiday for new businesses, which is contained in the second part of the Bill. That provision encourages employment and enterprise in the areas of the UK that are most dependent on public sector employment. Our aim is to help those regions in the transition to a more sustainable economic model based on private sector growth and investment. That is why we are introducing a holiday from employer national insurance contributions for qualifying new businesses in targeted countries and regions. The measure will reduce the costs of taking on staff and provide support in the vital early stages of business development. In order to ensure affordability, the holiday is limited to the first 10 employees taken on in the first year of business. For each of those workers, the holiday will last for 12 months, unless the closing date for the scheme-5 September 2013-is reached before the 12 months have elapsed.
In the Budget, we estimated that new businesses would save around £940 million of national insurance contributions over the next three years, giving them the ability to hire more staff, expand their business and invest in the recovery.
Nick de Bois: Will the Minister advise whether he envisages any problems from perhaps less than scrupulous companies that might go into pre-pack administration? Would they be able to claim the benefit if their new business started after a pre-pack administration, for example? If that is the case, will he take some measures to consider what can be done about this?
Mr Gauke: As we discussed in earlier stages of the debate, it is right that we look at this closely to see that the scheme applies where we believe it should, that we do not have artificial creations, that there is a proper need for this, and that the compliance capability of HRMC to address the matter is adequate, and we are ensuring that that happens.
I thank the many right hon. and hon. Members who have participated in the debates on the Floor of the House and in Committee. We have had a thorough examination of many of the arguments, perhaps occasionally at the risk of repetition, and we may have another opportunity for that later-who knows? I am grateful for the constructive way in which the Bill has been scrutinised by Members from all parties.
The Bill enables the reduction of taxation of labour nationally, and it provides extra support in targeted areas. It is good for growth and good for jobs, and I commend it to the House.
4.15 pm
Mr Hanson: This is the fourth Treasury Bill that I have dealt with as Opposition Treasury spokesman in four months, and it is the fourth Bill that has reached this stage without a single amendment being passed, so I am continuing with my fine record of scrutiny but little success in making changes.
I want to be clear at the start that despite concerns about some aspects of the Bill, we support the broad thrust of the measures before us. I note, however, that despite the rhetoric about national insurance that occurred at the general election, the Bill takes through the national insurance contribution increase of 1%. I accept that the Minister has included in the Bill changes to the employers' threshold, which will make a contribution towards those costs. However, even after that has taken place, the Bill still brings in a rise that will cost businesses about £1.4 billion a year. I make no complaint about that, because we proposed to do it at the election; my complaint is that there has been a lot of smoke and mirrors from the Government in their approach to national insurance.
Mr Gauke: As the right hon. Gentleman will know, the policy that we are pursuing is entirely consistent with what we set out in our manifesto. Given the position of his party and the shadow Chancellor on this, presumably they will be opposing the increase in the threshold for national insurance contributions that will be introduced very shortly.
Mr Hanson:
The electoral rhetoric does not match the actuality of this Bill. The Minister has rightly said that threshold increases were trailed in the election manifesto, but £1.4 billion of extra expenditure on businesses is still being put forward in the Bill. I make no complaint about that, as it formed part of our manifesto commitments. However, we should examine the electoral rhetoric. During the election the Conservatives said, "Let's Stop Labour's Jobs Tax", but they are still executing, through this Bill, some £1.4 billion-worth of extra costs on employers; again, we have no objection to that. We will look at all these matters in due course and make our judgments when we see the proposals that the Government bring forward. However, given what was
said at the election, there is still a sting in the tail for employers in the small print of what the Minister has brought forward today.
My right hon. Friend the Member for Edinburgh South West (Mr Darling) announced in the pre-Budget statement on 9 December 2009 that we would increase national insurance contributions by 1%. However, in this Bill there is not only that increase but, side by side with it, the 2.5% increase in VAT that the Government have introduced. The Minister has put an extra £1.4 billion on national insurance and, at the same time, increased VAT. At least we were clear about our objectives in the election. However, we will support the Bill today.
We support the national insurance holiday, which engendered most debate in Committee and on the Floor of the House. We think it is important to consider measures that encourage business, but we disagree with the exclusion of London and the south-east and eastern regions. We have made the case on that issue and I hope that the Exchequer Secretary will reflect on it.
This debate has been very positive. I thank my right hon. and hon. Friends who have contributed, particularly those from London and the south-east and eastern regions. I thank my hon. Friend the Member for Nottingham East (Chris Leslie) and the Whip, my hon. Friend the Member for West Ham (Lyn Brown), for their help and support during the course of the Bill. We will not vote against the Bill this evening, but we will undoubtedly return to the scrutiny of it in another place shortly. Some of the arguments bear further repetition in Committee and on the Floor of the House in another place. Finally, I thank the Minister for his patience and co-operation. I look forward to seeing him on numerous occasions in the future.
4.20 pm
Gavin Shuker: I, like many hon. Members, have followed the debate extremely closely. When the changes were first announced in June, I authored an early-day motion that stated the inadequacies of the Bill for the greater south-east-the south-east, the east and London. On Second Reading, I flagged up my concerns and in Committee we looked at the evidence in greater detail. The Bill will have a real impact on my constituents, and on those of hon. Members from across the House. In particular, it will impact on people in the greater south-east.
Obviously, we accept the Treasury's need for more national insurance income to sort out the structural deficit. Although we are not opposed to the legislation and will not press for a Division, I still have a number of concerns that it is important to place on the record.
