Thank you for the welcome. It’s great to be here. A word about Carillion, a word about apprenticeships and a word about the broader economy, and then I’ll try and take any questions or points that you want to make.
Firstly, really glad to be here at Carillion. You’re doing some great things here. The fact that you are training 1,000 apprentices this year and you’re planning to do even more next year: that is hugely welcome. We’ve seen 1.5 million people start apprenticeships under this government. I want to see that grow, that number increase, and Carillion is at the forefront of that. So, thank you.
Thank you also for what you’re doing on smart motorways. We need to build better infrastructure in our country, and you’re helping with the smart motorway schemes, so that people can use all of the lanes of the motorway, including the hard shoulder, in a proper traffic managed sense. I think you’re going to be working on the M6 on the way up between Birmingham and Stafford: particularly dear to my heart. I remember going up that motorway, and I – I know the traffic problems on the M6. So, that’s great Carillion is doing that.
The word on apprenticeships is this: that it is a really important part of our economic programme, and I want to make sure that the apprenticeships that you do in Britain are as good as the ones anywhere in the world. So we asked Doug Richards to do a review, to make sure we really are putting quality as well as quantity into our apprenticeship programme. And his proposals to make sure that all apprenticeships have to be at least over a year, to make sure that 20% of the time should be spent studying as well as practicing, and to make sure that employers are in the lead in how we design quality apprenticeships. I think those are good steps, and I think Carillion welcomes most of what we’ve set out.
The broader word on the economy: I’m not going to tell you everything in the garden is rosy, but I think things are looking better. Our economy is now growing, and forecast to grow more than twice as fast as Germany this year. The number of people in work has gone up over the last three years – we’ve seen a million extra people in work; I think that is good news. And the number of businesses in our economy is growing. 400,000 new businesses have started up over the last three years. So we’re seeing what we need, which is a private sector-led recovery, providing the jobs and the wealth that we need.
But – here’s the big but. We don’t just want an economic recovery. We want a recovery that lasts. We want a recovery that benefits everyone in our country. We want a recovery that benefits, not just the South of England or the City of London; we want it to benefit everyone, including here in the West Midlands.
And it seems to me, to get that right there are some absolutely vital steps we’ve got to take. We’ve got to invest in infrastructure: not just HS2, but it is important to have high speed rail at the heart of our economy. Infrastructure will make a difference. We’ve got to invest in education, and make sure that school leavers have the qualifications necessary so they can really participate in a growing economy, and that ties in to what I said about apprenticeships. We’ve got to go on reforming welfare, so that it always pays to work, rather than not to work, because I think we want to make sure everyone can be included in a growing economy.
But I think, perhaps, as important of all those steps of education and welfare and infrastructure, the last two are probably the most important. First of all we’ve got to stick to the plan of making sure we get our deficit down, making sure we can afford government and public services, making sure we’re not borrowing too much money. The worst thing for our economy right now would be interest rates going up and mortgage rates going up. And I think allied to that, is we’ve got to encourage people by making sure they can keep more of the money that they earn. So next year, for the first time in a very long time, you’ll be able to keep the first £10,000 of what you earn before paying any income tax. That means someone on minimum wage working a full-time week will see their income tax bill come down by two-thirds over the time of this government. Because I think it’s really important we make sure people feel that they are part of this growing economy, they are part of this recovery. And I think it’s absolutely right to leave people with more of their own money to spend as they choose, as part of a growing, succeeding economy.
That was what I wanted to say. Happy to take questions, points – you can ask questions about anything you like.
I’ve got a 13 year old son. What’s the government doing about, sort of, making young people in schools aware of the apprenticeships programme?
Absolutely brilliant question. I don’t think we’ve been very good at it up to now. I – I’ve lost count of the number of young people I’ve come across who’ve been to university or been at university, and said to me, ‘Actually, I wish I’d known about the potential of apprenticeships.’ And this is not to blame teachers, but most teachers have been through school, then university, then teaching. So they know that pathway, but they don’t know enough about the apprenticeship pathway. So we have a National Careers Service that we’ve established, that’s now in touch with every school and providing better information.
