Unemployment

Opposition Day — [7th Allotted Day] – in the House of Commons at 3:44 pm on 10th March 2009.

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Photo of Michael Martin Michael Martin Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons 3:44 pm, 10th March 2009

I inform the House that I have selected the amendments in the name of the Prime Minister in both Opposition day debates.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions 3:56 pm, 10th March 2009

I beg to move,

That this House
notes that unemployment rose by 146,000 to 1.97 million in the three months to December 2008, the highest level since August 1997, that the number of people claiming jobseeker's allowance in January 2009 rose by 73,800 to 1.23 million, and that the number of vacancies in the UK fell by 76,000 in the three months to January 2009 to 504,000, the lowest figure since records began;
further notes that unemployment among 18 to 24-year-olds was 616,000 in the three months to November, the highest total since 1995;
further notes that the Government has failed to establish a national loan guarantee scheme to increase the flow of credit to businesses, and calls on the Government to establish such a scheme;
further notes that the Government failed to introduce necessary welfare reform during the years of economic growth;
further calls on the Government to relax the rules on jobseeker's allowance to allow unemployed people rapidly to take up training opportunities;
believes that the Government should immediately cut taxes for firms taking on new employees who have been unemployed for three months;
notes with concern the failure of the procurement process for Flexible New Deal, and further calls on the Government not to backtrack on the use of the private and voluntary sectors in welfare-to-work provisions;
and calls on the Department for Work and Pensions to expand the use of an 'invest to save' approach to welfare-to-work services, allowing the full potential of the expertise in these sectors to be realised.

I am sure that no one in this Chamber needs reminding of the unemployment challenge that this country faces. Every day, Members of this House deal with letters and e-mails from constituents who have lost their jobs and are unable to find another. People feel helpless, frustrated, distressed and utterly let down. Who can blame them? The recession is having a devastating effect on employment around the country. No industry or geographical area remains immune from this downturn and the people of Britain are dealing with its harsh realities every day.

What has been the Government's reaction to this crisis? Have they taken immediate action to help people now? Sadly not; unemployment has been rising constantly for more than a year, yet the Government closed an average of one jobcentre a week in 2008. As late as last July, Ministers were still issuing press releases patting themselves on the back for record levels of employment, and brushing the unemployment problem to one side. As Ministers were reminding us that we should see the rise in jobseeker's allowance "in context", perhaps I can provide a little context for the Government, in the hope that it will get them to face up to the problems that we face.

There are 1.97 million people unemployed. Youth unemployment is at its highest level since 1995. There are record redundancies, combined with the lowest level of vacancies since records began. Jobseeker's allowance claims are up by 55 per cent. in one year, with the claimant count smashing through the 1 million mark, and there are more than 130,000 fewer jobs in the economy since June last year. The reality is that Britain now faces an unemployment crisis.

Yet there is still no real action from the Government. Instead, true to form, they have given us only empty promises. In October, the Government announced £50 million of help for people "currently facing redundancy". Five months on, how many have received that help? None. Why? Because the projects will not start until April. In December, the Government announced £79 million of funding. Two months later, they reannounced that help. Only then was it revealed that no new employment programmes would be in place as a result of that money until the end of this year.

The golden hello scheme was announced in January. We welcomed that—the Government had finally taken up the proposal for tax breaks for new jobs that we announced in November, but again nothing will happen until April. Yesterday, the Secretary of State announced in an interview with a newspaper that he was spending £40 million to provide extra support for white-collar workers with one-to-one interviews, which they are supposed to have anyway, and the creation of job clubs, which some job centres, such as the one in Maidenhead, already run.

We should pity the poor unemployed white-collar worker who heard that and logged on to the Department for Work and Pensions website to find out more, because there is no more information. Indeed, the announcement is not even on the DWP website. So what sort of commitment is it? Is it new money? How many job clubs will be created? Where will they be, and crucially, when will what has been announced happen? I cannot refer to job clubs without mentioning the excellent work that my hon. Friend Tony Baldry has done in setting up a job club in his constituency, which I am looking forward to visiting this Friday. I am sure that many people will be helped by it.

If press releases created jobs, we could believe the Government's proclamations that they are offering real help now. Unfortunately, far too many people who are struggling to find work each day know that that simply is not the case. One of the reasons why the Government have been so complacent about tackling the unemployment crisis is their complete inability to acknowledge what caused the problems that Britain now faces. This is a global recession, but Britain entered it worse prepared than almost any other developed economy. If it is all America's fault, why has the value of the pound plummeted against that of the dollar? Why is the UK's economy predicted to be worse hit than any other major economy, and why has the OECD predicted that unemployment will rise faster in the UK than in any other G7 country?

If the Prime Minister cannot admit the mistakes that he has made, he cannot help the British economy out of this recession, so perhaps this afternoon the Secretary of State for Work and Pensions will follow the advice of the noble Lord Malloch-Brown and take this opportunity to apologise to the 1.97 million people in the UK today who cannot find a job.

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Photo of Anne Moffat Anne Moffat Labour, East Lothian

As we are talking about apologies and unemployment, will the right hon. Lady take this opportunity to apologise, 25 years after the miners' strike, for the time when a whole industry and thousands of people lost their jobs and their ability to participate in socially acceptable community life?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I say to the hon. Lady that when the Conservatives left government, unemployment was coming down. Crucially, youth unemployment was coming down. Under this Government, unemployment is going up, and is predicted to go through the 2 million mark. The Government have an abysmal record on employment. After 10 years of economic growth, almost 5 million people are on out-of-work benefits. The Government boast of creating 3 million new jobs, but up to 80 per cent. of them went to foreign-born workers. There are pockets of deprivation where well over half the people are claiming out-of-work benefits, and we have the highest proportion of children growing up in workless households in the whole European Union. The challenge of dealing with rising unemployment is deepened by the huge figures for those already claiming out-of-work benefit. That is how prepared the UK was for the downturn under this Government.

In the past few weeks, I have spoken to jobcentre staff and unemployed people, spent time with providers of welfare to work services and listened to the experiences of my constituents. When someone becomes unemployed, they understandably often turn to the state for help, and usually they go to their local jobcentre for that help. What they badly need is support, advice, knowledge and reassurance, but the question that the Government must ask themselves is whether the Jobcentre Plus network can provide all those things. Despite grand announcements of billions of pounds of funding and thousands more staff, the reality is that the Government are just reversing previous cuts, not providing additional help.

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

Will the right hon. Lady confirm that she still opposes the Government's fiscal stimulus, announced in the pre-Budget report?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I am grateful to the right hon. Gentleman for his question. As he knows, we believe that parts of that fiscal stimulus have not had the effect that the Government said they would—notably the VAT cut, which cost £12.4 billion that will have to be paid off through future tax rises. As he knows, the Government were intending to put VAT back up not just to 17.5 per cent., but to 20 per cent. That will hit everybody in this country.

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

As the right hon. Lady continues to oppose the stimulus, will she confirm that she opposes the extra £2 billion that we put into Jobcentre Plus?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I have just made the point to the Secretary of State that the money that he has put into Jobcentre Plus merely reverses previous cuts that were made by his Government. His Government have closed 500 jobcentres.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

Just wait. The right hon. Gentleman's Government closed almost a jobcentre a week at a time when unemployment was already going up. The Government set their face against the reality of what was happening to the economy in this country. That is why any measures that they claim to have taken have not worked.

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

If the measure is making the system more efficient, the right hon. Lady should support that. Will she confirm, therefore, that she is opposing the £2 billion extra—yes or no?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I have said to the right hon. Gentleman that all he has done is reinstate money that was previously cut from the Government's budget for Jobcentre Plus. If he is so pleased with himself, he might ask himself why the Government in the face of rising unemployment were cutting Jobcentre Plus offices and reducing the service to people who would become unemployed.

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Photo of Tony Baldry Tony Baldry Conservative, Banbury

The truth of the matter is that Jobcentre Plus staff are doing an incredibly good job in incredibly stressed conditions, but most of the time they just about manage to get on top of new applications for jobseeker's allowance. The Secretary of State needs to address his mind and his Department to dealing with the ever-increasing number of people who are out of work and want to get back into work as quickly as possible. Jobcentre Plus is not addressing their needs. It is not rocket science. None of the £2 billion is coming through for that group. I would welcome his coming to my constituency and meeting young automotive engineers who have been made unemployed and who desperately want to get back into the world of work as speedily as possible. Jobcentre Plus at present does not meet their needs.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

My hon. Friend is right. I was going on to make exactly that point. The problem that Jobcentre Plus faces—

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I will make a little more progress, then I will give way to the hon. Gentleman.

The problem that Jobcentre Plus has is that it is expected to support people in going back into work for the first 18 months of their jobseeker's claim, but it is finding it desperately difficult just to be able to process the claims as people initially come in, because of the numbers that it is dealing with, as there has been a threefold rise in benefit claims.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I will continue to make another point on Jobcentre Plus. There will still be an opportunity for the hon. Gentlemen to intervene.

I agree with my hon. Friend the Member for Banbury that Jobcentre Plus staff do an incredibly difficult and important job, but they are also frustrated by a system that hampers their best efforts and often causes hardship for claimants. Claims are taking so long to be processed that individuals are forced to apply for crisis loans. That cannot be right. There are people who have worked hard, often giving years in tax contributions, who find that the archaic system means that they have to apply for crisis loans to feed their families. We should be seeking to ease the pain and trauma of becoming unemployed, not adding to it.

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Photo of David Taylor David Taylor Labour, North West Leicestershire

I thank the right hon. Lady for giving way. She is ladling compliments with a trowel on to Jobcentre Plus staff. Why, then, in her motion does she call on the Government

"not to backtrack on the use of the private and voluntary sectors in welfare-to-work provisions"?

All the available recent evidence shows quite clearly that where outsourcing has taken place in recent years, it is less effective, more costly and unlikely to contribute towards the resolution of the problems that the nation's economy is facing. Is it not the case that her friends in the private sector will be able to cherry-pick, at great cost to the taxpayer and little benefit to the unemployed?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

The evidence is the opposite to that. I am sure that the Secretary of State was pleased to receive the hon. Gentleman's warm welcome for the Government's Welfare Reform Bill, which is due to return to the House. If the hon. Gentleman comes along next Tuesday—17 March—for the final stages of the Bill, the Secretary of State will no doubt welcome his contributions to that debate.

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Photo of Gordon Prentice Gordon Prentice Labour, Pendle

What she just said seems to be contradicted by the evidence insofar as it relates to what is happening in Lancashire and Cumbria. On Friday I met Peter Chadwick, who is responsible for that area. I have a letter from him, in which he writes:

"Despite the increasing volumes, I am pleased to be able to say that our average actual clearance times for the main benefits are holding up well."

He mentions jobseeker's allowance being delivered in 10.1 days, compared to the 11.5-day target; incapacity benefit delivered in 13.1 days, against a 15-day target; and income support delivered in 8.5 days, against a 10-day target. So people are being dealt with more quickly than she would invite us to believe.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I am grateful to the hon. Gentleman for referring to the experience that he quoted. Experience is patchy across the country and there are many areas where— [Interruption.] Ministers on the Front Bench sneer at that, but they should not do so. In some areas people have had to find charitable support because their claims are taking so long to get through Jobcentre Plus. What is happening is not something to be sneered at; it is seriously affecting people at some jobcentres. Such delays are one of the issues with Jobcentre Plus. Giving people the fast, targeted and relevant support that they need is vital, yet all too often the processes can be slow, cumbersome and generic. We should be able to provide a smarter and more efficient service.

As I said a few minutes ago, I am sure that everybody in the House will join me in saying that Jobcentre Plus staff are doing the best that they can in incredibly difficult circumstances; any steps that the Government take to streamline the processes that those staff deal with every day will be welcome. Creating a jobcentre system that is fit for purpose is an essential weapon in the battle to tackle unemployment.

What of the services that the Government offer the unemployed? They launched the new deal, their flagship programme, in a blaze of glory, but it can be described at best as a damp squib and at worst as a damning indictment of the Government's failure properly to grasp the challenge of unemployment. In 2008, fewer than 30 per cent. of the new deal participants found a job. One third of participants on the new deal for young people had been on the programme at least once before, and that figure rises to 40 per cent. for the new deal 25-plus. There can be no denying that the new deal is an abject failure. Half of all young jobseekers who leave the new deal for young people end up back on benefits within the year. I hope that when he responds, the Secretary of State will accept the failings of the new deal system—

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

Wait—a little patience.

Those failings have been described by Mr. Field, the former Minister and undoubted expert on the matter, as "woeful" and a calamity. If the Secretary of State does not accept that, will he accept the findings of a report published by his own Department last September? It said that claimants

"were more or less unanimous in the view that the New Jobseeker Interview and the Jobseeker Agreement served administrative purposes only. It was seen by almost all as a form-filling exercise that offered no real help in getting back into work or training. Very few had read the Agreement in detail before signing it."

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

The right hon. Lady asked me about the new deal. Does she agree with her new boss, the soon-to-be Lord Freud, that by any measure the new deals have been a great success? He also said that they had been enormously successful.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

That intervention does not even merit a response.

I return to the words of the Department's own report, which found that half those interviewed said that they never spoke to anyone at these interviews; instead, they just handed their forms to a receptionist for processing. The view of one claimant was:

"It's just: 'okay, sign it, there's your money, go'."

Jobseekers get to the new deal after 18 months on jobseeker's allowance. One person said that he just

"sat there for six months", received no work experience or training and

"spent the majority of the time playing solitaire on the computer or listening to music."

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Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

In the motion to which she is a signatory, the right hon. Lady has put forward some interesting ideas that are worth debating; I am thinking of the loan guarantee scheme, relaxing the rules on jobseeker's allowance for training and cutting taxes for new employees. I see those as pump-priming measures. Will she say what her party would spend up front on those three measures in the financial year 2009-10?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

The hon. Gentleman is quick to suggest that we have a debate on the motion, and that is exactly what we are doing. If he is lucky, he will be able to catch Mr. Speaker's eye and make a fuller contribution to the debate later.

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Photo of Graham Brady Graham Brady Conservative, Altrincham and Sale West

Rob Marris mentioned pump-priming and the Secretary of State talked about fiscal stimulus. Treasury Committee members were in Leeds this morning and heard remarkable tales about the capital programme in further education. It was completely suspended in December, leaving construction companies, which are waiting for the work and desperately trying to keep people in employment, floundering and unable to know how to proceed. Is it not ironic to hear about fiscal stimulus from a Government who prevent their own projects from going forward?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

My hon. