Local Employment

Bill Presented – in the House of Commons at 4:21 pm on 23rd June 2009.

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Motion for leave to introduce a Bill (Standing Order No. 23)

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Photo of Jamie Reed Jamie Reed Labour, Copeland 5:10 pm, 23rd June 2009

I beg to move,

That leave be given to bring in a Bill to promote the utilisation of local business supply chains and the local workforce in the completion of major infrastructure projects;
and for connected purposes.

I declare an interest at the outset, in that my father and brother co-own a small construction company in my constituency, in which I have no involvement or financial interest whatever.

The Bill would aim to ensure that local people and local businesses received maximum benefit from major privately funded infrastructure projects and Government-funded investment programmes in areas such as west Cumbria and other areas of partial market failure around the UK, both now and in the future. It would require large employers to show a duty of care towards the local work force with respect to employment, training and development. Local businesses should also be shown a duty of care by those same public or private agencies when they procure goods and services. Consequently, the Bill would aim to help grow local businesses and to create more jobs and stronger, more sustainable communities. That would result, at least temporarily, in the reduction of externally contracted labour from outside local economies, thereby increasing the number of contracts available to the local supply chain.

The Bill is based on essentially Keynesian principles, because just as we are witnessing a return to what some have called Keynesian economic policy, with market intervention on a national and international basis, so we must now ensure that the same type of policy, with the same intended effect, is introduced at the regional and micro level throughout the country, to ensure that already peripheral regions can emerge from this downturn stronger and better equipped to grow economically. In so doing, we will strengthen our national economy, reduce long-term Government subsidies and bail-outs to areas of market failure, and stop the overheating of the south-east economy.

The Bill is not meant to be anti-competitive. It would not seek to prohibit competition or create a closed shop for either local work forces or local businesses—to do so would prohibit opportunities for local people elsewhere in the UK and across Europe. However, the Bill would aim, wherever possible, to put local small and medium-sized enterprises at the top of the list for services required by major public and private agencies. The Bill would also aim to put local people at the front of the jobs queue.

There will always be a need for workers with certain skills and abilities from outside particular areas to find work in those areas, and in many ways it is important that they should. Our magnificent NHS is proof of that. Far from being anti-competitive, the Bill would aim to introduce market interventions—a correcting hand—to ensure that the whole country can fairly compete in the free market. The Bill would seek to do that by growing local economies through placing a legal obligation—a duty of care—upon major investors and public and private agencies to employ as much local labour as possible, to train local labour where skills gaps occur and to create indirect employment through the targeted use of local business supply chains. At the heart of the Bill is a presumption not that the free market is wrong, but that too many of our people and our communities cannot enter it.

There could hardly be a more propitious time for the introduction of such a Bill, given the recent industrial unrest surrounding the employment of foreign nationals in some workplaces around Britain. However, before making clear the inequities that this Bill is designed to address, it is important to state what it is not. It is not a Bill designed to stop the skilled employees whom we need coming to this country. However, it is a Bill that would seek to further the aims of social justice, develop more responsible business practices, including the effective development of genuine corporate social responsibility, help to secure full employment in our communities, help to develop a more progressive and engaged relationship between business, the Government and trade unions, and underpin the economic regeneration of those communities experiencing market failure, through progressive employment practices and the development of a duty of care on major public and private agencies towards the communities in which they operate.

The background to the Bill is simple and can perhaps best be seen through the prism of my constituency and the experiences of my constituents. The Sellafield nuclear facility is the largest employer in my constituency and perhaps the largest in the whole of west Cumbria. In truth, it is perhaps the largest employer of its size in any industry anywhere in our islands. The site employs approximately 11,000 people directly and a further 5,000 in the local supply chain. The annual budget for operations at the site that is provided by the taxpayer is about £1.3 billion. Less than half that money is spent locally, meaning that the unique work undertaken in my constituency in the service of this nation does not provide anything like full employment, either directly or in the businesses that comprise the supply chain. In fact, if more had been spent locally historically, it is unlikely that the area would now require such economic regeneration.