First, I believe that the Exchequer Secretary's motivation is confused. We have heard contradictory statements. We have head that it is about rebalancing the economy; we have heard that it was decided which areas should receive a holiday to match the price tag that was set for the policy; and we have heard that it is about simplicity. Clearly, it would be simplest to implement the scheme for all new businesses across the country, yet that is not the scheme we are looking at.
Secondly, I believe that the implementation of the scheme is flawed. So far, just 1,500 applications have been received. We all hope that every eligible new business will take up the scheme, but the target of 400,000 for the next three years seems a long way off, given the current
trajectory. The simplest approach would have been a blanket scheme, and that would have been simple to communicate to new businesses. Certain groups will be disadvantaged by the holiday: the east, south-east and London will be disadvantaged, and, as was discussed in Committee, charities who employ people will miss out compared with businesses. Also, as we discussed earlier, the NHS, for which some of the money is hypothecated, will not benefit to the extent we believe it should.
Thirdly, I believe that the spin relating to the Bill has been conflated. The Exchequer Secretary said that he is not implementing Labour's jobs tax. However, there is a 1% increase, and it is important for this place to acknowledge that. The scheme will have an effect on businesses in certain areas. Although we accept the need to find fair and just ways to reduce the deficit, I am worried about some of the rhetoric about public sector jobs. Public sector workers not only support their families but serve us. Whether a job is in the public or private sector, people should be able to have pride in it.
Finally, I believe that the analysis that comes out of the legislation will be flawed in a number of ways. We tabled amendments calling for a report and more information on the effectiveness of the scheme, but we will not receive the constituency-level data we would like. They would enable us to compare data for future reference, so that after, say, three years, we could consider how we might wish to implement the scheme again, whether it was worth extending or whether the time for which it was in place should be reduced. Instead, we will have to go through a laborious process of tabling parliamentary questions and will not be able to examine constituency-level data as a whole. That is a real shame.
The Exchequer Secretary says that in this case simplicity should outweigh justice and that the simplest way to balance the scheme is to exclude certain groups. I do not believe that that is the case, but we accept that there is a need for the scheme, and for that reason the Bill will go forward tonight.
I have one question for the House, though: what is just about business men and women in my constituency, an area with deprivation, losing out compared with those setting up businesses in other constituencies just 20 minutes away up the train line? I do not believe that there is a whole load of justice in that. I ask the Minister to think again as the Bill proceeds, and I know that if he does, living where he does, he will receive the thanks of a grateful constituency.
4.25 pm
Jonathan Edwards: In general we support the Bill, not because we think it will make much of a difference-as we have heard, the take-up has been far from promising so far-but because it is recognition by the UK Government that the UK's economy is geographically unbalanced and that action needs to be taken to address the problem.
The gross value added of the communities that I represent is 20% of that of inner London, something that clearly has to be addressed. Under the last Government, 10 jobs were created in the south-east of England for every job created in the north and the midlands, and I fear that Wales fared even worst. One of the great themes of the last Government was the concentration of jobs and money in the south-east and London, with massive growth in the financial sector and the destruction
of other sectors of the economy, particularly manufacturing. That led to huge wealth polarisation on both a regional and an individual basis, and it was refreshing to read today in The Independent that the Leader of the Opposition at least recognises that damaging legacy.
We should also consider other areas that need action. The UK Government have been talking about the creation of enterprise zones in Northern Ireland and the use of different levels of corporation tax to stimulate private enterprise in areas of the state that are lagging behind. We will therefore support the Bill.
Bill accordingly read the Third time and passed.
Petition
Immigration (Sivarajah Suganthan)
4.27 pm
Stephen Williams (Bristol West) (LD): This is a petition concerning my constituent Sivarajah Suganthan. Siva is a native of Sri Lanka, but he has lived in the UK since he was 14 years of age and is now aged 26. The case of that particular asylum seeker has aroused much concern right across the city of Bristol, and I should particularly like to thank the Bristol Refugee Rights centre for co-ordinating and collecting the signatures of approximately 800 people in the city and further afield who wish to express their support for Siva.
The Petition of residents of Bristol West, and others,
Declares that the Petitioners support Sivarajah Suganthan, a fellow Bristolian who has previously been detained in Campsfield detention centre, awaiting deportation to Sri Lanka.
The Petitioners therefore request that the House of Commons asks the Home Secretary to reconsider Sivarajah's case.
And the Petitioners remain, etc. [P000877]
Careers Advice (Schools)
Motion made, and Question proposed, That this House do now adjourn. -(Jeremy Wright .)
4.28 pm
Esther McVey (Wirral West) (Con): I am delighted that this important matter is being debated in the Chamber today. However, as it is an important and complex matter, I would very much like this to be the start of a discussion on careers advice for all ages, so that we can create a much greater awareness of the issue as a whole.
It is because of the scope of the topic of today's debate that I shall focus on careers advice for those at school and the importance of specialist careers professionals as a separate practice and distinct occupation, pushing the sector towards professionalism under a unified body and voice. At the outset I welcome the Government's plans for an all-age careers service, but it is important that all Members can discuss the matter before any further steps are taken. I therefore welcome the time that we have been given in the Chamber this evening.
It is an apt time to examine careers advice for the young given that the latest figures for those not in employment, education or training are at an all-time high. At the end of the third quarter in 2010, the figure for those aged between 16 and 24 in England was 1.026 million. Of those, 160,000 are in the north-west-the highest figure of any of the UK regions. Of particular concern to me is the fact that, in Wirral, 16.8% of those aged between 16 and 19 are not in education, training or work.
