In the Pre Budget Report, the Chancellor set out our three-point plan to:

1)     secure the recovery and go for growth

2)     take tough choices necessary to halve the deficit in four years

3)     protect vital frontline public services

 After the worst economic crisis in 60 years, and a deep and painful recession, it is vital that Government’s actions are decisive. That way, we reject the decade of low-growth and austerity the Conservatives offer, and set out instead how we can have a richer and fairer country, built on thriving industry and first class public services.

Today Labour shows we have both the values and the experience to get this right. We extend support to those still coping with the effects of recession and announce new measures for growth. And we make tough choices on tax and spend that allow us to halve the deficit while protecting our top priorities: the NHS, Schools, Childcare and Police.

Our actions will not be painless, but nor will they be reckless. This is a balanced package that is the best economic approach for long term stability and above all, fair, in line with Labour values.

The Conservatives would give unfunded and unfair tax cuts to the wealthiest – including a giveaway of £200,000 to each of the 3,000 wealthiest estates. And they would hit the mainstream majority hard to pay for these tax cuts – scrapping Labour’s patient guarantees, including a guarantee for patients suspected of cancer to see a specialist within two weeks. Scrapping the Child Trust Fund for those on incomes as little as £16,000 and cutting Child Tax Credits for those on modest incomes.

The Tory proposals to start cutting now and to cut deeper are dangerous. Their plans risk choking off the recovery before its secured. Yet they refuse to come clean on how fast they would cut. But if they halved the deficit in 3 years instead of 4, they would need to find a further £26 billion – equivalent to over half the schools budget or a VAT rise of 5.5p. They are not being straight with the British public. In 1992 they promised no new taxes before an election – and then hit middle Britain with 22 tax rises once they got in.

Summary of Key Measures

Secure Recovery & Go For Growth

Today, Labour has shown it is the only party in British politics that puts securing the recovery first and introduces new measures to stimulate economic growth  

·        We will continue support to keep people in work and in their homes by:

§         Guaranteeing every young person out of work for more than six months with a job, training or college place; and a new Better Off in Work Credit to make work pay

§         A freeze on the standard interest rate for Support for Mortgage Interest Payments (SMI) for a further 6 months to help those who have lost a job or income stay in their homes

§         National rollout of the Money Guidance scheme to give financial advice to over 1 million financially excluded in the 12 months from March 2010

·        We will continue support to businesses manage tough times by:

§         continued support for the economy and continued efforts to get lending flowing again such as Customer Charters at RBS and Lloyds which improve lending to SME’s

§         extend the Enterprise Finance Guarantee scheme until March 201, worth another £500 million of loan guarantees to SMEs, on top of the £1 billion 8,800 SMEs to date; extend HMRC’s Time To Pay scheme that allows firms to defer tax if needed;

§         new help for Mutuals and for Islamic Finance

·        And we announce new measures that “go for growth”:

§         Supporting small businesses by freezing small business corporation tax at 21% and launching the Growth Capital Fund for SMEs which will give them new access to finance

§         A new £400 million “green growth” package that will create new industries and new jobs by including money for infrastructure, offshore wind, carbon capture and storage and electric transport. This also means more money for Warm Front and a new Boiler Scrappage scheme where people can trade in energy inefficient boilers and get £300 off the cost of a new green version

Halve the Deficit in Four Years

Today Labour has shown it is the only party in British politics with a proper plan to halve the deficit as opposed to the reckless and evasive position of the Conservative Party. The Chancellor announced:

§     A tax rise package that is fair, meaning that combined with the last Budget and PBR over half the additional revenue raised comes from the wealthiest 2% of people

o    A one off payroll tax on bank bonuses to deter bumper bonuses

o    A freeze on the Inheritance Tax threshold at £325,000;

o    1/2 p rise in employer and employee national insurance contributions, with higher earners paying more too

§     A spending cut package that has been carefully worked through

o    A below inflation pay settlement across all public sector workers and reform to public sector pensions

o    A series of tough programme measures to tighten our belts such as reforming legal aid, scaling back government support to students from wealthier families, and cracking down on fraud and error in access to social housing

o    New efficiency savings from Monday’s Smarter Government command paper of £11bn annually by 2012/13, on top of the £26.5bn already saved since the Gershon Review in 2004 including cutting quangos, and marketing and consultancy budgets

§     The introduction of the Fiscal Responsibility Act which requires Government to halve the deficit in four years

Protect Public Services

Today, Labour has shown it is the only party in British politics deeply committed to protecting frontline public services by announcing that even in tough times, we will protect in real terms:

§         investment in the NHS frontline in the next 3 years

§         investment in Sure Start in the next 3 years

§         investment in frontline schools in the next 3 years

§         investment in the police which will ensure that the number of police can be protected over the next 3 years

and we will commit whatever funds are required for the war in Afghanistan and fulfil our ambitions on overseas aid.