Sellafield's THORP—the thermal oxide reprocessing plant—is a multi-billion pound facility that is still the largest yen earner in the British economy. Adjacent to the site—literally only a few miles away—are pockets of severe inter-generational unemployment, worklessness and much else. That is morally wrong. That point is historically important, but far more important is the immediate future of my constituency and scores of constituencies like it up and down this country. During the construction of THORP, a heavily contractorised work force from all over the United Kingdom created an unsustainable spike in the local economy. Neither the rise nor the fall of the spike was properly planned for. Consequently, the local economy overheated and, once construction came to an end, the spike rapidly disappeared, leaving a deflated economy and an enfeebled supply chain.

With the real prospect of nuclear new build in my constituency, in addition to the building of a £100 million acute district hospital, a new £25 million academy school and new health centres and dental surgeries, as well as multi-million pound school improvements, universities, laboratories, community hospital refurbishments and more, it is essential that the mistakes of the past are not repeated. The remedies that the Bill offers are suitable for many areas of the UK, particularly given the accelerated public spending programme now under way.

The external servicing of contracts such as these from companies outside the local economies in which the investments are made will, if left unchecked, strip smaller, isolated economies of the full economic benefit of public and private investments. In turn, this makes it impossible for these areas to grow their industrial capability and capacity, either in their skills base or in the strength of their local business supply chain, making it unlikely, if not impossible, that these same entities could ever compete for contracts within their own local area, let alone outside it.

The Bill intends to ensure that, apart from in exceptional circumstances, companies working locally must exhaust the local labour market before attracting external labour, whether from outside the immediate locality in which investments are being made, or from outside Britain. The same opportunities should be afforded to companies in the local supply chain.

The reasons for these measures are compelling. Put simply, many of our communities, rural and urban, can be classified as areas of market failure. The further away from major economic centres and communications arteries these areas are, the more likely it is that their economies rest on public investment, either in the shape of subsidy or in the shape of universal public services such as schools, hospitals and local government. Let me be clear: 10 years of unprecedented public sector investment have delivered stronger economies, improved services and better standards of living. By and large, however, these investments have not solved what is in many cases decades of market failure. The tensions are obvious, even before one takes into account the likely pressures on the public finances over the coming years. The communities concerned do not want to rely on the largesse of Governments, and Governments of any type do not wish to provide an indefinite subsidy to areas that, in some cases, show little sign of sustainability.

One of the best analyses of the situation facing such communities was articulated by Robert Kennedy as long ago as 1968. When illustrating the problems facing the urban poor in the United States, he wrote:

"A realistic plan must also begin with a perspective: that the building of self-sufficiency and self-determination within the communities of poverty themselves is critical."

In charting the fundamental role of employment in combating poverty and economic under-development, he also wrote that

"welfare workers, or higher welfare payments, cannot confer self-respect or self-confidence in men without work".

Kennedy went on to chart the importance of this factor in the collapsing family unit in areas of poverty, but the point is that, in the same way that unemployment affects individuals, the culture that it creates affects whole communities—even whole regions of this country. Government programmes by themselves are not the answer to these problems. For markets to grow, take hold and work, economies need businesses that are not only flexible and responsive but socially responsible.

It is clear to all of us—whether we are buying milk from the local supermarket that has come from hundreds of miles away and not from the local farm, or whether we are watching gangs of contractors leave factories and employment sites in areas where unemployment exists close to those places of work—that when we allow the building blocks of wealth creation to be taken away from local economies, those economies begin to crumble and their dependency on the state grows.

There are times when it is clear that external labour is required and should be welcomed enthusiastically, and there is a variety of different situations in different local economies when such arrangements work successfully and to the benefit of those localities. However, there are also times when a duty of care must be shown to local work forces. Stopping foreign labour entering the UK entirely would seriously damage our economy and lead to thousands of overseas UK workers being thrown out of jobs, as well as damaging the UK's competitiveness and skills base. We now need to develop a more sophisticated and effective programme of economic development and job creation. Many of our communities need it, the times demand it and the Bill would help to facilitate it.

Question put and agreed to.

Ordered,

That Mr. Jamie Reed, Andrew Gwynne, John Mann, Phil Wilson, John Robertson, Tim Farron, Albert Owen, Mr. Richard Caborn, Malcolm Wicks and Lembit Öpik present the Bill.

Mr. Jamie Reed accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 October and to be printed (Bill 120).

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