Closing down the pension schemes

August 19, 2009

Do you share my concern at the way in which Final Salary Pension Schemes are being closed to new members and now in some cases to existing members? These are schemes which have helped so many of today’s pensioners to enjoy a comfortable retirement. Companies in a recession may see closure as a quick way of showing they are keen to cut costs and we can understand that. But it is time it was realised that future living standards for the retired will fall, unless action is taken. Since there is little sign of working age people increasing their saving for retirement and employers are ducking for cover, the future is likely to be employees and companies paying for decent living standards for the retired through higher taxes.

The Government has no stature in discussions with employers about how to fashion a way forward for Occupational Pensions, because Gordon Brown’s 1998 Pensions Raid ending the dividend tax credit took £5 billion per annum out of Pension Schemes. Having plundered the Pension Funds himself, he can hardly take the high ground now and his poor stewardship of the nation’s finances has led to Britain’s weak position in the current recession.

His Party was also involved in rubbishing the idea of a funded national state pension scheme with money set aside and invested to help pay future pensions at a higher rate, rather than solely relying on today’s workers’ national insurance payments to pay today’s state pensions (Pay As You Go). This idea was supported by Conservatives and enlightened Labour thinkers such as Frank Field. In Canada the Canada Pension Plan has money set aside to pay for future pensions.

We are all pinning our hopes on better up-rating of the state pension in line with earnings, reform of the State Second Pension and the new Personal Accounts, but I believe we will come back to two issues. We need to look at ways of making Occupational Pension Schemes fairer for employers, but without employees losing the security of a pension which gives a defined benefit and we need to look again at the idea of setting aside an investment fund to pay for better future state pensions.

Local businesses pulling through the recession by pulling together

August 12, 2009
Oliver with Chief Executive Tim Hutchings and Yolanda Rugg

Oliver with Chief Executive Tim Hutchings and Yolanda Rugg

I have just come back from a breakfast meeting with the Hertfordshire Chamber of Commerce and Industry at the Letchworth Hall Hotel. The Herts Chamber of Commerce has a good reputation founded upon these sorts of events which give the local business community the chance to get together and network. As their guest speaker my speech mainly covered the challenge for Letchworth of achieving growth while unemployment is rising, but I also described the effect of the recession on the skills gap and the the challenges faced by the High Street.

I believe that Letchworth is well placed for business success. Despite the recession, local businesses have responded to the challenge and as a result we are slightly ahead of the rest of the country in unemployment levels. I pointed to recent redevelopments such as at Spirella, North Herts College, the Cinema, Nexus House and the Broadway as a good platform for further planned development at the Wynd and Eastcheap.

As a Garden City, Letchworth has a strong sense of civic and community spirit that has led to many Garden City firms doing business together. Speaking to local business leaders I was reassured by their strong sense of pulling together and their commitment to growing out of recession. This local network of business contacts really helps local businesses to grow and therefore helps local employment too. The Chamber of Commerce, the Heritage Foundation and North Herts Council all play their part in making the Garden City business friendly too.

Letchworth wants to remain true to its principles, without becoming a museum. Events like the business breakfast this morning show that the town has done just that. It is open to business and keen to play its part in the future. Economic development and regeneration have always been at the core of the Garden City vision and still are. Despite the recession, Letchworth has a strong business future.

Apprentices losing their futures

June 30, 2009

I was shocked to hear from the Construction Industry Training Board (CITB) that 2000 apprentices have been “displaced” i.e. lost their jobs and thus their training. Imagine the national outrage if a university with 2000 students lost their courses. CITB have done well to place about 40 per cent of the apprentices, but you do have to ask if Government should not have a scheme to enable displaced apprentices to at least finish their training regardless. I have suggested this and will continue to press the case.

Allegations against recruitment companies

June 30, 2009

I have been shocked at allegations that recruitment companies employed by Government have been defrauding the system by forging signatures to show that work has been done when it has not. These allegations need to be investigated by the National Audit Office and those found to have misbehaved should not have Government contracts. I agree with the tough line of our Work and Pensions’ Select Committee Chairman Terry Rooney. Well done Terry!

Today’s bad news on unemployment

June 17, 2009

The Office of National Statistics Labour market stats are out today. Despite the Government-funded Economic and Social Reform Council’s report earlier last week saying that we were out of recession, today’s outlook is very concerning. Official figures show that unemployment has hit 2.26m and that the jobless rate has risen to 7.2% – the highest since July 1997. This means that the last few months have seen the biggest fall in employment on record.

Even more worrying is that the unemployment rate for 18-24 year olds is now at 16.6%. Unemployment is a scourge for young people. To have young people, with their hopes for the future, unable to find work and even facing the prospect of long-term unemployment, is bad news for Britain. We want better Government help for apprentices so that they can continue their training even they lose their jobs. We must also find opportunities for them to work so that their newly acquired skills do not get rusty.

