HC Deb 21 June 1995 vol 262 cc319-28

2 pm

Mr. Nigel Evans (Ribble Valley)

I am grateful for the opportunity to raise this important subject for debate today. It is one of those subjects on which it is extremely difficult to get any coverage whatever when things are going well, but when things are going badly tends to lead the news bulletins. Having said that, however, this morning, on page 2 of the Daily Express is an article entitled, "Boom-time Britain" in which it talks about the British economy being in fine shape, with soaring exports, falling unemployment and growing output". An influential report by the Organisation for Economic Co-operation and Development has stated that, not the Daily Express. It also states: Unemployment could fall by a further 300,000 over the next 18 months to just over two million". That is excellent news.

If one looks at some of the recent statistics about unemployment, one will see that only last month it fell yet again by another 10,000 to 2.32 million—the 21st successive fall. Within the United Kingdom, the work force in employment now stands at 25.5 million, which is a superb figure. Manufacturing productivity in the three months ending April 1985 rose by 3.2 per cent. Export volumes, which are important, excluding oils and erratics, are up 11.5 per cent, in three months to March on the year earlier. Underlying inflation is at its lowest level since the 1960s. That is all good news for the economy.

My constituency has the lowest level of unemployment in the whole of the United Kingdom. Therefore, one might think it strange that I have decided to ask for this debate today. My constituency is blessed in having a very good and skilled work force. We have a good infrastructure—the motorways—in and around the Ribble Valley. The west coast main line could improve that infrastructure dramatically, and I hope to see further investments in that, which would encourage more people to travel by train, and more freight to be carried by train.

We are also blessed in having Manchester airport not too far away. It is one of the largest international airports in the world and provides great service for people in and around the region. I have a superb rural constituency, which attracts many tourists, and Blackpool is not too far away, which attracts many more tourists and conferences as well.

There is also tremendous manufacturing capacity within the Ribble Valley, and just outside as well. One leading firm, British Aerospace, is world-renowned, particularly with its carbon technology. It is a good supporter of the community, and I am extremely grateful for the work it does in supporting schools and technology, particularly the William Temple school in my constituency, which it supports with its technology courses. It has done much innovative work and has provided many jobs in schemes such as the European fighter aircraft, airbus, and, I hope, the future large aircraft and Tiger in future.

We have some superb manufacturing skills. On top of that, my constituents also travel long distances to work. If they do not find work on their doorstep, they travel to places such as Manchester, Liverpool, throughout the north-west—wherever the jobs happen to be.

In my constituency, there are also smaller firms than BAe, which none the less are vital. Ultraframe has to be one of the success stories of my constituency. I invite my hon. Friend the Minister to come to my constituency, in the not too distant future, and visit Ultraframe, so that he can see for himself at first hand the successes that can be achieved when a firm is run by people with a belief in what they are doing, who are constantly reinvesting money back into their firm, a firm that has faith in the people who work there, and which not only ensures that they are properly trained in the work they do but encourages them to undertake national vocational qualifications.

In 1992, Ultraframe had 152 employees; in 1993, 207; in 1994, 293. It currently has 420 employees. It pays a lot of attention to exports as well, which is extremely important. Last year, its turnover was £25 million, and it is the UK market leader in conservatory roofing systems. It takes on a lot of youngsters from the schools at 16 or 18 and offers them jobs and training. It is a superb asset, not only to the Ribble Valley but to the United Kingdom as well, particularly with its exports.

We have to look at what we offer people in this country, to ensure that we have the right skills and a good work force that companies will want to employ, and at the encouragement that we give to businesses to expand. That means that we must have good schools and colleges, the right courses and relevant training. We must also ensure that the training and enterprise councils are delivering the right packages of training. There are 82 TECs. I am sure that they are not all of a superb level, but I hope that we will encourage those that are not as good to raise their standards to those of the best.

To see another reason why we are doing so well in this country one has only to look at the strike record. One can remember the 1970s, when strikes dogged this country. Businesses did not know whether they would be able to operate. Customers did not know whether they would be able to get their services. It was a blight. It was the British disease.

