Pat McFadden
MP for Wolverhampton South East · Labour · United Kingdom
“In his review Alan Milburn considered that issue and said that, “the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years.” As I said earlier, 400,000 more people are in work this year than last year, and the number of young people in employment is up since the election.”
“Since our last DWP questions, both Alan Milburn and the Pensions Commission have published their respective interim reports on young people and on the current state of saving for retirement. I look forward to receiving their final reports later in the year.”
“As Alan Milburn pointed out in his recent report, the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years. There are 400,000 more people in work than last year. The number of young people in employment is up by 74,000 since the election.”
“I thank the right hon. Gentleman and send him commiserations for whatever has left him reliant on his crutches today. I am happy to congratulate the businesses he mentioned in his constituency. He raises a serious point: it is important not only to come up with the right policy, but to make it simple for businesses to use.”
“My hon. Friend is right, and I thank Cardiff football club for being a partner. We are supporting nearly 1 million young people and creating up to half a million opportunities for jobs and training.”
“We are making strong progress on expanding youth hubs, with around 130 already in operation across Great Britain. In March, I announced the locations that we want to open in this year, and I have just announced a further 180 locations for the following two years.”
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“There has been a history of third party involvement in Royal Mail. Some years ago, Lord Sawyer carried out an inquiry into industrial relations in the Royal Mail, and George Bain and others have also examined the company in the past. There has been no shortage of third party involvement. ACAS stands ready to play a role if both parties think that that would be helpful. I am sure that ACAS would be able to play a productive role, but that would have a far better chance of working if the threat of industrial action were lifted.”
“They are round the table. There has been nothing lacking in the volume of meetings between Royal Mail management and the unions. I have heard talk of 70 to 80 meetings. ACAS is ready to assist and, as I have said on more than one occasion today, it would be easier for ACAS to play a productive role if the threat of industrial action were lifted.”
“I believe that Royal Mail is prepared to involve ACAS in the dispute, but obviously it feels that that would have more chance of success if the threat of industrial action was lifted.”
“That judgment problem continues to haunt them as the issue becomes not response to recession, but how to foster and sustain economic recovery. Perhaps we should not be surprised about that, because people of my generation, who grew up in the 1980s, know about the Tory response to recession; I have gently to disagree with the right hon. and learned Member for Rushcliffe (Mr. Clarke) here, because I remember very well the times when communities were torn apart by swathes of job losses, with little or no real assistance in place to help them recover, when there was long-term unemployment and when child poverty doubled. The Leader of the Opposition says that he is angry about poverty. He should be, because his party created enough of it when it was last in power.”
“For in those moments when intervention had to take place—in those times when we sought to stabilise the banking system; to put more money in people’s pockets; to launch schemes to support industry, such as the scrappage scheme, which we have just extended; and to stop recession turning into depression—the judgment of all politicians was tested. Time after time, we have found that the judgment of the Conservative party has been called into question. From the Conservatives’ opposition in the beginning to the nationalisation of Northern Rock—the shadow Chancellor said that he opposed that “full stop”—to their opposition to the fiscal stimulus, they have proven time and again that they would not have been up to the task of responding to the grave economic situation in which we have found ourselves.”
“I very much welcome this debate on economic recovery and welfare. Responding to the global recession of the past 18 months or so has tested Governments right around the world. When the world was faced with a collapse in credit, the seizing up of the banking system and a steep decline in trade, Governments had to step in to stop a catastrophe for people and economies throughout the world. Of course, it is not just Governments who will be judged by their response to the crisis; it is Opposition parties, too.”