Tomorrow’s budget

April 21, 2009

What the Budget must do above all is to explain how Britain will get back onto a stable financial footing in the medium term – in short, how to reduce the massive Government borrowing to a manageable level by no later than 2015. Let’s hope we do not get another disappointment like the pointless 2.5 per cent VAT cut we had in the Chancellor’s mini-budget in November. I expect they will try to put off the tough decisions until after the General Election.

Conservatives are still calling for more help for businesses and more skills training. Companies need to be able to borrow money responsibly and the Government has still not implemented a proper Business Loan Guarantee Scheme as Conservatives have urged right from the start. Job losses have a direct impact on training for the future, many apprentices now face the sack. We cannot afford to lose these skills for the future. The Government must come up with a package to help young people obtain the skills they will need and to help the apprentices, as Conservatives have pledged. We need to improve job skills during the recession so that our labour force is ready and able to meet the challenges and opportunities of the future.

The PM’s Pre-Budget Gambit

April 21, 2009

It seems to me that the decision by the Prime Minister to make an announcement about MPs’ allowances the day before the Budget is a strange coincidence. MPs’ expenses are such a big issue in the papers right now that the Prime Minister may well be hoping that this will deflect attention away from the bad news the Budget will bring. This Budget will show massive borrowing by the Government, the biggest-ever rise in unemployment, the longest recession since the War and that all previous Government predictions were wrong, so the Prime Minister will be desperate to draw people’s attention away from it.

I certainly agree that reform of the allowances’ system is needed and I have long supported more transparency and better audit, but I am surprised that his announcement has been made just 3 days before the start of the Inquiry into Allowances he requested.

Train to Gain Wake up Call to Government

April 8, 2009

The April CBI Skills’ survey is a Wake up call to Government pointing to a lack of quality in their flagship “Train to Gain” programme, which should be making more of an impact on businesses. In the House of Commons I raise regularly the need for the right quality of training and support.

Local employers tell me how vital it is to use the recession to train our workforce, because the jobs of the future will require higher levels of skill. This is true for those both in and out of work. Employers want more out of staff training during the recession to help their businesses survive.

The April CBI/Nord Anglia education and skills survey, ‘Emerging stronger: the value of education and skills in turbulent times’, shows that in response to the recession, over half of employers (51%) say that they want to target their training more effectively to “ensure they are better placed for an upturn when it comes.” (CBI’s Director-General, Richard Lambert)

42% of employers using Train to Gain say it has delivered ‘no impact’ for their business, and three-quarters rated its training brokerage service as ‘poor’ or at best ‘mixed’. While Employers support the principles behind Train to Gain – skills advice and access to funding for their staff on nationally accredited training courses – it is clearly not delivering.

Recent government figures on the performance of Train to Gain show the biggest increases in employer demand was for Level 3 training. This brings me back to the point I have made regularly in the House of Commons, that quality of training is vital. Apprenticeships used to be at Level 3, but many have been downgraded by Government to Level 2. Yet, it is the Level 3 qualifications which reduce job risk and bring higher pay.

So, the message to Government is -Wake up and raise the quality of training and “Train to Gain”.

“Back to the Future” for apprenticeships

April 6, 2009

I have been saying for some time in the House of Commons that the Government needs to wake up to the realities of the recession when it comes to employment policy. Many current policies are designed for the recent world of jobs’ growth and plenty, not the current reality of rising unemployment and sparse vacancies.

A key to this is to realise that short-term job losses in the recession will hasten the long-term process outlined in the Leitch Report by which unskilled jobs are lost. We need to use the recession to ensure that our workers are better trained and skilled, particularly in the new business areas which will expand, such as new green businesses.

Many newly unemployed workers are very employable and will be back into work quickly, but there are others who have not found job search difficult in the past, who will struggle, because their skill levels are too low in the new environment. Jobcentre Plus and the Learning and Skills Council need to integrate their activities as never before.

A particular problem will be how to keep newly-learned skills fresh while searching for work. Practising the skills is important. The government like to claim that the Conservative governments of the 1980s “did nothing” about unemployment. Whilst not all the employment initiatives were successful, it was a period when many new ideas were tried and it was the effective start of active Labour Market measures. Some schemes were simply overwhelmed by the numbers involved in the recession of the early 1980s and quality suffered, but many of the ideas tried at that time have been built on and improved.

I was therefore pleased to see that the Association of Learning Providers is putting forward a “new proposal to re-design a successful initiative utilised in a previous recession, update it and indeed improve and develop it to a significantly higher level of effectiveness.”

They are referring to the Community Programme, which they describe as “so successful in the early ’80s”. The programme created tens (probably hundreds) of thousands of real jobs, predominantly in the voluntary sector, undertaking tasks of general community benefit. Typical projects involved extensive work for the National Trust and other ‘environmental’ bodies, the development of previously unusable sites and buildings, gardening and domestic security installations for older people, etc.

