Economy and City Link: Coventry — House of Commons, 2015-01-23
Topic: Macroeconomics
James Dolan Cunningham (Labour, Centre-left): First, I thank Mr Speaker for granting this debate, the purpose of which is to discuss the general position of Coventry’s economy, which looks very positive on many counts. I also want to take a harder look at the labour market The Government are using all sorts of means to make the employment figures look good, but that can mask problems with pay, stability and the type of work involved. The recent collapse of City Link is a good example of why we need to look at the type of work more closely I start with the positives of Coventry’s economy. The Centre for Cities annual "Cities Outlook", published this week, looked at 64 UK cities. There is plenty of good news for Coventry. Coventry came 10th for housing stock growth, 9th for highest business growth, 7th for jobs growth, 6th for the highest private sector jobs growth, and 4th for patents issued, largely in the automotive industry. I welcome that good news. There is much to be proud of In the same report, however, Coventry was ranked 59th out of 64 for its employment rate. I understand that that is 8.3% lower than the UK average. The employment rate has fallen by more than 3% in the past year. I want to guard us against sitting on our laurels; it is that background that makes any announcement about job losses very serious All that brings me to the situation with City Link. Let me be clear: it is not that Coventry is in trouble, but we need to be watchful of every major loss of jobs. We cannot be complacent and we need to make sure that we do not see a pattern of job losses. City Link provided 404 jobs in Coventry, the vast majority of which have now been lost. The collapse was announced on Christmas eve. Better Capital, the private equity firm that owned the company, is expecting to recover £20 million from the £40 million loan it gave; as a secured creditor, it will rank ahead of staff when proceeds from the company’s liquidation are distributed. The taxpayer has to foot the redundancy bill Why is that significant? Any unwanted job loss is a tragedy for the individual concerned. Getting new jobs is the immediate priority, and I am very pleased with how Coventry has risen to the occasion and businesses have come forward with jobs, but there are worries. I am very concerned about the self-employed drivers; at least, they are technically self-employed, but the idea is absurd—they were allowed to work only for City Link. They have been made redundant through no fault of their own. They will be doubly hit—they will not get redundancy payments, as things currently stand, and nor will they be eligible for jobseeker’s allowance We need to look into that type of employment, which is dangerously precarious. We need to consider the law in relation to this matter, and I am pleased that the Secretary of State for Business, Innovation and Skills agrees. We need to look carefully into what happened in the build-up to the company’s going into administration. I have met the Business Secretary, who intends to wait until the report by the administrator is complete before deciding whether the situation warrants an investigation. I personally believe that an investigation is warranted already, but I appreciate the Business Secretary’s position. Once the report is published, I will be keen to call for an investigation We cannot have a situation in which asset strippers can toy with workers so that thousands lose their jobs with no warning while the management are able to make plans. This is a good example of a situation in which many people who were counted as self-employed were left very vulnerable when the company collapsed. Furthermore, the owners were able to walk away with millions, while giving workers no notice period in which they could have started looking for jobs. Your type of work matters, your pay matters, your employment status and rights matter, your security and stability matters, your quality of life matters: it not just about the headline figures In addition to the recent job losses at City Link, a number of other companies have announced their intention to cut jobs in Coventry. This includes the recent closure of the Marks & Spencer warehouse, where about 150 jobs are expected to be lost, and recent job losses at Sainsbury’s. Peugeot Citroen will be cutting jobs, although the number now looks to be under 100. In November, Severn Trent announced plans to cut 600 jobs. Given that the city has had a decreased employment rate in the past year and is already below the national average, we need to make sure that there are no structural reasons behind this, so we must take each case seriously. I urge the Minister to pay close attention to the picture of jobs in Coventry and to comment on the attractiveness of Coventry as a place to do business I want to flag up a number of other concerns. Median annual pay in 2014 was £499 down on the 2013 figure, and that is £1,505 lower than the average in England. Gross weekly pay for a woman in Coventry is over £100 less than that of a man. Perhaps most alarmingly of all, Coventry was 63rd of 64 for the highest percentage of people with no formal qualifications—15.8%. That is something we really need to look at and work on That brings me to the bigger picture, which is that the Government are throwing taxpayers’ money at subsidising companies that pay low wages. We are seeing people pushed off JSA to become self-employed, often earning very little indeed and needing substantial income support. There is no training, support or career development—it is all about being able to keep unemployment figures down. Similarly, a third of jobs in Coventry are part-time. That figure does not show how many of these people cannot get full-time work. I have constituents who are technically employed, but for only a few hours a week. They want to work more hours, but they are not offered them, and the Government then have to top up their income. I urge everyone to watch last week’s Channel 4 "Dispatches" programme, "Low Pay Britain". I am concerned that the employment figures are masking the reality and papering over the real problem, which is a lack of proper, well-paid, stable jobs that pay enough to live on and include future career opportunities. I ask the Minister to take this seriously, as I am sure she will. It is not enough to say there are jobs—it matters what types of jobs they are Cuts to local government funding have meant that Coventry city council has already cut well over 1,000 jobs and is expected to cut many hundreds more. For example, proposed cuts to the local welfare assistance scheme by central Government mean that payments under the scheme would have to come from council budgets rather than central Government. This would hurt those in the city who are in the most urgent need of help. I ask the Minister to raise this with her counterparts at the Department for Communities and Local Government. These cuts to local government mean that the council is not in a position to offer the support to the economy that ideally it might have done Coventry needs to take a hard look at the real story behind the employment figures to make sure that we are not storing up problems for ourselves in future and that we have a healthy and sustainable labour market that pays well and offers people a high standard of living.