“I beg to move an amendment, to leave out from “House” to the end of the Question and add: “welcomes the Government’s decision to support families and businesses during the current global downturn; believes it is vital the Government takes an active role to support recovery and build future economic strength; notes the authoritative view of business leaders and leading economists against premature withdrawal of the support for the economy; commends the Government’s leadership in co-ordinating the international action, through the G20, to support jobs and growth; further welcomes the Government’s decision to invest an extra £5 billion to help people back into work and provide the Young Person’s Guarantee, increased numbers of Jobcentre Plus staff, 150,000 Future Jobs Fund jobs and an offer to all jobseekers at six months; calls on business and the voluntary sector to support the campaign Backing Young Britain; further welcomes the introduction of the Employment and Support Allowance, the accompanying Work Capability Assessment, the expansion of Access to Work, and the Flexible New Deal delivering tailored support with providers paid by results; further believes that it is the right judgement by Government to encourage investment by small and medium-sized enterprises through the Enterprise Finance Guarantee and other support; further welcomes the successful car scrappage scheme; further welcomes the help for over 150,000 businesses through giving more time to pay tax bills; and commends the Government’s new industrial activism, which, combined with the real help now being offered, will help secure the country’s future prosperity.”.”
“The Centre for Economics and Business Research said: “The figures are clear; the VAT cut is working.” The Institute for Fiscal Studies said: “The temporary cut in the standard VAT rate…is a better stimulus measure than its critics suggest.” More broadly, fiscal stimulus measures were supported around the world, although not by the Conservative leader, who said in April: “We were against the fiscal stimulus…when it came to”— the decision —to oppose the VAT cut and the so-called fiscal stimulus, I didn’t consult a focus group or an opinion poll I just knew it was the right thing to do.””
“Following the action that we took on the banks, we launched a fiscal stimulus, which included bringing forward capital spending, tax cuts to put more money in people’s pockets, and support for business. Some of that included the VAT cut, which I believe the right hon. and learned Member for Rushcliffe said was an option that he supported, although it was attacked by many in his party.”
“I do not have a sense of “déjà vu, once again”, as the hon. Gentleman puts it. I do not wish to dwell on yesterday. It is today and tomorrow that really matter and there, more importantly, the Opposition have got the judgment calls wrong time after time. This Government knew that when faced with the biggest worldwide economic contraction in decades, we needed to act to ease its effects and help the economy get through it. That meant taking action to stabilise the banks to protect people’s savings and keep credit moving. As I said, the shadow Chancellor opposed the renationalisation of Northern Rock and proposed amendments to the Banking Bill, the effect of which would have been to make the rescue of Bradford & Bingley impossible too.”
“The contention of the Opposition, apart from saying that they opposed the stimulus, was that Britain “could not afford it.” However, the real issue was whether we could afford not to support the economy, given the situation that we faced.”
“I am certainly not here to predict the interest rates for the future. We have a system for setting interest rates, which the right hon. Gentleman well knows. As the Leader of the Opposition said, he opposed the fiscal stimulus, whereas right around the world Governments of left and right were coming to the opposite conclusion. While the Conservatives opposed what we were doing, countries came together at the G20, here in the UK, to agree that co-ordinated action to support our economies was necessary. For example, the managing director of the International Monetary Fund said at the height of the crisis: “If there has ever been a time in modern economic history when fiscal policy and a fiscal stimulus should be used, it’s now”.”
“I think that the right hon. and learned Gentleman will find that with both the discretionary measures and the automatic stabilisers, the stimulus adds up to some 4 per cent. of GDP. That is a substantial stimulus. My point is that Governments of left and right from around the world engaged in similar action while his party said that it opposed it. His leader said that he opposed it because that was the “right thing to do”. In fact, Nobel prize winner Joseph Stiglitz said: “You’re fortunate that you have had a much more responsible government over the last eight years than we have had in the United States…We look to Britain as an example in times of which the economy was good, you did the right thing, we didn’t.””
“I know that my hon. Friend comes from a business background. There has not only been help with the 50 jobs in Clackmannanshire; help has been given on a wider basis. For example, the time to pay initiative that we have extended to business has led to agreements with 150,000 businesses to spread more than £3.7 billion in business taxes to help them during the course of the recession.”
“We will talk more about welfare and unemployment in this debate. Of course, unemployment has risen as a result of the global recession. However, my argument is that our response to dealing with that unemployment contrasts with the hon. Gentleman’s party’s policies in the past and the policies that it espouses today.”