Added to that is the ever more sophisticated array of choices of job, training, education and routes to work. It requires the accompanying sophistication of knowledge and know-how to enable students, at the right juncture in their lives, to choose the right subject so as to follow the right education path, preferred course or apprenticeship training, or fill out the right job application form. It is not only providing up-to-date information that will allow every student the best opportunity to pursue subjects and interests that best suit their talents and aspirations, but ensuring that young people and their parents are well informed about the potential of the decisions and the positive ways in which they can influence their future working lives.
All young people, of all backgrounds, abilities, interests and ambitions need good careers education information, advice and guidance so that they can achieve their best and fulfil their potential. However, that is currently not happening with sufficient consistency for every child throughout the country. That has led to comments such as those by the Local Government Association, which said that careers advice was found to be "not useful" by
"the majority of young people".
The Institute of Career Guidance said that the provision of careers services in England was "patchy and inconsistent". Although the National Foundation for Educational Research recognised that Connexions was making a significant contribution, it was for a small number of people in a very specific situation. Again according to the LGA, the majority of young people were
"more likely to ask their parents, teachers and youth workers"
for careers advice than to seek formal careers services.
If those points are added together, we have a lot of young children who are not getting the service that they require. I therefore agreed wholeheartedly with the Secretary of State for Education when he said at the annual conference of the National College for Leadership of Schools and Children's Services in June:
"We are clearly, as a nation, still wasting talent on a scale that is scandalous. It is a moral failure, an affront against social justice which we have to put right".
The question for all hon. Members is how we are going to put that situation right. How will we find a system that works for all children of all abilities from all backgrounds? How will we provide a flexible system with underpinning standards and requirements? Today, I will make a few suggestions, welcome others, and await the Minister's replies.
I want to make it clear at this point that, when I pass comment on the failings of the current system, I am in no way passing comment on the thousands of careers staff, educational welfare or youth service staff, who work tirelessly throughout the year, dedicated to their chosen profession. The debate tonight is a constructive overview of careers advice; it is not a question of the staff, but a look at the current system, asking how best that focus should be directed, as well as how best the staff, resources, infrastructure and intelligence already in place can be used to achieve what is best for our youth today. There is also a key question about the transition from the current to the proposed system which I would like the Minister to address.
A quick look at the history of careers advice might provide a useful insight. From April 1974 to April 1994, local education authorities had a statutory duty to provide a careers service under sections 8 to 10 of the Employment and Training Act 1973. The purpose of the service had been mainly to provide guidance and counselling to young people in full-time education in order to help them make the best of their abilities when selecting a career. It had also helped adults requiring information on retraining and in promoting schemes directed at unemployed young people.
In 1990, the Conservative Government undertook a review of services to consider the effectiveness of existing organisational arrangements, with the aim of recommending the most relevant system for delivering careers information, advice and guidance for young people. The review led to proposals to introduce legislation that would facilitate a mix of provisions, including direct management by training and enterprise councils, joint TEC-local education authority provision and a local service contracted out to the private sector. That amended the 1973 Act and transferred the responsibility for the careers service from LEAs to the Secretary of State.
Under the previous Government, in 2001, Connexions was implemented and the careers service subsumed completely within the new Connexions structure. Subsequently, in line with the social inclusion agenda, the emphasis for careers advice was shifted away from universal schools provision to those not in education, employment or training. However, in July 2009, Alan Milburn published a report commissioned by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) into social mobility that was highly critical of the previous Government's provision of career services, in which he judged Connexions an expensive failure.
Similarly, the Sutton Trust, the education charity, found that only 55% of pupils had a formal career action plan meeting with a careers adviser or a teacher-down from 85% in 1997. Recognising that the Connexions service was not working, in October 2009 Labour published "Quality, Choice and Aspiration: a strategy for young people's information". Criticism focused on the fact that poor or non-existent career advice had allowed many people to take A-levels inappropriate to the university degrees to which they aspired or to choose degrees unsuitable to their ideal career. Some were encouraged to go to universities when advanced apprenticeships would have been better or had gone for unsuitable short-term jobs from Jobcentre Plus. The National Council for Educational Excellence noted that
"state school teachers are often ill-equipped to offer adequate advice to students",
leading to unjustified divisions of provision between different types of school.
Such criticisms of a system would lead me to believe that the advice being given was too little, too late, to too few, and of a varying quality. One of the questions being raised tonight is whether we need to start tackling careers at a much earlier age to discover where a child's passions lie. We do not need anything prescriptive or pre-suggestive when a child is young; we need initially to allow a child to go on a natural discovery of his or her favourite subjects, and then to build on that love of a subject to explore career options constructively, asking, "Where would that subject lead?" We are talking about the application of education and appreciating the building blocks of school, work, employment and, most of all, life fulfilment.
In my mind, that falls in line with the recent report from the Institution of Mechanical Engineers, which stated that science, technology, engineering and maths-STEM subjects-are not being highlighted until later in the educational process, by which time students may have bypassed those career options. It added that there is evidence that
"engaging with young people before they reach secondary school has the potential to create more positive attitudes towards STEM".
Potentially, therefore, we are missing out on a section of children who might have gone into a science career. Inadvertently, we have closed a career path to a swathe of children who may well have gone on to excel in and relish such a career. Most importantly, that affects the individual, but the wider picture is that it affects society as a whole.