To listen to or read the Chancellor’s speech in full, or for more detail on the report, go to the Pre Budget Report microsite at: http://prebudget.treasury.gov.uk/

Labour is determined not to repeat the Tory policies of the past which left families and communities scarred for generations. That is why Labour is investing £5 billion now to help people get back to work - £5 billion which the Tories oppose.

If we don’t act now, it will cost us all more in the long term. Labour’s choice is to invest billions in people’s future now. The Tories oppose giving people this extra help and would cut back on the support available to people during the downturn. Unlike the Tories we do not believe that unemployment is ever “a price worth paying.”

Independent experts recognise the disaster the Tories would cause. According to Professor David Blanchflower (former member of the Monetary Policy Committee of the Bank of England), George Osborne’s plans would lead to unemployment reaching 5 million.

Contrary to the claims in Cameron’s speech last night, yesterday the Conservatives voted against greater responsibilities in the benefit system that will help parents into work, and help cut child poverty. They also want to abolish the New Deal for Lone Parents. The reality is they don’t support more responsibilities because they won’t support the extra rights to support that come too. The Tories aren’t serious about cutting poverty or welfare reform.

Today’s figures show that many in the UK are suffering the effects of the recession.  But there are signs that our actions to help the unemployed are starting to work. 

Labour’s active welfare state is working. In stark contrast to previous recessions, people aren’t being dumped on inactive benefits like incapacity benefit, and Government action has helped to protect up to 500,000 jobs during this recession. 

Background to Labour Market Statistics

This month’s Labour Force Survey covers July 2009 to September 2009.  The claimant count and Jobcentre Plus vacancy count dates were 8^th and 2^nd October respectively.

The number of people in work rose this quarter

• nearly 29 million people were in work in July to September.
• employment level in July-September was 6 thousand higher than the previous quarter and 490 thousand lower than in the same quarter last year.
• the employment rate is 72.5%, down 0.1 percentage points on the quarter and down 1.9 percentage points on the year

The number of people claiming JSA has risen this month

• claimant unemployment was 1,639.5 thousand in October 2009, up 12.9 thousand on the level in September, and up 632.7 thousand on the year. 
• the claimant unemployment rate, at 5.1%, is virtually unchanged on the month and up 1.9 percentage points on the year.
• inflows to JSA were 361.4 thousand in October, up 4.0 thousand on the month and up 80.8 thousand on the year. The number of people leaving JSA increased to 333.9 thousand, down 1.3 thousand on the month and up 104.5 thousand on the year.
• In the year to May 2009, the number of people claiming employment support allowance/incapacity benefits rose by 25,600 to 2.6 million.  More recent provisional estimates suggest that there were 2.63 million claimants in September 2009, unchanged on the month but up slightly from the level a few months ago.

ILO unemployment has risen this quarter

• 2.46 million people were ILO unemployed in the July to September quarter, up by 30 thousand on the April to June period and up 629 thousand on the same quarter last year. 
• the ILO unemployment rate is 7.8%, up 0.1 percentage points on the quarter and up 2.0 percentage points on the year.

·        International ILO unemployment: ILO unemployment (7.8%) is below EU average and below that of US, Canada, France and Spain

The number of 18-24 year olds who are unemployed has increased

·         746 thousand 18-24 year olds were ILO unemployed in the July to September quarter, this is up by 24 thousand on the April to June period and up 165 thousand on the same quarter last year.

·         Of the 943 thousand unemployed under 25 year olds, 267 thousand are in full time education.

The level of economic inactivity is up on the quarter and up on the year

• the economic inactivity rate is 21.1%, up 0.1 percentage points on the quarter and up 0.2 percentage points on the year.
• excluding students, inactivity as a proportion of the working age population is unchanged at 15.3% on the quarter but down 0.2 percentage points over the last year.

