National Insurance Contributions Bill

Part of the debate – in the House of Commons at 5:20 pm on 4th November 2013.

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Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East 5:20 pm, 4th November 2013

We do not know that that policy would have taken jobs out of the economy, because we did not have the opportunity to implement it.

Another issue that is subject to repeated predictions is jobs. The number of new private sector jobs is constantly being put at about 1.4 million, but, interestingly, in January 2011 the Government were already saying that 500,000 jobs had been created. It is clear to anyone that even if those figures are accurate, and even if factors such as the re-categorisation of jobs into different sectors are taken into account, the pace of job creation is not quite as dramatic or as effective as we might think.

We were told that the earlier proposal for a national insurance holiday was intended to create jobs. The fascinating aspect of that was the very low take-up. If all those new employers had set up new companies and provided new jobs, why did they not want to take advantage of it? Why did so few come forward? That surely casts doubt on the notion that numerous people were desperate to start up new businesses and to take on employees. In December 2012, there were only 20,365 applicants for the scheme. The Minister has told us that eventually there were 26,000, but the initial prediction was 400,000. There is a considerable difference between those figures.

It is not surprising that the Minister was reluctant to respond to interventions from his own Back Benchers and to say what he thought might be the outcome of his current proposals, because he knows how poor earlier predictions have been. It is not just in respect of the national insurance holiday that predictions have been wildly at odds with the reality. For example, the youth contract, which involved offering money to employers to take on people aged between 18 and 25, was apparently going to be one of the major answers to youth unemployment. It was designed, we were told, to help 53,000 young people per year. However, in the first year of its operation it helped only 4,690. That was another not very successful policy that we had been asked to believe would help people in an important way. In that context, I think it significant that only last week the Work and Pensions Committee heard from the CBI that it would have liked to see extra money for training, rather than cash incentives for employers to take on young people. Perhaps the Government should listen to what people think would help create jobs.

The Institute for Fiscal Studies has pointed out that the current proposals do not guarantee any additional jobs and that this is simply a tax cut. A tax cut may be beneficial and may bring about more jobs, but in itself it will not necessarily do so. Again, I would point to the previous record. The IFS says we do not know whether this proposal will have any effect on job creation as it will not be piloted and will be almost impossible to evaluate, and that we will therefore be unlikely to know whether it will be money well spent. We must bear in mind the previous history, which I have mentioned, of two schemes that both failed to help create employment, and we must ask the Government to monitor and evaluate this new proposal as much as they can if they are going to introduce it.

The Government must realise that the creation of jobs is extremely important for many parts of this country. Many Government members and Back Benchers have expressed pleasure at the reductions in unemployment in their own constituencies, which is all very well, but unemployment levels in many parts of the country are still extremely high. What is even more important for many people is the lack of quality jobs and the fact that they often cannot work the number of hours they want to. We currently have the highest recorded level of people working part time who want to work more hours. That means people have low incomes and are often dependent on top-ups from Government benefits.

The Government sometimes wonder why things like housing benefit keep going up rather than down, despite the reforms they put in place. The main reason is that people in part-time, low-income jobs on zero-hour contracts have no choice but to apply for such benefits, so even the jobs that are out there are often ones that leave people with a cost-of-living crisis. That causes real suffering, and there is no point in pretending otherwise.

I ask the Government to indicate the likely take-up of this scheme—reluctant though they are to do—and to accept that their previous measures in this field have not been successful. Three years on, their initiatives have simply not been successful, and we see the results in the state of our economy today. Of course it is good that growth is beginning to return, but such low-level growth after such a long time can hardly be hailed as a success. If we want to argue about whose predictions were right, perhaps, at best, we have to say that nobody’s were. The Government’s predictions on coming to power in 2010 were certainly not borne out, and people have been suffering the results of that in the past three years.