No longer is that the case. We now have one of the lowest strike records since records have been collected. That is important. We take that for granted, but we should not. We also have consistently low inflation. We should not take that for granted, because we can remember the 1970s, under the previous Labour Government, when inflation ravaged industry and people's savings.

We also have competitive interest rates, which are important for businesses, as they enable them to borrow with confidence to invest in their businesses, and they know that they will get returns.

We also have low taxation. We can remember what taxation rates were like under the previous Labour Government. There was hardly any incentive to take risks, because the Government, if one made any profits, were taking the lion's share. That is no longer the case. I hope that we shall continue with our tax-cutting policies in future to ensure that people who take the risks in business are able to keep the lion's share, so that they can reinvest that money in their businesses.

We also have a policy of deregulation, which is vital. I sat on the Standing Committee last year that considered deregulation, with my hon. Friend the Member for Scarborough (Mr. Sykes). I believe that it is one of the most important pieces of legislation that we have passed since I have been a Member of Parliament.

One has only to talk to business people to know that the last thing they want is regulation after regulation heaped on them, for all sorts of reasons. Goodness knows why some of them are put into place. We have to appreciate that every rule and regulation imposed on business has a cost. Therefore, if we can lift the burdens of bureaucracy off the backs of businesses, they would be able to ensure that their businesses were more profitable, that they could expand and reinvest the money they make back into their businesses.

I am not saying that I want to scrap every rule and regulation—some of them are there for good reasons—but we have to look at each of the rules and regulations, particularly those that have been around for some time, and question their worth. There should be a cost-benefit analysis of some of those rules and regulations. We should remove as quickly as possible those that happen to be politically correct or those that are extremely expensive but show little or no reward.

Mr. John Sykes (Scarborough)

I am grateful to my hon. Friend for giving way. We are all pleased to hear that he has been made a privy councillor. I wonder whether he knew that Small Business News has awarded him a privy councillorship. I think that it is richly deserved.

Will my hon. Friend contrast the levying of regulations in this country with the manana attitude towards regulation by some of our so-called partners in the European Community, some of whom do not even obey their own laws, never mind directives from Brussels?

Mr. Evans

First, my hon. Friend and the bureau are somewhat premature in their congratulations to me on being made a privy councillor. Secondly, I fully appreciate that, in the United Kingdom, we have a structure in place that demands that, when we sign up to rules and regulations, we enforce them.

Many other member states of the European Union are happy to sign up to almost any rule or regulation, and they do not read the small print. They are not bothered about that, because they will not enforce the rule or regulation with the rigour of the United Kingdom. Perhaps we should approach some rules and regulations in the same way. It would be better, however, if other member states' enforcement was the same as the UK's. If that were their approach, they might think twice before signing up to more rules and regulations in future.

I am glad that we are able to gain so much inward investment. It takes place in the north-west, as it does throughout the country. We received 41 per cent. of Japanese investment in Europe. Close to 40 per cent. of the investment made by the United States in Europe comes to the UK. Why is that? Overseas companies have confidence in investing in the UK, because they know that they will not have social on-costs heaped on them, as happens in other parts of the EU. Levels of unemployment elsewhere in the EU are telling.

In Spain, unemployment is 23 per cent. Youth unemployment is a staggering 43 per cent. In France and Belgium, it is 12 per cent. and 10 per cent. respectively. The EU average is 10.8 per cent. How grateful I am that unemployment in my constituency is 2.7 per cent., and 8.3 per cent. is the average throughout the UK.

We must ensure that we have proper training. General national vocational qualifications are vital, and superb work is being undertaken at St. Mary's college, Blackburn. We must ensure that job clubs and our various schemes provide relevant advice and proper guidance.

I hope that we can do more to encourage employers not to adopt agism within the work force. Far too many people are unable to obtain work when they are in their 40s and 50s. In fact, they have a wealth of experience. We must do more to convince employers that they should not turn their backs on older prospective employees. We have a flexible work force, which means that someone who starts work at 18 will not be in the same job until he is 65. It is more likely that employees will have several careers during their working life.

I hope that employers will stop using advertisements in newspapers that state that they are interested only in people who are under 30 or over 25. It is wrong to take that attitude. It gives no encouragement to people in their 50s and 60s, and the country suffers because a wealth of experience is not being used properly.