There are still many vacancies available, and the number of redundancies has fallen back this quarter:

• There were 205 thousand redundancies in June to August, down 63 thousand on the previous quarter and up 49 thousand on the previous year.
• ONS’s vacancy survey estimates an average of 428 thousand unfilled vacancies in the three months to October 2009, down a thousand on the quarter and down 154 thousand on the year.
• In the last month Jobcentre Plus has taken on average over 10,000 new vacancies every working day and many more come up through other recruitment channels.

Labour’s help for people when they need it most

·        As unemployment has increased, Labour has stepped up the support for people losing their jobs - £5bn of extra investment.

·        The Tories oppose this help because they oppose spending any more money to help people through the downturn. Real help costs real money.

Before redundancies happen

We give help to people at risk of redundancy to find a new job, even before they become unemployed through our Rapid Response Service (RRS). Opposed by the Tories.

Day One of Unemployment

We have invested to guarantee that everyone looking for work will get, from day one: help and advice on finding a new job, help to write a new CV and fill in job applications; help on retraining and skills advice; help with their rent and with their mortgage from 13 weeks; help to access to the new vacancies recorded by Jobcentre Plus every working day. We are recruiting thousands of new Jobcentre Plus staff to help people into work. Opposed by the Tories.

From 3 Months Unemployed:

People will get extra help with mortgage payments (SMI) to help them keep their homes when they lose their job. We are giving twice as much help, paid earlier. In addition, we step up the help we give with wider job search and more intensive support from advisers. Opposed by the Tories.

From 6 months unemployed:

We know that the majority of people move off Jobseekers Allowance within 6 months, but we are guaranteeing more help for those that don’t. We are promising every jobseeker more support if they have not managed to find a new job within six months.  As well as extra funds for Jobcentre Plus to allow them to provide more intensive and personalised support, we are offering:

·        “Employers’ Golden Hellos”: incentives of up to £2500 (£1000 in Scotland and Wales) paid to employers to recruit and train unemployed people

·        New training places: extra funding for training places to help unemployed people get new skills to maximise their chances of getting jobs from the 500,000 vacancies in the economy.

·        Work-focused volunteering options: opportunities to volunteer to help people back into work habits

·        Help to set up a business – advice on creating a business plan, plus funding for the first months of trading.

Backing Young Britain

The joint campaign with business, public sector bodies and charities runs over the next few months.  It recognises that times are tough – but calls on everyone to play their part. We want to give young people leaving school or university a chance and to harness the talent of the future for Britain’s organisations.  This will help young people get into the jobs market – and benefit business into the bargain.

We are calling on employers, on businesses and other organisations to make a commitment to support young people in at least one of the following ways:

• work with a partnership to bid for one of the 100,000 jobs for young people from the Future Jobs Fund
• offer a volunteering place or a volunteer mentor for school or university leavers;
• provide work experience places to help young people learn about work, make contacts and fill their CV
• consider a young person for a job through a work trial
• offer an internship for a graduate
• provide an apprenticeship for 16-24 year olds
• join a Local Employment Partnership to make sure job vacancies are advertised to local unemployed people

 Labour’s Guarantee for young people:

·        Labour will protect Britain’s young people from the effects of the global recession by offering work or training for every 18 to 24 year old who is in danger of becoming long term unemployed.

·        We are funding 250,000 jobs in the public and private sectors, including a ‘Future Jobs Fund’ that will enable local authorities and third sector groups to develop innovative ideas for jobs that will make Britain a better place.

·        The Future Jobs Fund will provide 150,000 new jobs, at least at a National Minimum Wage level, around two thirds of which will be directed at young people. The remaining jobs will be focussed at areas of particularly high unemployment.

·        The Fund is already open for business and we are working with councils and voluntary groups on developing new jobs through the fund and, by January next year, every 18 to 24 year old who is approaching 12 months unemployment or more will be guaranteed a new job, training or paid work experience place.

·        We are calling on every local authority, voluntary sector and social enterprise to bring forward their ideas of jobs they could offer - we want organisations to come to us with proposals and we hope that bidders can match funds, alongside the £6,700 we will provide.

·        In addition to the Future Jobs Fund we will offer 100,000 jobs opportunities in the sectors of the future that will help Britain grow.