As chair of the all-party group on the chemical industry, I am repeatedly told the same story, which is that we are losing valuable talent-so much so that reports are coming to me that we are losing and have lost generations of young technicians and engineers. Not only that, but the industry is crying out for posts to be filled. That equates to career opportunities and jobs that are not being taken. Those are employment gaps that we could easily be filling now, especially at a time of high youth unemployment. There have been so many wasted opportunities. The Institute for Manufacturing and Professor Allport, who is the head of particle physics at Liverpool university, co-ordinating projects at both Daresbury science and innovation campus and CERN in Geneva, confirm that point.
I hasten to add that I cannot believe that the current situation is unique to STEM subjects. It must span across a range of subject areas, the message being: if we
can engage young people and children in future career options and get them interested from an early age, they can connect with a broad range of choices of which they might not otherwise be aware. If they have a particular interest, they can tailor their education to that interest. Young people often miss out on important opportunities because they do not take up the correct subjects and are not adequately informed early enough about the choices that they need to make for their careers.
Bob Stewart (Beckenham) (Con) rose-
Steve Rotheram (Liverpool, Walton) (Lab) rose-
Esther McVey: I have two hon. Members seeking to make an intervention-like buses, two have come along at the same time. I will give way first to my friend from Walton.
Steve Rotheram: I congratulate the hon. Lady on securing this Adjournment debate on an issue that is close to both our hearts: making certain that young people get the best possible careers advice, so that they can make informed choices-something that, unfortunately, I do not believe I got when I was 16. She asked how we were going to put the system right. Does she agree that sacking careers advisers and slashing funding would not achieve her aim of doing just that?
Esther McVey: I do not believe that that is what is happening. Not only have I read out quotations from other people, but when the right hon. Member for Kirkcaldy and Cowdenbeath commissioned a report into the matter, he said that the project in question had been expensive and had not worked. I also specifically said that I was not looking at the staff individually, because so many of them are well qualified, believe in the job passionately and are completely dedicated. The focus of this evening's debate is where things are going wrong. Where do we need to focus our future direction so as to capture people with the infrastructure and the systems that are already in place, so that we do not lose anything, but instead take things forward?
Bob Stewart: I thank my hon. Friend for letting me get off the second bus. Does she agree that the focus in recent years has been far too much on pushing young people down the academic route, towards university? Many of the vocational ways of getting full-time work, including apprenticeships, have simply not been helped-I will not say "overlooked"-by the system. I want pupils in Beckenham, along with those in every other constituency, to be given more opportunity-a broader scope; a full range of options-so that they can choose the route that best suits them and their skills.
Esther McVey: My hon. Friend makes a key point, which I was going to touch on a little later. Did the requirements on schools perhaps produce some distortion, pushing children down a university route that might not benefit them all? That is why I am asking for far more sophisticated careers advice, so that each child gets the career outlet that is best for them, and not necessarily one that produces extra positive statistics for the school concerned. It is always about the child and how that child moves forward.
What sort of advice are we talking about, and who will provide it? In his review of higher education, Lord Browne stated that careers guidance should be
"delivered by certified professionals who are well informed, benefit from continued training and professional development and whose status in schools is respected and valued."
However, in times of austerity, with ever-decreasing schools budgets, we need to ensure that we are able to make such a commitment. We need high-quality guidance for all children that can help young people make the right choices.
Added to that, a survey of young people from workless families found that 70% struggled to find work, that 25% felt that their parents did not have the knowledge to help them find employment and that 49% said that they did not have the role models to look up to or respect. That implies the need to bring such role models into schools to meet young people. In fact, the Deloitte Education and Employers Taskforce found a "substantial" divide between what young people wanted from their careers advice experience in school and what they actually got, including levels of involvement with employers. The findings showed that 95% of young people agreed that they would like employers to be more involved in providing advice and guidance about careers and jobs.
We therefore need to look at the interface between schools, other organisations and the professional careers bodies. I concur with the general secretary of the National Union of Teachers, Christine Blower, who said that the conclusion she drew from the Ofsted report on careers advice was that
"Not every teacher should be expert in careers advice, but... young people should know who to turn to when they need guidance on future learning or on employment. Careers education in secondary schools should not be an also ran. Schools should have the resources to employ staff who can give dedicated and knowledgeable advice."
I would add that careers advice requires a co-ordinated interface of individuals and bodies working together, which requires standardisation as well as flexibility, aided by the creation of accredited professional organisations bringing real business examples into the schools.
My points for the Minister are these. We have to look at the new proposals, particularly the fact that schools will have a legal duty to secure independent and impartial careers advice for their students. Schools will be free to decide how best to support young people to make good career choices. It might be perceived that that could lead to a gulf in the provision of careers advice among schools, councils and areas. I would like to think that that will not happen, but I would like some clarification. Some children could be getting better advice than others, so we need to ensure that that does not happen. We need to ensure that what we have said about universal specialist training happens.
Dr Stella Creasy (Walthamstow) (Lab/Co-op):
I congratulate the hon. Lady on securing this debate. Like her, I feel strongly about the importance of careers advice. She makes a strong case for how to reform the careers advice system, but does she not accept the concern of some Opposition Members that our ability to provide the new careers service that she wants will be severely damaged by the fact that many careers professionals currently face redundancy? I understand that in Merseyside alone 130 places are due to be cut. In my borough of
Waltham Forest, the careers service is at risk because of the cuts to local government. She might have great ambitions for an all-age careers service, but the people necessary to support it will simply not be there by September this year to facilitate it.
Esther McVey: What the hon. Lady has said is vital, which is why we are here today. We are saying that such a situation could be on the horizon, so we need to capture the people I mentioned. However, when Members on both sides of the House have said that Connexions is not working, failing and an expensive experiment, it shows that the system is wrong. It is not the people who are wrong but the system, so how do we get those people into the right system? That is what we are trying to do.