I was delighted when my right hon. Friend the Prime Minister fought hard within the EU to ensure that we had opt-outs from the social chapter. If we had signed up to the chapter in its entirety, companies would have looked beyond Britain when investing in the EU. Without opt-outs, the chapter would have been extremely expensive. I see no reasons or advantages in being a signatory to it without opt-outs.

Mr. Sykes

My hon. Friend does not need any additional information, but he might be interested to know that, in my constituency, a large food manufacturer that normally supplies the home market decided that it could not afford to build a factory in France, and so doubled its production line at Scarborough, much to the benefit of my constituents who work for the company, whose jobs are now guaranteed. What does that say for the social chapter?

Mr. Evans

It says everything for my right hon. Friend the Prime Minister having won opt-outs. My hon. Friend has given a constituency example. I am sure that it is one that could be replicated throughout the country. So many businesses have decided to contract within other parts of the EU and to expand in Britain. Companies outside the EU decide to come first to Britain. They take full account of the advantages of investing in Britain. I think that it was Jacques Delors who said that it would be to experience paradise to engage in inward investment in Britain. Instead of following Britain's lead, the rest of the EU decided to try to get us to follow them. That was ridiculous.

Most damaging of all policies for our future economic prosperity is the minimum wage. We all know that socialism is a creed that dare not speak its name. The minimum wage is a concept that dare not name its price. If it is such a good idea, why should its level remain a secret?

It is rather like a perverted form of the "Price is Right" approach, except that the losers in the minimum wage game will lose their jobs. It will be a case not of low pay but of no pay. Silence on the level of a minimum wage is not for the virtuous reason that there should be consultations with the unions and employers. To say that such consultations should take place is to put up a smoke screen. The present vacuum allows an unpriced product to be shown in a shop window. If anyone has to ask how much it is, he should know that he cannot afford it.

A menu without prices means that Labour spokesmen can say to employers, "We are new Labour, not old. Don't worry about the level of the minimum wage. It will be so low that it will have no effect on the profitability of your business. We want only to catch a few cowboys who are paying poverty-level wages."

At the same time, Labour spokesmen are saying to the unions, their paymasters, "Don't worry about new Labour tosh. It is just to con the public into thinking that we have changed. We can't set a level for a minimum wage. If we do so, employers will be able to work out how much it will cost them and how many jobs they will have to shed. Obviously, we are going to look after you. After all, you look after us." The only losers in the game will be those whose jobs disappear in the black hole of socialist dogma. As many as 1.8 million jobs could be lost.

I watched the hon. Member for Peckham (Ms Harman) being interviewed on "On the Record" on Sunday. John Humphrys gently savaged the hon. Lady to pieces. It was a cruel display by Mr. Humphrys, who had the effrontery and cheek to ask the hon. Lady a few elementary, simple and straightforward questions on the minimum wage. How dare he? Whenever she was unsure of what to say, she resorted to making a dash behind the name of Winston Churchill, who was the saviour of many people. Never was his name called on so many times in such a short time as by the hon. Member for Peckham.

When the hon. Member for Peckham said, in her Mother Teresa demeanour, that she wanted to get rid of poverty, she should have started with the poverty of her argument. Winston Churchill was a great man, but not even he could have saved the hon. Lady or her feeble argument on Sunday.

Two further complications with the minimum wage are the black economy and differentials. We would be stupid to ignore the fact that the black economy exists. Indeed, it existed to a greater extent in the 1970s under the Labour Government, when taxation was so high. If we introduce a minimum wage, many cowboys will still pay poverty wages. They will do so in an underhand manner and behind the back of the Inland Revenue. Without a minimum wage, we have a transparency in the system.

No one—especially not a member of the Labour party—should be allowed to hide behind the argument that his role is to look after only the poorer sections of society, those who are earning £1 an hour or less. If a minimum wage is introduced, those who are earning £4, £5 or £6 will want to ensure that differentials continue. The unions have said as much. The result will be demands for inflationary pay increases.

It will not be only those who are earning £1 or £2 an hour who will lose their jobs. Jobs will also be lost by those who are earning £4, £6 or £8 an hour. It has been estimated that a minimum wage of about £4.15 will cause about 800,000 people to lose their jobs. That would cost £2.2 billion in additional unemployment benefit expenditure.