·        Despite the recession, many sectors still have vacancies and others will grow over the coming years. In these areas we will set aside posts for young job seekers and offer them pre-employment training and a recruitment subsidy, so talented young people can take up interesting jobs and gain vital work experience for jobs of the future.

The steps that have been taken to ensure help is available at every stage of the repossession process include:

• ACTION ON ADVICE: The Government is investing £130m in providing free face-to-face debt advice services between 2006 and 2011, and over the past year more than 100,000 families have received information and advice about their mortgages from councils and Citizens Advice Bureaux.

• ACTION ON LENDERS: The Government has taken action so homeowners are treated fairly with tolerance and understanding from lenders for those in mortgage arrears – 116,000 struggling households are now benefiting from special arrangements agreed with their lender.

• ACTION IN THE COURTS: Lenders must prove they have exhausted every possible option before applying for a repossession order. The Government has continued to put funding into Court Desks offering free, on-the-day legal advice and representation for those threatened with repossession. The Government recently doubled the extra funding to support this service. There is now universal access to this service for people attending repossession hearings at county courts in England. Even on the day of a repossession hearing, around four in five repossessions can still be stopped if the households attend court and access free advice.

• ACTION TO PROVIDE DIRECT SUPPORT: Through special Government schemes like Support for Mortgage Interest and Homeowners Mortgage Support over 200,000 families are now getting help with their mortgage interest payments – with another 88,000 expected to benefit over the next two years. For the most vulnerable households facing the immediate threat of repossession, there is the safety net of the Mortgage Rescue Scheme.

The Government payments are designed to:

• Help kick-start families’ saving for their children;
• Strengthen the savings habit of future generations;
• Promote financial education; and
• Ensure that at age 18 every child will have access to a financial asset

 Background

The Labour Government introduced the Child Trust Fund (CTF) in April 2005.

When a child is born, a CTF voucher for £250 is sent to parents automatically once they have claimed Child Benefit.  If a child is in a lower-income family they will also receive an additional £250  (this will go to children in families eligible for full Child Tax Credit  - those with a household income of £16,040 or below in 2009/10). 

It was backdated to cover all children born from 1 September 2002 onwards. 

Children who reach the age of 7 from 1 September this year will receive the second round of Government payments – as announced in Budget 2006.

At the age of 7, each child will receive a further £250 payment from the Government.  Again, children in lower-income families and children in care will receive an additional £250.  Age 7 payments are paid directly into the Child Trust Fund account by HMRC.

When children reach the age of 16, they take control of accounts, allowing them to invest the money as they wish. The money is locked in until they reach 18.  There are no restrictions on the use of the money at 18 - young people are best placed to decide on use. The Government has announced that Child Trust Funds will be able to roll over into an ISA on maturity, enabling young people to continue to save tax-free. 

The Government also provides an extra £100 per year for every child who spends the year in care, in order that their Child Trust Fund provides a more significant asset for them to access on entering adult life.

At Budget 2009, the Government announced that it will contribute an additional £100 per year to the Child Trust Fund accounts of all disabled children, with severely disabled children receiving £200 per year.  Payments will start in April 2010 for children with a CTF account.

Key facts

• Over 4.4 million children have a CTF account.

• The total value of savings held in CTF accounts is currently around £2bn

• Over 700,000 7-year-olds per year will benefit from the age-7 payments that start this month.

• Around three-quarters of parents actively open their child’s CTF account after their child is born. But no child misses out – if parents haven’t used their voucher within 12 months, Government opens a stakeholder account on child’s behalf

• Around one-quarter of children receive contributions from parents, grandparents, family and friends into their CTF account.  Up to £1,200 per year can be saved tax-free.

How much could each child’s CTF be worth when children reach 18?

Together with the Government payments, families saving as little as £10 a month into their child’s account could provide their child with a nest egg of an estimated £4,500 at age 18.  This will be even higher for children in families with low incomes or for disabled children, who receive extra contributions from the Government.

An online calculator is available at www.childtrustfund.gov.uk

22 October 2009

This time last year, the world banking system and the global economy were staring into the abyss

We took action.  We stepped into support our economy and led the global response through our leadership of the G20.

The action we took is working, although the job isn’t finished yet.  Without it, another 500,000 jobs would have been lost.