“Let us be clear: we did not intervene in the markets because we wanted to replace them. We intervened, because a market failure of that magnitude meant that Government had to act to ease its effects and to offer help to those who lost their jobs as a result. If the Conservatives made the wrong judgment call on the recession itself, the critical question now is the recovery and what the future holds for the British economy.”
“I want to make some progress. After countries came together to support their economies, we had the party conferences. After an unprecedented co-ordinated international action in the face of the gravest economic contraction that we had seen for decades, what was the target of the Leader of the Opposition’s speech at his party conference? Was it the irresponsible financial practices that had got us into this situation in the first place? Was it the market failures that had forced Governments around the world to act? No. In 2009, after everything that had happened, his attack was on big government. After the first great economic crisis of this century, when the actions of Governments were absolutely critical in preventing things from being far worse than they would have been, the right hon. Gentleman’s attack was on big government.”
“However, when we start paying down debt, what is the time scale and what are our priorities as we do so? On those issues, there is a real difference between the parties. If we withdraw the stimulus too soon, we risk choking off recovery and sending the economy backwards, not only increasing the human pain of the recession but impairing the country’s long-term ability to pay down the debt that the Opposition say that they are concerned with in the first place.”
“and learned Member for Rushcliffe mentioned the importance of regulation. I can tell him that the World Bank’s most recent ease of doing business survey raised Britain from its position as the sixth-best place in the world to the fifth-best to do business, so on that international measure we are heading in the right direction. As I said, it would be complacent to assume that the recovery will take hold come what may, or that there is no need for further Government help for the economy, yet that is precisely the advice offered by the Opposition, much of which centres on the discussion of debt. Of course, stimulus has meant a build-up of debt, which must be paid down in future. There is no argument about that, and we have set out a plan to cut the deficit in half over four years.”
“We combined a tax cut with capital spending—there is not necessarily a choice between the two—and the overall effect of the VAT cut was to put about £1 billion a month into the economy that would not otherwise be there. The question is, is recovery in place and how strong will it be? There are some encouraging signs. For example, the CBI’s most recent output expectations index for manufacturers shows improvement on its predecessor. The Bank of England’s summary of business conditions reports that demand for consumer services has increased. Those signs are welcome, but it would be a rash politician who claimed that recovery was in place, embedded and not under any threat. If there is a recovery at all, it is a fragile one and it is very capable of being set back if we make the wrong judgments and the wrong decisions. The right hon.”
“The judgment failures that led the Conservatives to make the wrong judgments during the recession are being repeated, just as we see fragile signs of recovery.”
“Friend, Kevin Green from the Recruitment and Employment Confederation, when asked about the fiscal stimulus last month, said: “We certainly don’t want it to be switched off early. We actually need it to continue.” Yet a premature end to the fiscal stimulus is precisely what the Opposition are advocating. The Leader of the Opposition said in his party conference speech: “The longer we leave it, the worse it will be for all of us.” But the fact is that in the present economic situation, that is not true. His attack on big government is driving him and his party to an economic stance that endangers the recovery and threatens to choke it off before it has been properly established. That is what happened in Japan in the 1990s, with the result that the downturn there lasted years and impacted even more severely on debt levels.”
“My right hon. Friend the Secretary of State for Work and Pensions will have more to say later in the debate about our plans to ease unemployment and get people back to work, but my hon. Friend the Member for High Peak (Tom Levitt) is right that we must not abandon the unemployed and must do everything we can to support employment in the economy. I return to the question of the stimulus and when it should be withdrawn. The former member of the Monetary Policy Committee, Professor David Blanchflower, said: “If spending cuts are made too early and the monetary and fiscal stimuli are withdrawn, unemployment could easily reach 4 million.” Just a few weeks ago the director general of the CBI said: “The economy is too fragile right now for massive cuts in public spending.” On the question of employment just raised by my hon.”
