Employment

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 26th October 2006.

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Photo of Andrew Gwynne Andrew Gwynne PPS (Rt Hon Baroness Scotland of Asthal QC, Minister of State), Home Office 10:30 am, 26th October 2006

What recent assessment he has made of the effect of levels of employment on the UK economy.

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

Employment levels are the highest on record, and have grown year on year every month since 1997, contributing both to the strengthening of economic growth and an 800,000 reduction in child poverty under this Government since 1997.

Photo of Andrew Gwynne Andrew Gwynne PPS (Rt Hon Baroness Scotland of Asthal QC, Minister of State), Home Office

Part of our success in areas such as Denton and Reddish stems from a combination of the new deal, the national minimum wage and tax credits, all of which help to make work pay. Does my hon. Friend agree that in future we need to do even more to invest in skills and training so as further to enhance employment opportunities in areas such as mine, and that that should be our economic priority, not unfunded tax cuts?

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

I do agree, and I wish only that the shadow Chancellor agreed, too. We have increased employment since 1997 by 2.5 million jobs. In my hon. Friend's own constituency, unemployment has gone down by 42 per cent., youth unemployment by 62 per cent., and long-term unemployment by 84 per cent. since 1997. [ Interruption. ] That is not good enough, however, as we still have too many people out of work on incapacity benefit, and we still have too many lone parents who want to work but cannot. The way to address that is to expand the new deal, not to abolish it.

Photo of David Laws David Laws Shadow Secretary of State for Work and Pensions

What assessment have the Government made of the impact on employment of the tax credit system? As the Chancellor of the Exchequer has failed to answer a question on the issue in Treasury questions for 896 days, will the Economic Secretary tell us whether the Chancellor has read the recent report from the Institute for Fiscal Studies that indicates that work incentives have become worse under this Government?

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

I am proud of the fact that we have more than 1 million more single parents in work because of the way in which tax credits, with the new deal, have boosted thier employment prospects. The employment outlook from the Organisation for Economic Co-operation and Development states:

"There is a group of countries" including the UK

"where the policy-driven improvements in employment and unemployment over the period considered have been the most significant".

The OECD is referring to what we have done on tax credits. Tax credits and the new deal have improved the employment prospects of single parents in our country.

Photo of Anne Begg Anne Begg Labour, Aberdeen South

The economy in Aberdeen is booming. We have very low unemployment. It is well below 2 per cent., which is effectively full employment. However, there is a labour shortage; employers are finding it difficult to find people to go into work. What else can the Government do to encourage more people who are on inactive benefits to get into work?

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

My hon. Friend is right; we need to do more to help single parents get back into work with our support through the new deal and child care. We are also expanding the pathways to work initiative, which will help more people to move from incapacity benefit into employment. I hope that people in her constituency will be able to benefit from those measures as well.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Is the Minister aware that unemployment in Shropshire has risen by 36 per cent. over the past 12 months and that nationally unemployment is at a six-year high? I invite him, rather than reading tired and outdated ministerial briefs, to join the dole queues that are growing in Shropshire every single day of the week, and to come into the real world for a change.

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

We have the lowest level of unemployment for 30 years. We have 255,000 more people in work this year than last year. People have long memories; they remember 3 million unemployed and the 1.5 million families in negative equity. They also remember that it was unfunded tax cuts that led not only to public spending cuts but to double-digit interest rates. Nobody wants to go back to those days and, under this Government, that will not happen.

Photo of Anne Snelgrove Anne Snelgrove PPS (Andy Burnham, Minister of State), Department of Health, PPS (Rt Hon Lord Warner, Minister of State), Department of Health

Is my hon. Friend aware that, during the summer recess, Honda in my constituency announced another 700 jobs to manufacture the new Civic? That is due in part to the success of the work force and management in doubling production of the new Civic in six months. Does my hon. Friend agree that Honda's investment in manufacturing in Swindon demonstrates a world-class company's confidence in the Labour Government's world-class economy?

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

I do agree, and there are similar examples all around the country. The most important thing driving that job creation and new investment has been the stability in our economy since 1997—stability through Bank of England independence and through our fiscal rules. That stability would be put at risk if we were to return to the old days of unfunded and uncosted tax cuts for a few, which would be paid for by higher interest rates and instability, hitting families all around our country.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

In 1995, the Chancellor said:

"Our plan is nothing less than to abolish youth unemployment. I will not make promises I cannot keep".

Will the Minister confirm that the numbers of young people who are neither working nor studying are higher now than they were when the Government came into office? Is not that promise simply an early example of the Chancellor's tendency to call for aspirations without a commitment to a specific timetable for delivery?

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

If the hon. Gentleman looks at the figures, he will find that his claim is untrue. Since 1997, we have seen not only falling youth unemployment—down by two thirds—but falling inactivity among 16 to 17-year-olds. The fact is that we have more people going into apprenticeships and going to college —[ Interruption. ]

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

I am sure that you are right, Mr. Speaker, although I do not think that the House will be surprised that he is.

We have more people going to college and going into apprenticeships and all those people are included in the figures referred to by Mr. Hoban. There has been falling inactivity among that population group and, at the same time, there has been falling unemployment among young people. We should be proud of the achievements that we have seen since 1997, rather than trying to run them down with inaccurate figures.