Moving on, we have to look at the transition stage. All Members are deeply concerned about that. We need to look at the age and the scope of career awareness. As my hon. Friend the Member for Beckenham (Bob Stewart) said, we also need to look into a possible distortion from within schools to push people into career paths down which they should not go-to university, for example. My hon. Friend is a champion of apprentices, and we know that there will be 75,000 more of them during this Parliament. How will people find out about that? That is why I am asking for a professional body with sophisticated knowledge which uses all the outlets-whether face-to-face or through the internet. There should be every opportunity.
Steve Rotheram: Thank you for allowing me to intervene, Mr. Speaker.
The hon. Member for Beckenham (Bob Stewart) made an important point. Apprenticeships are not just about careers advice: people do not embark on them just because someone has pointed them in that direction. It is true that there are real problems related to careers advice, but there is also the problem of the culture of apprenticeships and the lack of parity of esteem. In other countries, such as Germany, an apprentice is seen as the equivalent of someone who has taken an academic route. It is not just a question of those working in careers services pushing people into apprenticeships; it is a much wider issue. People should not be pushed into an academic route which might not be the best option for some individuals.
Esther McVey: The hon. Gentleman has hit the nail on the head. He has identified one of the key flaws in the careers advice that is currently provided. As he says, apprenticeships have equal standing. Careers advice should take account of the abilities and capabilities of the individual, and should aim for the complete fulfilment of that person. We need to increase understanding of the status of apprenticeships.
We have touched on many important points this evening, on which Members on both sides of the House have been able to agree. We all want children from all backgrounds and with all abilities to be able to fulfil their potential.
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Andrew Miller (Ellesmere Port and Neston) (Lab):
I congratulate the hon. Member for Wirral West (Esther McVey) on securing the debate, and thank her for being
gracious enough to allow me a few moments in which to address the House. I also thank you, Mr. Deputy Speaker, and the Minister for agreeing to that.
This is a hugely important subject. There are few words that the hon. Lady uttered with which I would take exception, but I should like to mention a detail relating to my constituency. I stress that I am speaking from a local point of view. Connexions worked in Cheshire: it was extremely well run, although I accept that its success was patchy in the country as a whole. Our present difficulty lies in the fact that the local authority, Cheshire West and Chester council, has agreed to re-inherit, through a TUPE transfer, 26 youth workers from Connexions. That will be the sole service available to people in the age group that we are discussing, which is inadequate provision according to any measure.
A constituent who works in the service has written to me saying:
"As you are aware, there has been talk of an all age careers service being established by... 2012 which would lead the way in providing careers information advice and guidance. As you might not be so aware... the all age careers service... although its remit would be to work with people from the age of 13... would not operate within schools."
Therein lies the key problem. The hon. Member for Wirral West rightly identified the difficulties involving the STEM disciplines. With my Select Committee hat on, I have been discussing that huge and complex issue with a number of learned societies, including STEM Ambassadors and the UKRC. I am sure the hon. Lady agrees that it is sad that UKRC has lost its funding for supporting women in science and engineering, and the Minister may wish to comment on that en passant. Organisations such as those, which have been working extremely hard to promote STEM subjects, will find doing so much harder as a result of the vacuum that is being created. We are told that it will take until 2012 to set up the all-age service, and that it will not necessarily operate in schools. As all the STEM experts have observed, there is a gap in the schools sector.
I agree with the hon. Lady that people should receive careers advice at a very early age. If we are going to excite people about science and engineering, the "on" switch has to be found at a very early age. That is why I am a great fan of the National Schools Observatory operating out of John Moores university, where children from the hon. Lady's constituency and mine-and, indeed, from the constituency of the hon. Member for Beckenham (Bob Stewart) and from across the country-can get access to the telescope at La Palma and engage in genuine science. It is a fantastic project but, unfortunately, for the sake of probably less than £2 million, the service is going to disappear. Therefore, even in schools that have a science driver-a teacher who is excited about the potential of creating the next generation of scientists-tools are being taken away.
I have known the Minister for a while, and I know he is a man of eclectic tastes. It says in his biography that he is interested in subjects as diverse as architecture and jam-making. I also know that he ran an IT company with some success, so he is a man who probably understands the point I am making. My plea to him is that he should sit down with his colleagues in the Department for Education, and with those with responsibility for business and higher education, and start to formulate a strategy that will maximise the impact at the primary level. We must ensure that we work with industry and academia
to bring as much expertise as possible into the classroom, and we must continue the projects that are available at the secondary level, including the Catalyst centre, which is just down the road from the hon. Lady's constituency. It is a great, exciting place where people can play with proper chemistry, and do things that I hope we will do in the House in a few weeks' time to mark the anniversary of the Royal Society of Chemistry. I hope that will excite Members. We must also work at the higher level with university students-as many Members have done-and at a still higher level, working with people through the Royal Society pairing schemes. There are all sorts of things we can do.
I am not criticising the Minister for seeking change, but I am worried. We are going to have a vacuum, and in my constituency we are going to lose the skills of people within the system. My plea to him is that he should slow the process so that we make sure that the skills that we have are not lost, but instead are transferred into structures that are thought-through and appropriate to the local community. I want to stress that final point about being appropriate to the community. One size does not fit all. In my constituency we created, quite away from my interest in the STEM areas, the Cheshire Oaks retail academy. That is a grand-sounding title. It started off helping the NEETs-those not in education, employment or training-get jobs in the fantastically successful Cheshire Oaks retail operation. They were not getting jobs from the community, and we started at the very basic level, working with the further education college and the secondary school to help kids present a CV and present themselves for interview. The project has grown and grown, and now it is doing higher level national vocational qualifications, and has trained many young people-certainly at the top end of the second thousand of them. They have gone through training modules, working with all the employers on the Cheshire Oaks estate. There are therefore models that can be tailored to the needs of particular sectors.
