Unemployment

Oral Answers to Questions — Work and Pensions – in the House of Commons at 2:30 pm on 20th October 2008.

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Photo of David Jones David Jones Shadow Minister (Wales) 2:30 pm, 20th October 2008

What forecasts he has made of future trends in unemployment in the UK.

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Photo of Tony McNulty Tony McNulty Minister of State (Welfare Reform; Minister for London), Department for Work and Pensions

As my right hon. Friend the Secretary of State said earlier, the jobseeker's allowance count rose last month to 939,900. There are 608,000 vacancies in the economy and 80 per cent. of claimants leave jobseeker's allowance within six months.

Although we do not predict future levels of employment, we have been planning, quite properly, for the impact of higher levels of jobseeker's allowance claims in the coming months.

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Photo of David Jones David Jones Shadow Minister (Wales)

The latest Office for National Statistics figures reveal that the number of Welsh 16 to 17-year-olds who are economically inactive rose by 12,000 in the period between June 2007 and 2008, which equates to an increase of 32 per cent. Does the Minister accept that that is an alarming upward trajectory? What does he think that his Government can do to halt that steep increase?

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Photo of Tony McNulty Tony McNulty Minister of State (Welfare Reform; Minister for London), Department for Work and Pensions

I thank the hon. Gentleman for his question. It might be that he was showing guarded and rather contorted support for all young people staying on in full-time education until they were 18—I would welcome that. Jobcentre Plus, in Wales and elsewhere, stands ready to help all people, throughout all age cohorts in the labour market, to get into the job market at the earliest opportunity. That includes the very youngest. However, it must be right that the most appropriate way to do so is to get them the skills and training that they need through to and beyond the age of 18.

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Photo of Andrew Rosindell Andrew Rosindell Shadow Minister (Home Affairs)

If he will make a statement on his departmental responsibilities.

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

In April of this year we introduced the local housing allowance, a more straightforward and transparent way of calculating entitlement to housing benefit in the private rental sector. However, an unintended consequence of the changes meant that in a limited number of cases the taxpayer paid out significant sums to private landlords to house people in the sorts of property that they could not afford if they were in work. That was clearly unacceptable and I ordered an urgent inquiry into the local housing allowance rates for properties with more than five bedrooms.

Today, I can announce that LHA rates will be capped at the five-bedroom rate for all new customers. We will lay regulations as soon as possible, to come into effect no later than next April. In the interim, DWP and the Rent Service will monitor such applications carefully and advise on a case-by-case basis. Those currently claiming LHA above the capped rate for a property with more than five bedrooms will have their case reviewed on the first anniversary of their claim. This announcement fits with the wider DWP and Treasury review of housing benefit, which is currently under way. A key outcome of the review will be to ensure fairness for the taxpayer and to ensure that housing benefit provides the right incentives to work.

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Photo of Andrew Rosindell Andrew Rosindell Shadow Minister (Home Affairs)

The Secretary of State will be aware that earlier this year Dame Carol Black published a report entitled "Working for a healthier tomorrow", which highlighted the fact that sickness accounts for a cost to our economy of up to £1 billion. However, in these economically turbulent times the Government have so far failed to acknowledge the report or to give a proper response. Will the Secretary of State undertake to do so with immediate effect?

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

The hon. Gentleman needs to get his facts right, I am afraid. We have welcomed the report, attended the launch and are working on our response. We have announced, for example, that we will be replacing the sick note with a fit note and that we will be pursuing "fit for work" pilots. I refer him to the welfare reform Green Paper.

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Photo of David Taylor David Taylor Labour, North West Leicestershire

From this autumn, lone parents whose children are of secondary school age will be moved from income support to jobseeker's allowance. That change will affect existing claimants next April. Will the Secretary of State reassure the House and my constituent, Mr. Bennett, who has calculated that that change, because of changed links to housing costs, will mean that he will be at least £50 a month worse off? Is that an unforeseen consequence, or are his figures incorrect?

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I cannot comment on the individual case, although I am quite happy to look at it for my hon. Friend. I am sure that he will welcome the increased support that we are giving people, such as the fact that they will have an in-work credit of £40 a week, better help with transition costs and in and out-of-work advice. We know that that support works. We believe that ensuring that more people take up work will lift 70,000 children out of poverty. I am sure that my hon. Friend would welcome that.

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Photo of Sir David Amess Sir David Amess Conservative, Southend West

Given the effect of economic turbulence on the value of pension funds, will the Government consider suspending the present rules, which force people to lock themselves into long-term pension arrangements on their retirement age or on the occasion of their 75th birthday?