But I think we should also do something else, which is encourage businesses – small and large – to get into schools and talk to young people about what they do. First of all to tell them about apprenticeships and what is available, but second of all to inspire them about work, and about business and about enterprise, because it is very inspiring. It’s very inspiring what you do here. You are going to be building some of the great landmarks of this country. When Battersea Power Station in London rises up again with this incredible development, that is going to be because of people at Carillion. The hospitals that you’re building, the schools that you’re building: it is inspiring stuff. So we’ve got to get in there and inspire children, but the government should help with the National Careers Service too.
How can we change the perception of school teachers and pupils, that construction is a good career to – a good career path to take? Because we find that – that a lot of school children aren’t interested in construction.
Well, it partly goes to what I said about getting into schools and talking about what a fulfilling career it is, and how much satisfaction you get out it. I think that’s part of it. I think part of it is explaining how apprenticeships work: the fact that, you know, as you leave school, there should be what I call a new norm. You’ve got a choice: either you decide to do university – do your A levels, fill out your UCAS and go to university, or you do an apprenticeship and you earn as well as learn. And that’s very attractive to a lot of young people. So we need to explain the two pathways.
I think, also, we need to do something, perhaps, a little bit cruder, which is to start to explain the evidence for how much apprenticeships can benefit your long-term earning potential. If you do a higher-level apprenticeship, for instance, that can actually add to your long-term earnings over your lifetime of up to £150,000. So we need to give people the facts and figures about what the choices you make at school are all about.
But allied to that, we’ve got to remember, I think, a very, very simple fact, that, in the past, we’ve forgotten, which is the two most important vocational skills of all are actually English and Maths. You know, I challenge my children with this. I say, ‘Come on, name me a job where you don’t need English and Maths?’ And my son said, ‘Well, what about a football player?’ I said, ‘Well, you’ve got to be able to add up your earnings, you know.’
But it is a truth that I think we’ve forgotten about. And that’s why this government is very fixated about saying that we should be measuring schools on how well children do in terms of GCSEs, including English and Maths. We should be saying, as we are, in the Richard’s review of apprenticeships, that, you know, doing an apprenticeship – part of that should be English and Maths skills, saying to young people at school if you don’t get the qualification in English and Maths, you should keep re-taking it. It is tough, and it’s not always very popular, and some – you know, some people don’t enjoy doing their Maths. But it is such an important skill, and if, as a country, we want to be a success story in the 21st century – we’re going to take on and win against the Chinese and the Indians and the French and the Germans – we’ve got to be as skilled or better skilled than they are. And so, getting some of those basics right is absolutely vitally important. So, better information at school, more aspiration and inspiration in school, more information about what apprenticeships can do for you in terms of earnings, but never forgetting the basics, too.
What did you make of today’s revelations in The Mail about Ineos managers and staff being targeted by Unite activists, who’ve brought people round outside their family homes, and even roped in local children in protests outside their houses?
Well, I think these allegations are quite shocking, actually. Of course, people have a right to protest. Of course, trade unions have a right to represent their members and to take industrial action. Those are rights, and they’re important rights. But no-one has a right to intimidate. Nobody has a right to bully. Nobody has a right to threaten people’s families. No one has a right to threaten people in their homes. And if these things have happened it is very serious; it needs to be properly examined. We shouldn’t forget that the union action at Grangemouth, you know, was in danger of killing off an absolutely vital industry for Scotland and for the United Kingdom. So, I think we need to have these – these actions properly investigated. And I think also the Labour Party does need to investigate what has been happening with the Unite union, not least because the person in question is still Chairman of the Falkirk Labour Party. So, these actions need to be taken, but it’s not acceptable to intimidate people.