“We will not take risks with the recovery. We know how essential it is for the recovery to be supported so that it takes hold properly. We are determined to pay down debt, but we will not withdraw support at the precise moment when the economy needs it. I give way to the Chair of the Select Committee.”
“If that is their approach, I have to ask the right hon. Member for Maidenhead (Mrs. May) which parts of our help package for the unemployed they would withdraw. What training opportunities, what incentives to employers or other help would they abandon? Finally, for clarity, do the Opposition support the £5 billion package for the unemployed? Unemployment has risen during the recession, but we are determined to give people a second chance and to do everything that we can to stop it becoming permanent for those affected.”
“That involves, for example, an extension of the rapid response service even before redundancies take place; after six months unemployed, help with training; help to people to set up their own business; incentives for employers to hire people; and after 12 months a guarantee of training or employment for young people aged 18 to 24, as well as other measures, such as funding for 20,000 internships, which can be a hugely valuable bridge into work for many people. That activity stands in stark contrast to the way in which the Conservatives approached the issue when they were in power. And today, while we are putting in £5 billion to help the unemployed, the Conservatives—the right hon. and learned Member for Rushcliffe repeated this during his speech—have called for £5 billion less public spending during the recession.”
“The Government are determined to ensure that unemployed people get the help and assistance that they need to help them find another job, and we are devoting particular effort to ensuring that we do not have a repeat of the 1980s experience, when long-term unemployment left thousands—sometimes tens of thousands—out of touch with the labour market for years, and sometimes for ever. So we have put in place £5 billion in total to help get people back to work over this year and next year.”
“We always said that that tax cut was a temporary one, and we gave notice of that when it was announced, so I do not think there is any surprise about that. Let me turn to the question of individuals, as well as the economy as a whole. When the economy has contracted as much as we have seen, when trade has fallen around the world, of course people lose their jobs. No Government can say to their people that they can be protected entirely from unemployment, given the economic circumstances that we have been through, but we will not abandon the unemployed.”
“As recovery takes hold, it is absolutely critical that we work with industry to ensure that it can take advantage of such opportunities. That is why we have put in place the strategic investment fund and allocated funding to the projects of which I speak—because we want Britain to have a recovery that makes the most of our industrial future. We believe that government has a vital role to play in that.”
“In recent months, we have put financial backing into aerospace, wind and wave power, the scrappage scheme extension and a number of other areas. When it comes to industrial policy, however, my criticism of the Opposition is not so much that they attack big government, as that they have nothing to say at all: nothing to say about Britain’s industrial future, and nothing to say about the national capabilities that they believe that we should have. The problem for them is not so much big government as no government at all, and that is not good enough. Government may not create the jobs, but it does create the environment for employment and industry to grow. If the concern is debt, the best way to pay it down is through growth, and the best way to obtain growth is to work with industry to take advantage of the opportunities of the future.”
“This debate is important, because our responses to the recession and its human cost are issues upon which we will be rightly be judged, and judgment is just as important in the recovery as it is at the height of the recession. On future industrial policy, Britain needs a Government who will support the economy’s emergence from recession and help business to seize the opportunities that technological and industrial changes present—whether that is the transition to low carbon, or the advancement of digital technologies and biosciences. We have made it clear that we believe in an active role for government in helping Britain to make the most of those opportunities. The right hon. and learned Gentleman said that our policy was just words and branding, but that is not the case.”
“I must ask the hon. Gentleman to think about his constituents and how much worse unemployment would have been for them if we had not had the fiscal stimulus, the support that I have talked about or the expansion of apprenticeships. The right hon. and learned Member for Rushcliffe talked about apprenticeships, but there are four times as many apprentices now as there were when he was in power. To withdraw help for the unemployed would increase the risk of that situation becoming permanent and simply repeat the experience of people who lived through the recessions of the 1980s and 1990s, and we will not go down that road.”