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Photo of Rosie Winterton Rosie Winterton Minister of State (Regional Affairs) (Yorkshire and the Humber), Minister of State (Department for Work and Pensions) (Pensions Reform) and Minister (Yorkshire and the Humber)

I am sure that the hon. Gentleman will know that that subject will be debated during proceedings on the Pensions Bill in the other place. Obviously, it is ultimately a matter for Treasury policy, but we should be clear that the vast majority of people buy annuities well before the age of 75. Only about 5 per cent. delay until after that age, and they tend to be the wealthier pensioners. The proposal put down by the Opposition for a temporary suspension has been greeted with some dismay by many in the industry, who feel that it is unworkable. Annuity rates are at a six-year high, and obviously as people get older and move towards the 75 age limit their funds will be moved into more secure funding, such as Government bonds and gilts. Although obviously this is an idea that has been considered—

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Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

I greatly welcome the £100 million boost that the DWP, with skills Ministers, is providing for reskilling and retraining people who have lost their jobs, but I press the Minister to say that those who have worked in small and medium-sized businesses and those who are self-employed should also benefit strongly from that money. My Blackpool constituency is very dependent on such businesses, as are many seaside and coastal towns. It is important that people who lose their jobs there, such as the 30 people who only today lost their jobs in a manufacturing company in my constituency, are given proper and strong support.

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Photo of Tony McNulty Tony McNulty Minister of State (Welfare Reform; Minister for London), Department for Work and Pensions

I thank my hon. Friend for his welcome for the fund which, as he knows, is on top of a range of other support mechanisms for those facing redundancy. We are working through the detail of the mechanisms for the £100 million, and looking at what we can do through other programmes to address precisely his issue about other sectors and I shall be happy to talk to him about that subsequently.

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Photo of Bob Russell Bob Russell Opposition Whip (Commons), Shadow Minister (Defence)

Will the Minister look at a specific anomaly in respect of the Child Support Agency, whereby if somebody has a company car, it is disregarded as income when calculating maintenance payments, but if the same person is given an allowance from his company to purchase a car for the same purpose, it is regarded as income, and maintenance for the child or children is enhanced accordingly? Surely, they should be the same.

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Photo of Kitty Ussher Kitty Ussher Parliamentary Under-Secretary, Department for Work and Pensions

I am extremely happy to meet the hon. Gentleman so that we can look into the question in more detail.

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Photo of Greg Mulholland Greg Mulholland Shadow Minister (Health)

Further to the Minister's very disappointing reply to the question asked by Mr. Amess, I stress that I have been contacted—as I am sure have many Members—by constituents, particularly those aged 74, who have seen huge falls in their pension funds, yet the Government's response is simply to say that the issue is being looked into, when day by day, people see the future value of their pension savings being wiped out. I agree that a temporary measure is not acceptable, but will the Minister tell us that the Government are seriously looking at permanently scrapping that inflexible rule, which penalises people who have saved all their lives through their hard work?

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Photo of Rosie Winterton Rosie Winterton Minister of State (Regional Affairs) (Yorkshire and the Humber), Minister of State (Department for Work and Pensions) (Pensions Reform) and Minister (Yorkshire and the Humber)

As people move towards the age of 75, their funds will be moved into more secure funding streams anyway. That is why the proposal to move further will not solve the problems of the majority of pensioners. It is a short-term measure, aimed at a few people who, as I said, tend to have been able to delay taking an annuity until 75. Other options are still open to people at that age, such as alternatively secured pensions.

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Photo of Sally Keeble Sally Keeble Labour, Northampton North

Can my right hon. Friend the Secretary of State look at what seems to be the Child Support Agency's approach of making people with arrears repay them over one or two years? Whatever the rights or wrongs of their being in arrears that means that they have to pay large amounts of money, which tips them and their new families into real hardship.

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Photo of Kitty Ussher Kitty Ussher Parliamentary Under-Secretary, Department for Work and Pensions

The No. 1 priority of the Child Support Agency and its successor body has to be to contribute towards alleviating child poverty and I am sure my hon. Friend agrees. In some circumstances, flexibility can be shown about the rate of time over which arrears can be paid and if she has specific examples where she feels that is not working, we shall of course be happy to look into them.

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Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

After the Government's welcome announcement last week on the 13-week period for mortgage payments, is the Minister aware that many moneylenders are taking people to court for eight weeks' arrears, and even less? Will she explain how the Government will properly co-ordinate their approach to mortgage repossessions and arrears, so that the most ruthless members of the mortgage-lending community do not take advantage of the taxpayer?

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Photo of Kitty Ussher Kitty Ussher Parliamentary Under-Secretary, Department for Work and Pensions

Both our Department and colleagues in the Treasury, working with the Council of Mortgage Lenders and other lending bodies, have made it entirely clear that in these times we expect lenders to use repossession as an absolute last resort. The hon. Gentleman will be aware of recent statements to that effect, following the emergency measures that my right hon. Friend the Chancellor took to inject more capital into the banks. Suffice it to say that it is very important, at this time, that all families and others realise the punitive interest rates that some people knocking on their doors can offer. I urge them to seek affordable credit, if it is indeed credit that they require.