Back to today’s topic, perhaps. I’m sure these apprentices here would like to see that they’ll still be working consistently over the next 20 or 30 years and – and with [inaudible] doing this report for the Labour Party about planning for the future and delays that have happened to Hinkley, and HS2, which probably should have been signed off eight or ten years ago, is the government really thinking about how we as a country could be more consistent about the delivery of our infrastructure?
I think this is a really important point, and it does go directly to what you’ll all be building over your careers here at Carillion. You know, the fact is that Britain is lagging behind on infrastructure: our motorways are too full, our railways are too out of date, our energy supplies need to be properly updated. We need a big plan of action on infrastructure, and that’s why we have, for the first time, a UK infrastructure plan, with all the projects laid out that we need to build over the coming years and indeed decades.
And while we’ve had to make difficult cuts as a government – for instance, we had to cut police budgets by 20% – the police have done brilliantly and actually cut crime at the same time. While we’ve made cuts in areas like that, we’ve actually been increasing the level of capital spending that we’re going to be making. So if you take the next five years – the next parliament, 2015-2020 – our plan is to spend £73 billion on roads and railways and transport infrastructure. That is a big amount of money, and one of the things people will worry about, I know, is that HS2 is going to take up all that money. Well, the facts are that £16 billion goes on HS2 in the next five years, so that is less than – you know, we’re spending three times as much, if you like, on other transport projects. But I think it is important because people fear that.
So, yes, the money’s going in. Yes, there’s a long term plan. We do need some national consensus over this, and let’s be frank about HS2: we’ve taken it on as a Coalition in government, and we need everyone to get behind it. I am absolutely sure it is an essential piece of work for the country. It’s not just about journey times, although people always want to get places faster. Have you met anyone who says, ‘Oh, I’m going to take – I’m going to take the slow train. I’m going to go even slower.’
You know, it’s not just about journey times, it’s about capacity. The fact is, our West Coast Mainline is full. Every day between Birmingham and London, there are thousands of people standing on trains who need to be able to sit down and work on those trains. So the capacity is full. So the question for us as a country: do we build a new, old-style railway line, or what about building one of these new-fangled high speed ones, like they’re building in China, like they’re building in France? I think we should go for high speed.
The cost of high speed is only 9% more than the standard railway line, and the beauty of HS2 is that over time it will link eight of the ten biggest cities in our country. It really is a programme for making our country more efficient, making our economy grow, making sure North and South and the Midlands all benefit from the growth in our economy. I think it’s an absolutely vital programme, and actually, today in Parliament, the HS2 paving bill has its third reading, and I hope for a very strong and positive vote in favour of that piece of legislation.
So, we’ve got a long term plan, the money is behind it, the political commitment from this government is there, but all parties have got to play their part in recognising this – this has to be cross-party, national consensus to get this stuff done. Hinkley Point is massive. I meant that is a huge investment. I was there a couple of weeks ago. £14 billion. 25,000 jobs will be created, and we’ll be kick-starting, again, the nuclear industry, which can be a great industry for our country. And if we build other nuclear power stations – and I believe we will – again that will be jobs, investment, growth that people in this room, perhaps, will benefit from over the years to come.
You’re one of the most influential leaders in the UK what do you think are leadership attributes – leadership attributes that you have that have helped you on your way, or what do you look for when you’re picking your team around you?
Right. Well, I think – I think one of the most important things is recognise you cannot do it yourself. You need to have a team. And I think for a team you don’t want people that just automatically agree with you; you want to find talented people who work hard and who can work as a team. And I put a huge store on the fact that if you look at the people round my cabinet table – you know, William Hague has been my – not just my Foreign Secretary for three years – but he was Shadow Foreign Secretary, you know, for five years before that. And if you look at the key people in my team, I have appointed people, trusted them to get on with the job, set them the targets and worked together.