“They have failed the test of judgment time after time, and through the stance that they have adopted they have shown that they would fail the test again if they had the chance to put their proposals into practice. For those reasons, I shall ask my colleagues to reject the Opposition motion and to support the Government’s amendment, which offers an altogether better route to economic recovery for our country.”
“Absolutely. My hon. Friend makes a very good point. The right hon. and learned Gentleman talked about the business man in the midlands, but I recommend that he ask a few west midlands manufacturers what they think of the withdrawal of capital allowances for investment at this point in the economic cycle. That allowance is precisely the help that business needs to make investment decisions so that we can take advantage of the industrial change that I have described. This debate is valuable and important, because the country faces a real choice about who offers the best path to recovery. Through the choices that the Conservatives have made, they have placed themselves against the co-ordinated action that Governments took and in favour of early withdrawal of support for our economies, and they have been silent on our industrial future.”
“The hon. Gentleman has just said that he is not in favour of the fiscal stimulus being removed and that he is a bit worried about the trajectory of capital expenditure. Where does that sit with his party leader’s support for savage cuts?”
“The judgments have given rise to concerns, as I said, particularly among trade unions. Through significant improvements to the position of people at work, we have over the years enhanced the protection to which posted workers in the UK are entitled. They are entitled to the protections in legislation on the national minimum wage, working hours, health and safety and so on.”
“We wanted to try to get to the bottom of the matter, and to use the good offices of ACAS to help resolve a situation that involved a heated industrial dispute. I quote from ACAS’s conclusions: “Acas’ inquiry has found no evidence that Total”— the principal employer on the site— “Jacobs Engineering”— the principal subcontractor— “or IREM”— the Italian company— “have broken the law in relation to the use of posted workers or entered into unlawful recruitment practices. We have also received assurances from management that they will abide by NAECI agreement”— which is the collective agreement governing workers in the construction engineering industry. What was contested was whether the collective agreement had been broken in the circumstances, and ACAS found that it had not been.”
“As a result, some people have called for a review of the directive and demanded that the EU look again at the balance between workers’ protection and the freedom to provide services. Demands around the directive have also been fuelled by the recession, in which job competition is inevitably much tougher than during better times. Such issues of course become more urgent when people are losing their jobs. We saw some of the effects of that in the industrial unrest earlier this year, to which my hon. Friend referred, which took place after the loss of several thousand jobs in the construction engineering sector. I do not want to get too side-tracked by those disputes, but the contention was that the Italian posted workers were being paid less than the UK workers. The Government asked ACAS to step in.”
“In that case, the Court found in favour of the company, again on the grounds that the collective agreement was not of universal application because it applied only to public sector contracts and only in one part of Germany. All those cases deal with the balance that the directive seeks to strike between the freedom to provide services and the protection of workers’ rights. The issue then is the real interpretation of the judgments, and how we should respond. Many trade unions, parts of the European Parliament and my hon. Friend have expressed concern about the rulings. The contention is that they have altered the balance of industrial relations, tipping it away from the right to strike and towards the freedom to provide services.”
“The company declined to sign the Swedish collective agreement, and the Swedish trade unions blockaded the school site. Laval’s application to the Swedish court was referred to the ECJ, which reaffirmed its conclusion that the right to strike was a fundamental one but also concluded that, in this instance, the unions could not insist on Laval’s participating in or being bound by the Swedish collective agreement because it had not been declared as being of universal application. My hon. Friend referred to that in his speech. The Ruffert case was not so much about the right to strike as about the application of collective agreements.”
“As he said, the Viking case related to a Finnish operator that wanted to register its vessel to sail under the Estonian flag. The Finnish unions opposed that because the Estonian-Finnish crew would not need to be covered by the provisions of the Finnish collective agreement, and Viking sought an injunction against the unions’ action. The Court ruled that the right to strike is a fundamental one, as recognised by the charter of fundamental rights, and that exercising the right can, as a matter of principle, legitimately interfere with single-market principles. But it also concluded that, in this instance, the extent of such interference went beyond what could be considered appropriate or proportionate. As my hon. Friend said, the Laval ruling relates to a Latvian company that won a contract to refurbish a school.”