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Photo of Mary Creagh Mary Creagh PPS (Rt Hon Andy Burnham, Secretary of State), Department for Culture, Media & Sport

May I welcome my right hon. and hon. Friends to their new roles? I recently met my constituent, Katy Watt, who has returned after spending four years as a youth worker on the Isle of Man. She put the entire proceeds of the sale of her home into the collapsed Icelandic bank, Kaupthing Singer & Friedlander. I have advised her to claim pension credit, but I wondered whether Ministers could give my constituent and me advice on whether the notional sum tied up in the bank counts as savings towards her entitlement to pension credit. If they have not done so, will they issue guidance on the subject as soon as possible?

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I am very happy to do that, and for my hon. Friend to meet someone from the local service. As she knows, they regularly visit pensioners who claim pension credit, and they will answer her question in a precise way.

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Photo of Patrick Cormack Patrick Cormack Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee

Does the Secretary of State accept that those of us who support the exceptional measures that the Government have taken in recent days would think it entirely perverse if he were to sign the death warrant of 3,000 post offices?

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

We will make an announcement on that in due course; the hon. Gentleman may have heard me bore on about that earlier in Question Time. We completely recognise the importance of the post office network for communities around the country, and that is why we will take the decision carefully and properly.

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Photo of David Howarth David Howarth Shadow Solicitor General, Ministry of Justice, Shadow Minister (Shadow Solicitor General), Home Affairs

I return to the subject of housing benefit. What does the Secretary of State have to say to the 800 people in my constituency whose housing benefit is being cut, or is threatened with being cut, because of the new absurd way in which the broad market rental areas are being calculated? I understand that he has already undertaken to review the policy, but in light of its illegality, as declared by the House of Lords, will he make sure that all those people who have wrongfully lost out will be fully compensated when the policy changes, as it must?

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Photo of Kitty Ussher Kitty Ussher Parliamentary Under-Secretary, Department for Work and Pensions

The hon. Gentleman rightly raises the issue of the impact of what I think is known as the Heffernan case judgment in the House of Lords. We are urgently considering it as part of our internal housing benefit review.

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In response to a written question on the 25th of November, David Howarth was told the boundaries for Cambridge will now be reviewed, see:...

Submitted by Richard Taylor Continue reading

Photo of Alan Reid Alan Reid Shadow Minister (Northern Ireland), Shadow Minister (Scotland)

In recent years, the Government have made drastic cuts to the number of people employed in jobcentres in Argyll and Bute. With unemployment rising everywhere, how will those jobcentres cope with the extra numbers of people who will seek advice on finding work? That could become a particular problem in Campbeltown, where more than 100 extra people may be visiting the jobcentre soon if the threatened closure of Vestas goes ahead. What support will the Government make available?

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Photo of Tony McNulty Tony McNulty Minister of State (Welfare Reform; Minister for London), Department for Work and Pensions

The hon. Gentleman must accept that the Jobcentre Plus network is now far better placed for any slow-down than it was. When it comes to employment, in the Department for Work and Pensions and the Jobcentre Plus network there is a shift to the front line to help the people whom he describes.

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Photo of Mark Lancaster Mark Lancaster Shadow Minister (International Development)

According to figures released by the House of Commons Library, unemployment in my constituency was up 17 per cent. in the year to July 2008. Does the Minister agree that perhaps the time has come for the local economy, rather than the Stalinist housing targets imposed from Whitehall, to be the driver of the expansion of Milton Keynes?

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Photo of Tony McNulty Tony McNulty Minister of State (Welfare Reform; Minister for London), Department for Work and Pensions

I do not accept the point about Stalinist housing targets. There has been a lot of consultation on those targets across the growth area. The hon. Gentleman would do well to understand that Milton Keynes has a lot to offer, in terms of growth for the entire east midlands area. I am not sure whether he should knock that in the way that he does.

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Where did the Minister of state get the sense that the local MP was knocking Milton Keynes? He was purely deflecting attention from a very important point - unemployment. This is from a government which...

Submitted by Tony Kenyon Continue reading

Photo of Peter Bone Peter Bone Conservative, Wellingborough

After 11 years of a Labour Government, can the Secretary of State explain why there are more people unemployed in Wellingborough now than there were in 1997?

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I am pretty sure the rate has fallen in the hon. Gentleman's area. There are 3 million people more in work than there were in 1997. We have reduced the number of people on jobseeker's allowance from 1.6 million to 900,000. That is in clear contrast to unemployment reaching 3 million under the Government whom he supported.

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What I think this government has done is re-arrange the figures to look as good as possible. This has been the way with all government issued figures. It is all smoke and mirrors. We have seen so much...

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Photo of Henry Bellingham Henry Bellingham Shadow Minister (Justice)

May I refer the Secretary of State back to the Post Office card account? Surely a time of banking crisis, when more and more of our constituents are looking to safe deposits and the Post Office and National Savings, is not the time to threaten the future of the Post Office card account. Will he give a better answer than he gave earlier?

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions

I am sorry if the hon. Gentleman did not like the answer I gave earlier. I recognise that it was not a very interesting answer, but it is right that we should take the decision properly, with due process, and we will announce it to him and everyone else at the right time.

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