There are changes we need to think about that apply to the primary sector and the secondary sector, but my plea to the Minister is this: for goodness' sake, hold fire on pulling the plug on Connexions, because we need a more sophisticated transition from where we are now to where I think all of us on both sides of the House would like us to get to.
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The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): It is a pleasure to follow the hon. Member for Ellesmere Port and Neston (Andrew Miller), who chairs the Select Committee on Science and Technology and has a background as a technician and expertise in industrial relations. He said that I was "eclectic". I like to be eclectic, and even idiosyncratic, but only to the point where it is still interesting and not weird, as I shall try to illustrate in these remarks. I will address the points that he made, but he will understand that as a matter of courtesy I wish to start by congratulating my hon. Friend the Member for Wirral West (Esther McVey) on securing this debate and on the contribution that she has already made on the subject of careers, aspiration and, in particular, the opportunities available to young women.
I was proud to attend, along with the Secretary of State for Work and Pensions, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), whom I see in his place, the launch of this magazine "If Chloe Can". It is tailored to promoting opportunities for young women, to opening up those opportunities and to spreading the message that people's aspirations, tastes and talents can be met if the right support, the right advice and the right opportunity is in place. I will present a copy to you at the conclusion of this debate, Mr Deputy Speaker, and I hope that it will be signed by my hon. Friend the Member for Wirral West. She and other Members are a role model for young women, showing what one can achieve with hard work and determination. I know that she has been a success in business and in the media, and, as I say, she is making her mark in politics too.
My hon. Friend is right to say that high quality careers guidance is crucial if all young people are to receive the support they need to make well informed decisions about learning and careers. I listened to her carefully and she was also right to say that most young people garner that advice from social networks, parents and others in their immediate locale. I shall come on to speak at great but not inordinate length about social mobility.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con): You've got plenty of time.
Mr Hayes: My right hon. Friend is pitching in from a sedentary position, Mr Deputy Speaker, and before you say so, I will say that he should know better.
The point about the garnering of advice from those networks is that it disproportionately favours those whose parents or friends know about opportunity, know about going to university, know about college or know about apprenticeships. Young people who do not have access to that familiar and social support to enlighten them about those opportunities are doubly disadvantaged. In order to compensate for that disadvantage-it is the mission of this Government to redistribute advantage in society, and I make no apology for saying so-we need to ensure that good quality advice and guidance is in place so that people can achieve their potential.
The right support is one of the keys to unlocking social mobility and opening the door to aspiration and progression. Ruskin once said:
"The highest reward for man's toil is not what he gets for it, but what he becomes by it."
The hon. Member for Liverpool, Walton (Steve Rotheram), whom I seem to recall is a successful apprentice, rightly says that this is not merely about wage returns. Of course it is about that, but it is also about elevating the status of the practical, understanding the aesthetics of craft and realising that vocational learning has its place. As my hon. Friend the Member for Beckenham (Bob Stewart) said, for too long in this country we have conned ourselves into believing that the only form of prowess that mattered came from academic accomplishment. Practical skills and vocational competencies also give people a sense of pride and purpose, which is vital to their self-esteem and the communal health of our country. I entirely endorse what the hon. Member for Liverpool, Walton, in a happy alliance-one might call it a coalition-with my hon. Friend the Member for Beckenham, said
earlier. I recommend to them both a speech on that subject that I made at the Royal Society for the encouragement of Arts, Manufactures and Commerce. I have only one copy with me, but perhaps they could share it, passing it from one to the other.
Good guidance from a young age can stimulate ambition, inspire hard work and instil social confidence, even for the most disadvantaged young people in our society. As the hon. Member for Ellesmere Port and Neston said, we have some good examples of support offered to young people in schools and by the Connexions service. As he acknowledged in generously welcoming our initiative for an all-age service, we also have many instances where young people are not getting the advice they need. As my hon. Friend the Member for Wirral West made clear, the evidence clearly supports that conclusion.
According to a survey carried out by the Edge Foundation in 2010, 51% of young people reported that careers education, information, advice and guidance were simply not meeting their needs. Incidentally-this is not in the notes prepared for me, but I shall add it-the survey also revealed that teachers in schools knew less about apprenticeships than any other qualification with the exception of the Welsh baccalaureate. I have nothing against the Welsh baccalaureate, but one would have expected teachers to know rather more about apprenticeships than they do. As they do not have that information at their disposal, they cannot always match people's aspirations and talents to the opportunities that I spoke of earlier. That is why we need independent, high quality, up to date and impartial advice and guidance for all young people.
Ofsted has found, as hon. Members will know, that the provision of information, advice and guidance about the options available is not always sufficiently impartial. Those concerns also extend to the issues about which my hon. Friend feels so passionately.
First, on broadening horizons and challenging preconceived ideas about learning and careers for women, we must build on the work of my hon. Friend and others to ensure that young women are equipped and inspired to pursue the fullest possible range of careers rather than those that are too often mapped out for them based on stereotypical beliefs.