They believe the availability of high quality, employer designed Apprenticeship training frameworks gives the opportunity to offer high quality, relevant vocational skills for unemployed adults, linked to programmes of general community benefit. This “upskills a large body of potential workers, ready for instant availability for employers when the economy picks up.”

I particularly like the idea that green business and energy saving skills, with their socially desirable benefits, could be taught and practised and this would be a direct investment into future profitable ‘green enterprises’.

I hope the Government will look at this innovative idea, even though it is a new take on a successful Conservative employment programme of the 1980s.

Insecurity from Cradle to Grave

March 20, 2009

Labour’s New Take on Beveridge

There is a danger that all the Government’s efforts to bolster the economy will be engulfed by rising unemployment and the collapse in consumer confidence. We hear a lot about business confidence, but it is consumers who buy the goods and services and if they are so frightened that they stop spending, the situation plummets ever faster downwards.

When President Franklin D Roosevelt (FDR) was inaugurated on 4th March 1933, it was against the background of the Wall Street Crash and the deepening Depression. His famous speech on the theme “the only thing we have to fear is fear itself” outlined that his central aim was to rebuild consumer confidence and he succeeded. He was a new leader and he demonstrated firmness of purpose with a clear sense of direction and optimism, although I should say that a lot of the myths about FDR’s New Deal are wrong. The Americans did not have many shovel-ready New Deal schemes—to use the jargon of the time. But people believed that at last there was a workable plan and steady leadership and confidence returned leading to a revival of fortunes. When we look at the problems of the 1930s and what President Roosevelt did, we find that confidence was right at the heart of what he achieved.

How can you have confidence in Britain’s current leadership? In the Brown Recession, Government bungling has led to a sense of insecurity for all ages. How ironic it is, given Labour’s history, that their new take on Beveridge seems to be ‘Insecurity from the Cradle to the Grave.’ It’s not just that they contributed to the crisis by their raid on pension funds, failing to regulate the banks properly, by borrowing too much and encouraging the public to max out on credit, it’s also the drift over Northern Rock, the inadequate rescue packages for the financial system and the mess over Sir Fred’s pension. It all looks like an amateur production and the impact hits all ages, damaging confidence.

A child born today is already saddled with £17,000 of Government debt. Youth unemployment has risen since 1997 and long-term Youth unemployment will rise faster during the recession. Fathers and mothers face massive job losses. The most recent month’s rise in unemployment at 0.5 per cent is the worst on record. Experts expect unemployment to rise from 2 million to over 3.1 million and reach the highest ever level within a year or so. Yet, the Government just does not get it. The night before the dreadful figures were released, James Purnell MP, Work and Pensions Secretary was reported in the Evening Standard as saying that unemployment was rising more slowly than in the previous recession. Over 500 Jobcentres have closed in recent years and the Government is not ready for the unemployment challenge.

As jobs go and credit is tightened, home repossessions are rising. In my local County Court, the number of Court days available for repossession cases has trebled in recent months.

With very little return on savings, pensioners are badly hit and pension funds’ losses on the Stock Market are worrying for those about to retire. Many may have to look to the Pensions Protection Fund for help if their employers go bust. The Woolworths’ scheme may already be heading in that direction. Over coming months some of our largest pension schemes will have their three-yearly valuations and there will be big deficits. We must just hope that these do not push more companies under or lead to levies on good pension schemes to meet the losses of the bad. The Government has promised to make more substantial increases to the State Pension in the future, but no one knows when. In the meantime they keep using sleight of hand to subtly reduce benefits whilst simultaneously announcing generous sounding increases. So, this year we have seen the Savings Credit cut back, National Insurance Contributions increased, the Carers’ Allowance earnings threshold frozen and no proper recognition of the true rate of inflation for pensioners.

And the actions of Government have been baffling. How can the Government adopt the rhetoric of FDR – New Deal-style infrastructure projects and all – and then suspend 100 of the FE Colleges’ building schemes? At North Herts College they have a “shovel-ready” building scheme with builders ready as promised and now it’s on hold with no visible strategy for the way forward. Many are suggesting that we could tackle fuel poverty and provide energy and environmental benefits by undertaking insulation and Green energy projects, but the Government has rejected the proposals.

We have heard much from Government schemes about how they will help business, such as the Working Capital Scheme, their loan guarantee scheme, jobs schemes, mortgage help schemes, but none are delivering as they should and many have not even started months after the press announcements.

Since November, Conservatives have been calling for a substantial Loan Guarantee Scheme to help small and medium size businesses secure the credit lines they need to retain jobs and stay afloat. The Government have promised to do something, but months later there is no action on the ground. This just will not do. Every month that passes means businesses and jobs lost and confidence eroded. The danger is that with all ages fearful of job losses, home repossessions, incomes in retirement and a slow unsteady Government response, the situation will continue to go from bad to worse. The time has come for new leadership in Britain and a real sense of policy direction coupled with the ability to get the job done. It’s time for the Conservatives to undertake our historic mission of clearing up the mess left by Labour.


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