·     We cut VAT and income tax to help people and support the economy

·     We gave 150,000 businesses more time to pay their tax bills

·     We put in place the measures that have helped 300,000 people stay in their homes

 We must support the economy now and until recovery is secured.

 We have set out how we will half the deficit over four years once the recovery is in place and how we will plan for future growth.

 Throughout the crisis, George Osborne and the Conservatives took the wrong judgements:

·     Opposing the fiscal stimulus and measures to support to the economy and families

·     Pushing for deregulation of the mortgage market as the crisis began

·     Voting against the Banking Bill and would have let Northern Rock fail

·     Now, they are isolated here and abroad in calling for support to be withdrawn before the recovery is secured

 They are a risk to the economy.  If they had had their way, the recession would be deeper and longer, with higher unemployment and more debt.

Tories have been wrong on the recession and wrong on the recovery.

 Our Approach to the Economy

 We took action to prevent a global recession becoming a global depression

The global economy is predicted to shrink this year for the first time since World War II. 

This time last year, we faced a collapse of the banking system and the threat of the global economy falling into depression.

 We have led the international response to the downturn, and under our Presidency the G20 has taken unprecedented action to deliver commitments made at the London Summit in April. The stimulus measures implemented by the Government and the Bank of England in response to the global downturn are working.

We have taken action to support people and businesses.  We’ve put an additional £1bn each month into the pockets of families and retailers by cutting VAT; we’ve cut taxes and given 150,000 firms more time to pay their tax bills to help them survive; we’ve helped 300,000 people with their mortgages to help them stay in their homes. Together, action taken by the Government and Bank of England Together is supporting up to half a million jobs.

 There has been a cost to stepping in, but not doing so would have cost us more – by damaging our economy for years to come.

 If the Government had not taken action, many more jobs would have been lost, more families would have lost their homes, and more businesses would have closed.

 We are continuing to act to secure the recovery

Whilst the fiscal stimulus is temporary, the situation in the world economy remains fragile and unemployment is rising here and across the world. We need to continue to support the economy until the recovery is secured. The greatest risk to the recovery is complacency.

We will continue to help businesses and families that are struggling to deal with the impact of the downturn until the recovery is entrenched.

Borrowing to support people now and to invest in the future may feel counter-intuitive.  But in the longer run, it will mean the bills we face as a country are lower, and that we are better placed to pay them off.

 We will rebuild our fiscal strength in the medium return

 Once the recovery is secured, we will need to take action to rebuild our fiscal strength and reduce our borrowing.

 That is why we have already set out a deficit reduction plan that will halve the deficit over four years.

 We will do this in three ways: 

·     raising taxes as set out in Budget 2009 – for example a new 50p rate of income tax for those earning above £150,000

·     taking some tough choices on public spending for the years ahead.  That will mean cutting costs, cutting waste and cutting lower priority budgets, while continuing to invest in our priorities and our future.

·     but there must be a third, and crucial, part of our strategy for the economy – growth.

 Growth is the best way to creating jobs, increasing prosperity and paying down debt

 Not only is growth the best way of creating jobs and increasing prosperity – it is also the best way to earn the money to pay down debt. 

 We reject the Tories’ poverty of aspiration.  We know that wallowing in the age of austerity and refusing to invest, will simply mean that the economy gets smaller, we all get poorer, and even greater and deeper cuts are needed.  We have seen this before – the savage cuts of the 1980s meant whole swathes of our economy disappeared.

 Securing growth means the invisible hand of the market working alongside the enabling hand of government.  We will need to encourage innovation and enterprise, and so far we have:

·     More than doubled the science budget;

·     The most engineering and science PhDs relative to population in the G7;

·     And doubled the money universities make from knowledge transfer and spin-outs.

 But we need to exploit this advantage.

 The new Innovation Investment Fund will focus on investing in start-ups and spin-outs – across digital and life sciences, clean technology and advanced manufacturing. And in the next few weeks, Chris Rowland’s Review will set out how we can support the provision of growth capital for UK firms.

 On skills, Government training programmes have supported millions more to improve their skills. Apprenticeships have more than trebled – with over 2 million since 1997.  But there is still a skills gap with our competitors – and we need to address it.  Next month we will publish a skills white paper, so we can focus on the areas where training can have the greatest productivity impact.