So I think the first is – is making a team work. I think the second thing is always thinking about the simple question which is, ‘What is the right thing to do?’ Because you can get – particularly in politics, but, I think, in business and life – you get so many things coming at you. In politics you’ve got the newspapers over here, you’ve got the opposition over there, you’ve got your own party. You’ve got all sorts of things, and you’ve got to just focus on what is the right, long-term thing to do. Because, as someone once said, there is never a bad time to do a good thing. And I think that is a good thing to keep hold of.
I don’t know. The third thing I think is try and keep a sense of balance. Try and approach decisions in a rational, sensible way, and don’t – you know, don’t put – it’s terrible if you endlessly put things off, or procrastinate, or don’t take a decision, particularly in government. You know, the system needs decisions to be made. So you’ve got to, you know, go at it and work out that, you know, a decision needs to be made, you have to make it, you have to take responsibility. But try and do it in an ordered and sensible way. That would be my three tips, but you’ve probably got some far better ones. But they would be my three for getting on with.
What are your thoughts on zero hour contracts?
Zero hour contracts. Well I think this is a difficult one, because on the face of it, particularly saying to someone, ‘You’ve got a zero hour contract but, do you know what? You can’t work for anybody else while you have this zero hour contract with me:’ that does seem to raise some very serious questions. So we’re, in government, going to have a review of zero hour contracts, particularly asking about that specific set of circumstances. The figures are quite interesting, because from all I’d read, I would have thought that the use of zero hour contracts was going up and up and up, and actually that’s not the case. There was a very fast acceleration between about 2004 and 2009, but the number of zero hour contracts has been quite stable since then.
Also the research shows that some people welcome the flexibility. I suspect that’s more when they’re able to work different patterns, different shifts, for more than one employer, rather than this rather limited thing for one employer. So I think we have to be careful; don’t just rush in and just make a blanket decision on what looks like a couple of unfair cases. Let’s have a proper look at this, but as I say, let’s focus on this issue. If there are zero hour contracts being used where you’re not allowed to work for anybody else, that, I think, is the most troubling aspect of what I see.
Otherwise, there’s a bigger picture issue here, which is: we do want to keep a flexible labour market where businesses feel that it’s easy and straightforward to take people on. I think one of the reasons why we’ve had a better employment record in Britain than other European countries, even though our growth in the last three years has not been stellar – we’ve only just started growing, really, at a decent rate – but we’ve had this one million extra people in work. The private sector’s taken on 1.4 million people, net, since 2010. I think part of the reason for that is that Britain is a relatively easy country to take people on, to employ people: there’s not too much bureaucracy.
I think in some other European countries – particularly France – companies just fear taking people on because of the very heavy employment legislation. So, let’s get the balance right, and let’s keep our flexibility, because, in the end, work is the best route out of poverty. I am worried about the numbers of people in poverty in our country, the numbers of people on welfare. Work is the best route out of that. So don’t let’s create a labour market where it’s okay for the people with jobs, but it’s miserable for the people without jobs. And when I look around Europe, I see quite a lot of countries that have this insider/outsider problem. You’re okay if you’ve got the job, but if you haven’t got the job you’ve got very little prospect of getting into the market.
Sorry: long answer but it’s an important question.
I’ll try not to make this too much of a leading question, but you talked about the fact that we recruit over 1,000 new apprentices every year, and we’ve been doing it from a significant amount of time. And many of those will work in Carillion, but also we’ll find them employment into our supply chain.
So the question really is: the principle of large employers over-training on behalf of the sector – do you think that should be encouraged?
Well, this is difficult. This goes to the whole question about, if companies are particularly good trainers, isn’t it rather unfair that their trained workforce is poached by those companies that don’t invest in training? It’s a bit like transfer fees in football clubs. You know, you’ve got this great youth scheme coming up through one club, and then no sooner have they set their foot on the pitch for the top team, they get snatched away. But, at least, in that case, the training company actually gets some money for the training.