It is pointless to argue that the taxpayer is subsidising low pay for many people. A minimum wage will mean that the taxpayer will have to subsidise many more unemployed people. When Bill Clinton was campaigning to become President, he said that he would increase the minimum wage in the United States. He has not done so. That was even before the rise of Newt Gingrich. The President knew how many jobs an increase in the minimum wage would cost.

The right hon. Member for Kingston upon Hull, East (Mr. Prescott) said that he was aware of the consequences of a minimum wage. He told us that any silly fool would know that there would be a shake-out. The right hon. Gentleman was speaking the truth.

Does the Labour party, which treats the country with contempt, really think that the wages of some people can be jacked up without job losses, shorter hours, loss of differentials and the fuelling of the black economy? The higher the minimum wage, the higher will be the number of job losses. The Labour party fails to tell us what price is worth paying in terms of job losses to fulfil its bargain with the trade unions.

We must continue with the successful policies that the Government have followed in the past 16 years, which are leading to more job creation, more inward investment, more job expansion and more employment generally, with unemployment coming down. We must continue with the deregulation policy and ensure that the town halls, Whitehall and the know-alls of Brussels take into account the fact that businesses are there to ensure that jobs are available and to produce goods and services; they do not need such people coming on with a tirade of bureaucracy, rules and regulations.

In Europe, 20 million people are unemployed. The rest of Europe should consider what we are doing in this country, find out why we are so successful, and start to put our policies into place. The choice is simple. We know what is happening in this country. We have the job and wealth creation; the evidence is there for all to see. The choice is either sticking with that and with something that is successful, or listening to the Labour party, which is offering something for nothing.

2.20 pm
The Parliamentary Under-Secretary of State for Employment (Mr. Phillip Oppenheim)

I thank my hon. Friend the Member for Ribble Valley (Mr. Evans) for choosing this subject. He is well known as an hon. Member with great knowledge and understanding of the issues involved.

My hon. Friend mentioned at length the effect of a minimum wage on jobs. He was correct to point to the unemployment level in Europe, because every one of those European Union countries with minimum wages that are set at significant levels has higher unemployment, and particularly higher youth unemployment, than Britain. The figures that are quoted are based on the International Labour Organisation international standard for compiling unemployment statistics, so the claim that Opposition spokesmen sometimes make—that those figures are fiddled—is nonsense.

Every one of us wants low-paid people to earn more, but it is unfair and deceitful to the less well-off for politicians to pretend that they can wave some magic wand and raise wages without any cost to the economy. What we can do, and have been doing since 1979, is to continue to make the economy more competitive, to improve training and education, to create the conditions for sustainable non-inflationary growth, and to give people the chance to be more productive so that they can really earn more on a sustainable basis.

As my hon. Friend rightly said, his constituency has a fine record of good quality employment. It has that record because people in that region are productive and work for companies that produce goods that people want to buy. That is the only honest way for us politicians to say that people will be able to earn more, and that better-quality jobs will be created on a sustainable basis.

The Labour party's minimum wage policy is doubly dishonest. It pretends to the less well-off that there is some easy, cost-free method of raising their pay, and then it will not even say what the minimum wage will be until after the next election. It gives the less well-off a menu with no prices, in the hope that they will not discover the true cost in jobs, as my hon. Friend rightly said, until after the next election.

No wonder the Opposition spokeswoman, the hon. Member for Peckham (Ms Harman) got in such a mess in "On The Record" last Sunday. I found it probably the best comedy programme of the year. I think that my hon. Friend, as a Welshman, probably thought a better comedy occurred on ITV an hour or so later, but I did not find that show quite so funny.

During the programme, the hon. Member for Peckham said that she could not set a minimum wage level until after the election, because Labour could not meet employers to achieve consensus until it was in government, but when John Humphrys said that the reason Labour was waiting until after the election was that it could never achieve consensus—as too low a rate would annoy the unions and too high a rate without regional variations would worry employers—the hon. Lady suddenly changed tack and said that Labour had been meeting employers, and that there was a great deal of consensus. If that is the case, fine, but why cannot she now tell us what the minimum wage level would be? No wonder she kept harking back to 1906. If that is new Labour's idea of progress, how far back would old Labour have gone for inspiration?