Increasing apprenticeships for young people, training aimed at the high-growth sectors of the future, and raising employer demand for skills.

 Infrastructure is a vital element of growth.  Since 1997, we have increased capital spending and transformed the way we invest.  In transport, nearly 70 major roads and motorways improved since 2001. Increased rail reliability while carrying record numbers of passengers.  But we still need to do more – that’s why we are looking at new high-speed rail links. 

On digital infrastructure, we’re investing in the faster roll-out of next generation broadband to enable new business opportunities – opposed by the Tories.

 And we’re looking at our infrastructure needs across energy, waste, water, telecoms and transport over the next 50 years.  Alongside changes to the planning regime, these steps will encourage private investment and reduce market uncertainty. 

 It’s about government taking real action.  Since the Budget, we have:

·     Extended the scrappage scheme for cars, which has already supported 250,000 deals;

·     Increased resources for the promotion of UK exports;

·     Supported Rolls-Royce to invest in low-carbon R&D, alongside new aerospace and nuclear component factories;

·     Contributed to the £340m Airbus launch investment;

·     Expanded a ground-breaking research centre for printable electronics;

·     And part-funded a biotech demonstrator project.

 It is only by growing and investing in our key sectors that we will be able to deal with the many global challenges of the coming decades.

We are making the banks safer, stronger and better for the consumer.

The break-up of the rescued banks will create three new banks.  It’s the biggest shake up of the high street for a generation increasing competition and benefiting consumers with better rates and services.

The situation has improved largely due to Government action.  We are now announcing the outcome of the negotiations on the Asset Protection Scheme (APS) and the improved structuring of these deals:

o       RBS will participate in the APS under revised terms that improve incentives and deliver better risk-sharing with the private sector.

o       Lloyds will not participate in the APS and instead will raise additional capital predominantly from the private sector, as well as paying a fee to the taxpayer for the implicit protection provided to date. This will reduce the risk borne by the taxpayer, improving value for money; [details of both below]

This is a better deal, reducing the total assets protected by the taxpayer under this scheme by over £300bn

The likely costs to the taxpayer and the risks on the impact on the public finances have been reduced.  Both banks will still be required to meet tough conditions on pay and lending.

• �
  • Legally enforceable Lending Commitments have been entered into, increasing lending to businesses and mortgages by £39bn.

• �
  • Tough rules on bonuses going beyond even G20 rules: No cash bonuses will be paid to any staff this year earning over £39,000.  So staff in branches will be protected.  Executive Board members will have any bonus deferred until 2012 and subject to clawback.

• �
  • Each bank has agreed to publish a ‘Customer Charter’ for lending to small and medium enterprises and will reinforce its commitment to meeting all reasonable applications for finance from viable businesses.

• �
  • A commitment to ensure charging for current accounts and overdrafts is transparent and fair and customers are not overcharged

 Q & A

Why is it a good deal for consumers? 

This is the biggest shake-up of high street banking in decades: delivering better rates and services.  It will bring new entrants into the market (14% market share limit for current accounts and SME accounts).  Existing players like Barclays and HSBC won’t be able to buy these parts of the business being sold off.

Will we get our money back?

That is our intention.  We will sell our shares at a time when we think we can get good value for the taxpayer.

What’s the effect on pay and bonuses?

The new G20 rules are introducing tougher bonus policy for all retail and investment banks in the UK:

• Transparent, variable, and with no multi-year guaranteed bonuses.
• A substantial part must be deferred over a number of years, not paid immediately;
• Subject to claw-back, to ensure pay is aligned with long-term performance;

But we are rightly going even further than these rules for banks we part-own.  No cash bonuses will be paid to any staff this year in RBS or Lloyds earning over £39,000 (so protecting those in branches).  Executive Board members will have any bonuses deferred in full until 2012 and subject to clawback.  This goes much further than the G20 agreement and further than any other banks in the world.

Will this increase bank lending to businesses and mortgages?

The Government is taking action to ensure competitively priced credit continues to be available to business and households through the lending commitments.  In line with this, the lending commitments with RBS and Lloyds Banking Group will mean:

·         For LBG an additional £14 billion to households and businesses on commercial terms over the 12 months from March 2009;

·         For RBS an additional £25 billion, on commercial terms over the 12 months from March 2009.