On making apprenticeships and vocational training equal in status-and appeal-to academic qualifications, I have, as hon. Members will know, long made the case for elevating the practical in our system. Through restoring a focus on specialist expertise in guidance for young people, I want us to inspire the next generation of young scientists, for example, as the Chair of the Select Committee recommended.
Steve Rotheram:
I thank the Minister for giving way. I think I called you Mr Speaker earlier, Mr Deputy Speaker-I apologise for elevating you far too early. In case the Minister's reference to coalitions with Government Members ruins my embryonic political career, I agreed on the one point and very little else as regards my political persuasions and those of the hon. Member for Beckenham (Bob Stewart). I want to put on record the fact that the previous Labour Government trebled the number of apprenticeships, so they did understand their merits. Like my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller), I have been contacted by constituents who are end users and
employees of Greater Merseyside's Connexions service, some of whom are facing redundancy. Does the Minister understand their feelings? They believe that the Government's proposals are in danger of throwing the baby out with the bath water.
Mr Hayes: I shall come on to the issue of transition. The hon. Gentleman, like his hon. Friend the Member for Ellesmere Port and Neston, is right to raise the issue of how we deal with the transition from the existing arrangements to the all-age service. We will begin the all-age service, as has been said already, in 2012, but I want as much as possible to be in place by the end of this year. I shall come back to the transition, but let me say that this proposal is not just in the interests of the recipients of advice. It is also about re-professionalising careers advice for the people who give it. When I became the shadow Minister in the long-distant past, I met many people who worked for Connexions. Some were lifetime careers advisers who were desperate to have careers advice re-professionalised. They were asked during the Connexions regime to be advisers on all kinds of things-on careers, but also on sexual health, lifestyle choices and drug misuse. That was a very tall order. There is a place for that kind of advice, but I am not sure that it is best provided in a one-stop shop such as Connexions. It is much better to have a careers advice service that is just that. It is demanding enough for careers advisers to be up to speed and up to date with all the options for training, learning and jobs, let alone being asked to do much more. I say to careers professionals that this is not a threat but a serious opportunity, as our commitment to that service and their profession is unrivalled.
I have more time than Ministers usually have in Adjournment debates, and I cannot resist saying a word, with your indulgence, Mr Deputy Speaker, about apprenticeships. I do not want to get into a sterile debate about the history of this issue and the previous Government-a tragedy perhaps tinged with comedy-but I will say that I intend to build more apprenticeships in this country than we have ever had. We have already put an extra £250 million into the apprenticeships budget to secure that ambition. We have set an initial target of 50,000 more apprenticeships and I believe we can meet that target and exceed it in the lifetime of this Parliament-indeed, in this comprehensive spending review period. I want more apprenticeships at levels 2 and 3-and more too at levels 4 and 5-to fill the gap in intermediate and higher level skills that, as the hon. Member for Ellesmere Port and Neston is well aware, will inhibit growth, particularly in those high-tech, high-skilled industries that we need to foster.
Schools will continue to play an important part in ensuring that all pupils benefit from good advice. Teachers are so important. As this is becoming something of a wide-ranging debate, let me say, with your indulgence, Mr Deputy Speaker, that it is time for us as a Government and as a House to elevate the role of educators. Into the hands of teachers we place our future-our children. Every great civilisation from the past-Greece, Rome, Egypt, Persia and China-understood that educators and teachers are vital. Socrates himself was a teacher. However, we ask too much of our teachers when we expect them, in addition to inspiring young people with a thirst for learning, to be careers professionals. It is true that individual schools have the best knowledge of
their pupils' needs, and it must be their responsibility to ensure that those pupils can access the best possible advice, but it is not always best for those schools to provide the advice. Some do it very well, but others less so.
In the forthcoming education Bill we intend to introduce a duty for schools to secure independent, impartial guidance for their pupils, but they will be free to decide how that guidance is secured-through the all-age service or through another provider, all of whom will be expected to meet exacting quality standards. That will safeguard the partnership model in which schools draw on their knowledge of pupils' needs and work closely with external independent advisers with expert knowledge and skills. It is crucial to place that at the heart of our new arrangements, because with all that is expected of schools, it is too much to ask them to provide careers advice and to keep up to date with the latest developments in careers and the labour market.
My ambition is to have guidance for both young people and adults that is widely respected and valued. C. S. Lewis said:
"You are never too old to set another goal or to dream a new dream."
The important thing about the all-age service is that it will assist people who need to change direction or to upskill. One feature of an advanced economy is that as skills needs advance they become more dynamic. Businesses change more quickly to shape themselves around economic changes and skills needs change accordingly, so we need to help people to get the advice they need to get jobs, to keep them and to progress in them.
Information, advice and guidance will be available online. In those terms, we will build on the work of the last Government, who invented the Next Step service, which we were able to implement this summer and will provide a basis for a high-quality online product as it metamorphoses into the core of the technology offer that the all-age service will provide. Young people in particular tend to access information online, and as hon. Members will know, that will enable us to ensure that information is updated effectively, but face-to-face guidance matters, too. I am determined to use the limited resources that we have available-we live in tough times and the Government are determined to deal with the deficit, so there is no money sloshing about-to maximise the amount of face-to-face contact that people can enjoy, because it is needed to supplement what they can gain online.
To form a new professional basis to the service that will be crucial to its success, the Government are responding positively to the recommendations of the Careers Profession Task Force aimed at increasing the quality and status of the profession. That was led by Dame Ruth Silver, who has done an excellent job with her team. Members who were fortunate enough to read the report that emanated from that work will recognise that it was very much about building the kind of professional pride and purpose that I described when responding a few moments ago to the hon. Member for Liverpool, Walton (Steve Rotheram).