So, I mean, it does go to that point. All the evidence I’ve seen of training levies and proposals to deal with this have been pretty costly, pretty bureaucratic, haven’t worked well in other countries. So, I think the answer is to make sure we go on as a government backing apprenticeships, backing the companies that deliver apprenticeships, making our contribution towards apprenticeships, and doing that for small firms as well.
So, we pay this bounty now. So, if you’re a small firm, you haven’t taken on apprenticeships before – we pay a bounty for your first apprenticeships, to encourage you into training, rather than just nicking people off Carillion who are doing the job.
Today was an historic moment at the Royal Courts of Justice: cameras were allowed in to film and broadcast. Do you support this first step, and do you believe that, perhaps, it should pave the way for cameras to be placed in criminal courts in the future?
Well, I do support this first step. It’s this government that has helped to make this happen. I believe in open and transparent government, and, as far as possible, open and transparent justice. And I think it’s good to start with the Appeal Court in this way, because you can see serious arguments being made, and you can see serious issues being discussed. And I think it will help to reassure people that our justice system is rigorous and fair.
I was very struck. I was watching on the train on the way up on an iPhone – just watching this argument being had. And it’s very rigorous about what sentences people should get and how appeals work. So, I think it will reassure people we have an open, sensible and rigorous system of justice.
But I think that it’s an important thing – open justice, open government – and, I think, starting with the Court of Appeal is right. Let’s see how it goes. I don’t think we should rush this, but let’s see how this goes and see whether there’s more that can be brought on camera in front of the people whose justice it is, rather than keeping it behind closed doors.
Is HS2 a wee bit of a harder sell, because the benefit cost ratio has dropped a small amount from £2.50 to £2.30 for every £1.00 spent? And can you guarantee, if and when the trains are built, they’re going to be made in Britain, not in Germany, or France, or Italy, or China?
First of all – look, of course any project is always an important sell, but I don’t think HS2 is a difficult sell. Why not? Because everybody knows that the rest of the world is adopting high-speed train technology. We need it here. Everybody knows, I think increasingly, that our train system is at capacity, and we need that extra capacity.
And, I think when you look at these particular calculations of benefit, you need to remember people said there would be a tiny benefit from the Jubilee Line: it’s been massively successful. People thought there would be a small benefit from the M40 – remember, it was called the ‘road to nowhere’ – it’s been a massive success. I believe that transport projects help to bring growth, jobs, and investment in your country. And high-speed rail, which will link eight of the ten biggest cities in our country, I think, will make a real difference.
As for trains, and for infrastructure, and for how much will be spent here in the UK, I think the opportunities are absolutely huge. We have very good train manufacturers in the UK. Of course, not just Bombardier in Derby – but they are important – but also Hitachi are building an enormous factory in the north-east of our country. So, we have every opportunity to win British for British firms as this project goes ahead.
What would you say the Coalition’s biggest achievement was? What are you most proud of that you’ve achieved since coming in?
Well, you know, we’re not finished yet. We’ve got a lot more work to do. But, I mean, I do think that the most important job we had was we inherited an economy that I think was quite close to the brink: we had the biggest budget deficit anywhere in the world, we hadn’t had growth in our economy, un-employment was too high. People were worried whether Britain would be able to pay our way in the world and whether we’d make it. And I think what we’ve done, these past three years, is start to turn that economy round.
So: we’ve got the economy growing, we’ve got unemployment falling, a million more people in work, the deficit is down by a third. We haven’t solved all the problems, but we are on our way. And, I think, that is what the British people wanted us to do. We’ve taken some tough and difficult decisions to get there, but we’re on our way. Now we need to build on that recovery in the ways that I’ve tried to set out for you this afternoon.
Thank you very much again for the reception. Thank you for all you’re doing at Carillion. I look forward to seeing these great landmarks being built by you, and a very exciting set of projects that you’re working on. And I’m also thrilled with the investment that you’re making in apprenticeships: vital for the young people here, vital for Carillion, but, even more so, vital for our country.
Thank you very much indeed.