·         The Government will report annually to Parliament on the delivery of these commitments.

What about next year’s commitments?

Similar lending commitments were made in respect of the 12 months from 1 March 2010 and will be reviewed to ensure that they reflect the economic circumstances at the time.  We are already working with RBS and Lloyds Banking Group to set these targets.

What more can the Government do to increase lending to small businesses?

As part of the APS negotiations, Lloyds and RBS have both agreed a ‘Customer Charter’ on good practice for SME lending. These charters will apply to over 98% of their business customers. The details will be specific to each bank but both charters will:

• commit to meet all reasonable applications for finance from viable businesses,
• make clear promises on the competitive pricing of loans, overdrafts and fees, and
• support businesses in temporary difficulty and into the recovery.

Through the Lending Panel, the other major lenders are also committed to delivering a Customer Charter for SMEs and we will be working with them on the details of this.

What can I do about businesses in my constituency having trouble accessing lending?

There is also a contact point for MPs wanting to raise issues about specific businesses in your constituency.  You can phone Dept for Business (BIS) on 020 7215 6777 and ask for the ‘MPs hotline on business’. 

What is the situation on job losses?

RBS yesterday announced 3,700 fewer jobs by May 2010. No compulsory redundancies as far as possible, focusing on re-location / voluntary redundancy.  Every job loss is very regrettable, but the banks need to restructure.  The Government will continue to give support through the extra resources given to Job Centre Plus to ensure that those that lose their jobs will be offered support and if necessary training to find new jobs.  The Financial sector is an important sector with over 1m employed – the majority outside of the South-East.  The measures we’ve taken to stabilise the banking system have supported jobs in the financial sector.

The Government is providing extra investment today, however RBS was effectively bankrupt last October.  If the government hadn’t stepped in the whole bank would have gone down with massive job losses.

What is impact on Lloyds Foundation?

We have received assurance from Lloyds Banking Group that, under their proposals, the Foundations will receive the full value of the existing agreement. This means that, at a time when the Group is loss-making, existing commitments can be honoured and funding to charities in Scotland will not be reduced. In fact, Lloyds are looking to agree a longer term financial and strategic relationship with the Foundations that will enable charities across the UK to grow and prosper.

13 November 2009 

Today John Denham, Communities Secretary, announced that 61 local authorities will receive a share of £40m of Working Neighbourhood Fund (WNF) to tackle worklessness and low skills, and help people back to work

While the number of long-term jobless families has been reduced by 13 per cent over the last ten years, this funding demonstrates Labour’s commitment to tackling entrenched worklessness and steps up action to support the remaining 73,000 back into work.

It builds on Labour support to communities during the downturn – £3bn that’s improved Jobcentre Plus; the guaranteed job or training to all long-term unemployed young people; and Backing Young Britain – a call to businesses, charities and government bodies to create more opportunities for young people.

In past recessions we saw too many people left behind; Labour is determined to make sure that this will never happen again. WNF puts resources into the hands of local councils to enable them to take immediate action in the downturn

Since 2008 £1.5bn of WNF has been given to councils with higher levels of deprivation and unemployment. Today’s announcement gives them extra resources to find new ways of reaching out to long-term unemployed people

One of the most effective ways of reaching out is through social landlords who have relationships with their tenants. WNF enables councils and social landlords to help their tenants discover what job options are available and provide a vital link to help them into work.

The figures released this week reinforce the fact that the UK labour market is performing better than most major economies. They show UK unemployment at 7.8%, compared to an EU average of 9.2% and lower than 14 other EU countries including France (10.0%), Ireland (13.0%) and Spain (19.3%), as well as the US (10.2%) and Canada (8.6%).

WNF allocations

More help with housing costs for working families

·       Labour is delivering real help for working families from today through changes to benefits rules.

·       More than 200,000 working families will gain about £1000 a year, thanks to new rules around Housing and Council Tax Benefits, making them an average of £20 a week better off.

·       From today, income from Child Benefit will no longer be taken into account when calculating entitlement to Housing Benefit and Council Tax Benefit. This will mean more money for families already getting these benefits and other low income families becoming eligible for the first time.

·       Both Housing Benefit and Council Tax Benefit can be claimed by customers who are working and this change will be an extra incentive to getting back to work. Currently, the average Housing Benefit award is £80 a week and the average Council Tax Benefit award is £15 per week.

