Economic failure, inequality and the Oldham Fairness Commission

Yesterday (9th April) I spoke during the Committee Stage of the Finance Bill in the House of Commons about the link between the Government’s economic failure and the hardship faced by many constituents in Oldham and Saddleworth.  This inequality, is the key reason why I established the Oldham Fairness Commission, to look at what concrete changes we can make to make Oldham and Saddleworth a more equitable place.

I am concerned about the large increases in the number of self-employed people which is boosting the employment figures, particularly when you look at average wages for the self-employed.  There is also widespread under-employment, because jobs offering full time hours are not available and most of the jobs created since the Election are low-paid, part-time and insecure. 

Overwhelming evidence shows that society as a whole benefits from more equality – through better life expectancy, mental health, social mobility and educational attainment and reduced crime.  Even from a purely economic perspective, evidence shows that inequality causes financial instability, undermines productivity and retards growth.  These are issues that the Oldham Fairness Commission, focussing on inequalities in education, employment and income, is seeking to address locally. 

The full text of my speech is below:

Debbie Abrahams: It is a pleasure to serve under your chairmanship, Mr Bone. It is a pleasure, too, to follow my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I shall spend a few minutes building on the economic context that she described. Unfortunately, we have seen too much self-congratulation at the glimmers of economic recovery that the country is finally seeing, after three years of a flatlining economy. We need to look at the full picture. This is the worst recovery in 100 years.

The gross domestic product in quarter 4 of 2013 was 0.7%. That is 1.3% below the pre-recession peak in 2008. We would need to grow 1.6% each quarter up to the general election just to reach where we were at the end of 2010. Since 2010, we have had growth of 3.8%, compared with the US, where growth has been 8.4%. UK productivity is the second lowest in the G7 and 20% lower than the G7 average—the widest gap since 1992. Exports were down 4% in the last quarter of 2013 and the trade deficit in December 2013 stood at £7.7 billion. As we know, the Government will have borrowed £190 billion more than planned in 2015. Public borrowing in 2015 will be £75 billion. We know about the promises in 2010 that the deficit would be cleared.

We have been speaking about the implications of the fragile recovery for employment and unemployment. The Government are keen to mention absolute numbers, but the employment rate is still below pre-recession levels and most of the jobs created since 2010 tend to be insecure, part-time and low paid. The proportion of short-term contracts has increased by 20 times to 1.65 million, of which 655,000 are involuntary. The increase in temporary jobs accounts for more than half of the rise in employment. Nearly one in five—that is, 1.46 million people—work part-time because they cannot get full-time work. That is the highest level of underemployment since 1992. Four out of five new jobs are paid below the living wage. Another key issue is the geographical spread of these new jobs. Since 2010, 79% of them have been in London, with only 10% in the nine urban centres outside London. It is hardly a recovery for the whole country, is it?

My hon. Friend spoke in depth about unemployment. I am concerned that the true levels of unemployment are hidden. We have seen a sudden increase in self-employment, which, as I know from my role on the Work and Pensions Committee, has been pushed in jobcentres. There has been a 4% rise in self-employment in the last quarter, and a huge rise in inappropriate and punitive sanctions attached to social security payments since the benefit sanctions regime was introduced at the end of 2012. Members may not be aware that 5% of jobseeker’s allowance claimants are sanctioned every month for at least a month. Half of them do not even know they can appeal against that, let alone that they have to keep signing on to remain on the unemployment register. Five per cent. of 1.17 million JSA claimants equates to 58,500 people; we can get the picture from that.

A constituent came to see me who was a special needs teacher who had been made redundant in his late 50s. It had been suggested to him that he became a bingo caller, but he had to travel 70 miles to do that. There is real deskilling of a skilled work force, along with graduates undertaking non-graduate-level jobs. My hon. Friend mentioned the 900,000 young people who are long-term unemployed. A recent report talked about a hidden talent pool of young people. A total of 2.46 million—two in five—young people are unemployed, inactive, underemployed, in a voluntary job, in a Government scheme, or a graduate in a non-graduate role. It may be described as hidden talent, but I would call it a waste of talent.

As I have said before, the impact on these young people cannot be measured only in financial terms. The long-term implications for their future are very significant. A recent report by the Prince’s Trust showed that one in 10, or 100,000, unemployed young people believe they have nothing to live for, and that increases to one in five of those who have been long-term—

Alison McGovern (Wirral South) (Lab): My hon. Friend is a respected member of the Work and Pensions Committee, so is she aware, as I am, that the DWP published its own report on the future jobs fund showing that it did tackle some of the crisis of self-respect and self-esteem that she is talking about?

Debbie Abrahams: My hon. Friend makes an excellent point. Yes, we need to be very clear about the interventions and programmes that can make a meaningful difference. I am sure that what we are suggesting in place of the youth contract, which is clearly ineffective, would fit the bill.

The report said that one in five young people who were long-term unemployed felt that they had nothing worth living for, and one in three felt suicidal. There is a moral imperative to act, not just an economic one. We cannot continue like this—it is completely unfair on the lives of these young people, in particular.

All this is happening at the same time as the top rate of tax has been cut for people on incomes of more than £150,000. As we have heard, bank bonuses are increasing again. Top-to-bottom pay ratios for the FTSE 100 stand at 300:1. We look at this in the context of the average family really struggling, with wages down by £1,600. The IFS has shown that since 2010 the average family has lost income of £974 a year.

The recent Oxfam report, “A Tale of Two Britains”, highlighted the growing gap between rich and poor, whereby the five richest families in the UK are wealthier than the bottom 20%, equating to 12.6 million people. Rafts of reports from the Equality Trust and others describe this situation. That gap matters, because overwhelming evidence shows that society as a whole benefits from more equality through better life expectancy, mental health, social mobility and educational attainment, and reduced crime—everybody gains. There is international evidence to support the existence of all these benefits.

I launched an Oldham fairness commission last year, to tackle inequality in my constituency. The commissioners are looking at inequalities in education, employment and income. We find it unacceptable that, in this day and age, someone who is white, able bodied and male is more likely to be in work than someone else with the same qualifications, and that a third of the jobs available in Oldham are paid below a living wage. That is not the way in which to achieve a sustainable economic recovery.

If we address inequalities and the gap between the rich and the poor, our economy will benefit. Overwhelming evidence from the International Monetary Fund and Nobel prize-winning economists such as Joseph Stiglitz shows that inequality causes financial instability, undermines productivity and retards growth.

New clause 5, which seeks to publish the receipts from the existing bank levy scheme, would help to show exactly how much we are contributing to narrowing the gap between the rich and the poor. We believe that it will show, yet again, the Government’s lack of commitment. They are not just indifferent; they are propping up the status quo.

Our jobs guarantee will give hope and opportunity to young people and those aged 25 and over who have been unemployed for more than two years, whom this Government have clearly abandoned. We will work for a one-nation Britain, not the two Britains we are enduring under this Government.

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