Jobs and Business

Part of the debate – in the House of Commons at 9:34 am on 10 May 2013.

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Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills 9:34, 10 May 2013

It is not complacent to acknowledge the extent to which we have serious problems, which is where I started, or to compare the country with economies that are suffering similar problems. For those who are rightly focused on unemployment among young people, the simple truth is that long-term youth unemployment rose by 40% in the boom years when the Labour party was in power. Labour Members are therefore not in a strong position to lecture us on how to deal with it.

We have focused on two policy areas to deal with the problem of youth unemployment. I am most closely involved in the growth of apprenticeships and my colleague, the Secretary of State for Work and Pensions, will talk about the other. We have all embraced apprenticeships, including, rather belatedly, the Opposition. There is a recognition among employers and young people that it is an excellent model for training. Under this Government, the number of apprenticeship starts has increased by 86%. There were 160,000 last year. There has been a 42% growth in the number of young people starting apprenticeships. We are making reforms that will improve the system further, notably the employer ownership system, under which apprenticeship training will be channelled through employers so that there is the demand for real jobs. We are also introducing a staged approach through traineeships, so that young people have a route into proper training.

A difficult area is that what has kept unemployment down in the UK is the fact that real wages have not risen. Indeed, they have fallen. That was the main focus of attack from the Leader of the Opposition. We need to understand and explain what has happened. The British economy was hit massively by the financial crisis. We are a significantly poorer country than we were before that time, although we are now recovering. The impact of that has been felt predominantly through the reduction of wages in real terms.

We are trying to mitigate that impact in two major ways. The first is by lifting low earners out of tax, which increases their disposal income even though their pre-tax income may have fallen. The effect of that is that people on the minimum wage are paying half the income tax that they paid before we embarked on that reform. We have also taken 2.7 million out of income tax altogether. Secondly, and this is my direct responsibility, we have ignored the advice from some quarters to abandon the minimum wage or to dilute it. I have followed the advice of the Low Pay Commission on the minimum wage.

One of the points that the Leader of the Opposition made in his speech—