·       The Child Benefit disregard for Housing Benefit and Council Tax Benefit is one of a series of measures taken since the Budget 2007 that will see around a further 500,000 children lifted out of poverty – part of the Government’s commitment to eradicate child poverty by 2020. 

For further information, please click here to access the Treasury’s dedicated microsite on the 2009 Budget.

o Extending the right to request flexible working
o Increasing statutory holiday entitlement
o Strengthening enforcement of the National Minimum Wage

These new rights build on a series of achievements by Labour which has delivered a fair deal in the modern workplace. These measures are not happening by accident. They are rights that would never have been introduced by a Conservative Government and shows the difference a Labour Government makes for hard-working people.

1. Increasing statutory holiday entitlement

• From 1st April 2009 statutory holiday entitlement will increase by 4 days to 5.6 weeks for full-time workers (28 days), pro rata for part-timers, benefiting 6 million people.

• This increase builds on the announcement in October 2007, where all workers have had the statutory right to at least 4.8 weeks paid annual leave (that’s 24 days paid holiday if you work five days a week).

2. Extending the right to request flexible working

• From 6th April 2009 the right to request flexible working will be extended to parents of children aged 16 or under, benefiting an extra 4.5 million people.

• If you have a child aged 16 or under, you are an employee and you have worked for your employer for 26 weeks continuously before applying, you will have the statutory right to ask for flexible working.

• Under the law your employer must seriously consider any application you make, and only reject it if there are good business reasons for doing so. You have the right to ask for flexible working - not the right to have it.

• Previously, the right to request flexible working applied to employees with disabled children, or children under the age of six, and carers of adults. In 2008 14 million employees worked flexibly within the last 12 months with 91% of requests being granted.

3. Strengthening enforcement of the National Minimum Wage

• It is the tenth anniversary since the National Minimum Wage was first paid. On this important anniversary Labour is building on this achievement by significantly strengthening its enforcement so that everyone gets what they are legally entitled to.

• Rogue employers who underpay staff by not meeting the NMW will face tough new penalties. We are introducing a fairer method for dealing with national minimum wage arrears, calculated so that workers do not lose out as a result of underpayment. And employers breaking the law will face automatic penalties with a maximum penalty for non-payment of up to a potentially unlimited fine. The most serious cases of non-compliance will also be tried in a crown court.

Labour achievements

Since 1997 the Labour Government has delivered key rights to enable a fair deal at work:

• Labour introduced the National Minimum Wage and then increased it year on year.

• Employees have protection against unfair dismissal after 12 months in a job, instead of after two years. The maximum compensation has risen from £12,000 to £63,000.

• Labour gave part-time workers the right to equal pay rates, pension rights, pro-rata holidays and sick pay.

• Everyone has the right to a 20 minute break if the working day is more than six hours, a minimum 11 hour rest period between working days and at least two days off in a fortnight.

• Every worker now has the right to be a member of a trade union and be represented in grievance and disciplinary hearings.

• Labour introduced the right to paid leave of 24 days increasing to 28 in April 2009.

• Labour extended paid maternity leave to 39 weeks, which has now been increased to £123.06 a week.

• Paid paternity leave – New fathers now have the right to two weeks paid time off when their baby is born.

• Paid adoption leave – Statutory Adoption Pay and leave has been introduced for the first time ever, mirroring Statutory Maternity Pay and leave.

• Labour extended the right to request flexible working for parents of children aged 16, disabled children under 18 and to carers.

• All parents and carers now have the right to time off to deal with unexpected problems for their dependants such as family illness.

• Agreement has been reached between the Government, TUC and CBI on a British framework for implementing the European Agency Workers Directive, giving increased protection to agency workers. 

• Labour introduced the Corporate Manslaughter and Homicide Act which makes prosecutions of negligent organizations more effective. They can now be convicted of manslaughter if their activities are managed or organised in a way that causes a person’s death and is a gross breach of the duty of care. On conviction an organisation can face an unlimited fine, a remedial order to remedy the fatal breach and a publicity order. This new power to prosecute organizations stands alongside the existing ability to prosecute individuals for gross negligence and for health and safety offences.

• Union Learning Fund – £50m investment has supported 450 projects in 3,000 workplaces, helping 67,000 workers to improve their skills.