During the programme, the hon. Member for Peckham insisted on repeating several myths. She said that we are alone among European Union countries in not having a minimum wage. That is wrong; only seven EU countries have national minimum wages. She also said that pay had fallen in wages councils sectors since we abolished the wages councils. She should know the answer to that, because she asked me a written question in which the labour force survey, which both the Labour party and the unions say they find fully reliable, showed that pay for workers formerly covered by the wages council was rising at double the rate for the economy as a whole.

The Opposition say that the minimum wage would end what they term the £2 billion taxpayer subsidy for low pay in the form of in-work benefits such as family credit, but, as Andrew Dilnot of the Institute of Fiscal Studies said, even if a minimum wage were set at £8 an hour, many families would still receive family credit, so the Opposition are wrong on that point as well.

Labour—and, again, the hon. Member for Peckham during that programme—persisted in claiming that pay had fallen in Britain and that Britain competes on the basis of low pay, yet pay has risen at all levels since 1979. The real take-home pay of a single low-paid man in the bottom 10 per cent. of earnings has risen by £27 more than inflation since 1979. It actually fell by £1 under the last Labour Government.

My hon. Friend ably made the point that our economy is much more productive and competitive compared with 1979. It is because we are so much more competitive and productive that real pay has risen significantly at all levels, in stark contrast with the period 1974–79, when productivity and pay stagnated. During the 1960s and 1970s, Britain was bottom of all the major industrialised G7 countries when it came to the increase in manufacturing productivity, whereas in the 1980s we were equal top with Japan. That productivity boom has led to a sustainable increase in real take-home pay and living standards.

Even Labour's union buddies do not find its policy credible. The Trades Union Congress, in a document published on 22 March this year, said: No campaign on the minimum wage issue will carry real weight … unless it clearly states who would benefit, what impact it would have on unemployment … and the impact on differentials. Sir Gordon Borfie, chairman of Labour's Social Justice Commission, wrote in April that the key to the minimum wage was the level. He said: too low would not have much benefit—too high would cost jobs. Even William Hutton, economics editor of The Guardian, wrote around the same time that the key to the minimum wage is the level at which it is set.

Therefore, why will not Labour say or give any indication of the level at which it would set the minimum wage, what it would do about differentials, and whether there would he different rates for young workers, regions and different industries? Why the deafening silence?

The answer has been given by Labour's leader and deputy leader. Three years ago, its deputy leader, who, sadly, is not here to listen to the debate—I can understand why—said: I knew the consequences were that there'd be some shake-out"— in jobs— any silly fool knew that. The Leader of the Opposition was a little more oblique in his comment. He said: Econometric models indicate a potential jobs impact. Now we all know why the hon. Member for Peckham is keeping so quiet about the level at which she would set the minimum wage.

We now have the spectacle of an Opposition—

Mr. Peter Butler (Milton Keynes, North-East)

There is no Opposition.

Mr. Oppenheim

My hon. Friend is right, but I understand why Opposition Members are afraid to turn up for this debate. We have, rather, the spectre of an Opposition whose shadow Chancellor—[Interruption.] Now that my hon. Friend the Member for Cambridgeshire, South-West (Sir. A. Grant) has apparently joined the Opposition, we have an Opposition—and a much worthier and more substantial Opposition than the one to which we are accustomed.

We may not have the spectacle of an Opposition here, but we have the spectacle of an Opposition in the country whose shadow Chancellor talks of the obscenity of directors' pay but said yesterday, in a Select Committee, that Labour would not introduce a pay maximum, and whose employment spokesman habitually speaks in flowery tones of putting a floor under low pay, but will not say what that floor would be.

That is the worst type of deceitful populism. Labour is cynically using the low-paid as political pawns, and it will not wash. By the time of the election, Labour will have to say what the level of the minimum wage will be; otherwise, the low-paid will know that they are being conned, and cruelly deceived.

It being half-past Two o'clock, the Motion for the Adjournment of the House lapsed, pursuant to Order [19 December].