“Its intention was to protect the posted worker and to ensure that he or she had access to at least the minimum conditions applying in the host country, rather than carrying what may be significantly poorer employment rights and standards from the country of origin. The directive clearly states that companies must abide by the minimum worker protections in the host country, whether defined by national law or a universally applicable collective agreement. In the UK, that means that people are entitled to a range of universal protections that this Government have worked to develop: the national minimum wage, default limits on working hours, annual holidays, health and safety legislation and equality legislation. My hon. Friend went through the judgments in some detail. I hope that I will not be too repetitive if I touch on several of them.”
“It is good to see you in the Chair, Mr. Martlew. Like my hon. Friend the Member for Elmet (Colin Burgon), I, too, welcome you. I should also like to express my gratitude to him for securing this debate, because the European Court of Justice rulings that he has discussed have generated much discussion in recent months. I am glad to take the opportunity to set out the position and perhaps even to shed a little light on what can be a complicated area of legislation. As my hon. Friend said, the underlying context for the Court’s judgments is the posted workers directive, which came into force some 10 years ago. It operates throughout the EU and allows companies to post their workers to another member state on a temporary basis in any sector of the economy.”
“In conclusion, we absolutely want fairness at work, but we also want openness in trade and the free movement of people that has benefited our economy and many other countries’ economies, too.”
“At the same meeting, we also supported the suggestion that social partners at a European level should enter into dialogue on the effect of the Court’s judgments that my hon. Friend outlined in his speech. Again, I believe that a couple of meetings have taken place. We have supported dialogue at the European level on both those fronts. What we want to see going forward is, of course, workers being treated fairly in the workplace, but we also want to keep the open, outward-looking trading stance that has benefited the UK and workers in the UK. There are more British posted workers abroad than there are posted workers in Britain, according to information from the EU.”
“Friend said that he did not want this to be a debate about migrant workers. The interpretation of our collective bargaining law is not concerned with migrant workers but with the parties to individual agreements. I hope that gives him some guidance on the issue. What else has happened in Europe on this matter? I was present at the Employment and Social Affairs Council—my hon. Friend referred to his question on this to the Prime Minister some months ago—at which the UK Government supported the Commission’s proposal to establish a high-level expert group to look at the operation of the posted workers directive. The group has been established and has begun to meet—I believe that it has met twice—and research has been commissioned into the operation of the directive.”
“I am, of course, happy to write to my hon. Friend. The principal question that he asked, in several ways, was whether the Government would declare collective agreements universally applicable. The issue is important, because the existence of such a system will affect whether the rulings have a particular effect in individual countries. We do not have a tradition of universally applicable collective agreements. The tradition supported up until now by trade unions has been for a voluntarist approach on collective agreements, which means that they are not applicable to those who do not sign them. I counsel some caution in this debate on posted workers, because that would be true of contractors from another country and also contractors from within the UK. Therefore, I am glad that my hon.”
“As we said at the time of its launch, the automotive assistance scheme is for long-term reinvestment in the industry, not short-term rescue funding. The Department has been in contact with about two thirds of all companies that may qualify for assistance under the scheme, resulting in 19 formal expressions of interest so far. Projects in the pipeline could involve total Government support of about £1.45 billion.”
“We are working closely with the companies concerned, but we also want to ensure that we get value for money and the long-term benefits of reinvestment for the industry concerned.”
“As I said, it is important to understand that this scheme is about long-term reinvestment projects, not short-term rescue. The Secretary of State said at the time of its launch: “There is no blank cheque on offer and there are no operating subsidies. We are committed to ensuring that anything backed by the scheme offers value for taxpayers’ money, enables us to green Britain’s economic recovery” and “delivers significant innovation in processes”. —[ Official Report, House of Lords, 27 January 2009; Vol. 707, c. 178.] We are working through these projects with the companies concerned. I can assure the hon. Lady and the House that there is no delay on the Government’s part.”