Let me say something about transition. To be frank, I was concerned about that, too. Determined though we are to put in place the all-age service, it is vital that
transitional arrangements are handled properly. During the transition period, we will support local authorities to work through any changes in local service provision that may be necessary as a result of the establishment of the all-age service, involving, where appropriate, Connexions service providers.
In 2011-12, the early intervention grant will support transitional arrangements to ensure that young people have access to impartial guidance in advance of the all-age careers service being fully operational. For those who want to check the figures-diligent Members will do so immediately after the debate-they were announced on 13 December in the local authority grant settlement. Transitional arrangements, by their nature, are never perfect, but we will use every endeavour to ensure the continuity of the advice offered and that the conditions in which it is offered are as appropriate as possible. Certainly, we want to support careers professionals, because they will form the core of the new service.
Andrew Miller: Given that the Connexions company locally has effectively been told to wind itself up, it will, by necessity, have to put people on notice of possible dismissal. What advice is the hon. Gentleman giving to the Connexions service and local authorities to give comfort to those people who have put a lot of time and hard work into the service that their jobs will be protected where the service has been of the standard that he quite rightly expects?
Mr Hayes: Local authorities will retain a duty to provide the service and the new all-age service will begin to kick in from this autumn, so any hiatus of the kind that the hon. Gentleman suggests is present should not be significant. I hope that local authorities would put in place arrangements to ensure that those people involved could move from one service to the other reasonably seamlessly. If he takes that message to his local authority with my endorsement, it may yield more fruit.
Andrew Miller: If the Minister were to write to local authorities and be kind enough to place such correspondence in the Library, that might give some comfort to hon. Members.
Mr Hayes: I am always informed by the contributions of hon. Members of this House, and I will certainly take what the hon. Gentleman says away and give it appropriate consideration. As I am a responsive, listening Minister, as you know, Mr Deputy Speaker, I will ask my officials to look at that matter closely, see what measures we have already put in place, and see whether we need to do anything more. That would be an appropriate way to deal with the hon. Gentleman's query, as I think he would acknowledge.
The arrangements for the all-age service will, of course, include an emphasis-widely welcomed in this debate-on apprenticeships. My hon. Friend the Member for Wirral West spoke about vocational learning, as have others. She also spoke about the need to be open-minded about all the opportunities available to young people. As many have already said, that certainly includes learning at local college, learning in the workplace, and learning provided by independent training providers, as well as the academic route. I want to create a pathway on the vocational side that is as navigable, progressive and
seductive as the academic route that many of us travelled. To that end, it is important that the House understands the new commitment that the Government have to apprenticeships, as a pivot of our skills policy. I want more apprenticeship frameworks, more higher level apprenticeships, and more apprenticeships permeating companies that have not had them in the past.
My officials are working closely on ideas for improving the status and aesthetics of apprenticeships, including proposals to introduce a more formal graduation process to give apprentices a proper sense of achievement; proposals to ensure that the frameworks are progressive; and proposals to develop more level 4 frameworks, in particular. I am also keen to ensure that we see apprenticeships as a route to higher learning. Many apprentices already go into higher learning through college or university, but I want to grow that over time. In our skills strategy, which I know sits by the bed of all hon. Members present, we committed to working with the National Apprenticeship Service to do many of the things that I have just described, but I have already spoken of the unprecedented financial commitment that we are making to apprenticeships, and I do not want to repeat myself.
Steve Rotheram: In Liverpool, there is no problem with careers advice attracting people into apprenticeships. It is the opposite way round: there are not the employed apprenticeship opportunities for people to move into. How does the Minister think the local government settlement in Liverpool-the worst in the country, which means that public sector jobs will be lost by the city council, which employs apprentices-will help people who want to get on the ladder as an apprentice?
Mr Hayes:
I would not want to talk about local government; it is outside my purview, and you would not permit me to do so, Mr Deputy Speaker, because it is also outside the range and scope of this debate. The hon. Gentleman has put his remark on the record. What I will say is that on his substantive point about
companies, he is right: we need to encourage more companies to take apprentices. The National Apprenticeship Service has been very busy doing just that. I have been working with it on a national campaign, unprecedented in its scale and penetration, to encourage more businesses to take on an apprentice. Seventy-five Members of this House have engaged with that campaign, working in their locality to promote apprenticeships. I do not know whether the hon. Gentleman is one of them, but if he is not, I hope that he will join their number. Many colleagues have taken on an apprentice. I have taken on one in my Department. I hope that Ministers and Members of the House will do that, too. Let us give apprenticeships the status that they deserve by what we do and what we say.
I shall now move to my exciting peroration, although I know that Members are, rightly, excited by this subject.
In summary, we have to improve our education system so that every young person gets the support, guidance and inspiration that they need to make a success of their life, and we need high-quality learning provision with clear routes into a range of rewarding careers. The establishment of an all-age careers service, which provides excellent, professionally delivered careers guidance to young people and adults, lies at the heart of that, and the support of schools will be a vital component in its success. As we take that work forward, I shall ensure that we address all the points that my hon. Friend the Member for Wirral West made at the outset of this debate.
Let me make myself absolutely clear. Education is a key driver of economic growth, individual well-being and communal health. It changes lives by changing life chances, and guidance and advice is critical to that. C. S. Lewis, whom I have quoted once already, also said, "What you believe is what you are," and this coalition Government believe passionately in social cohesion, social mobility and social justice.
5.25 pm
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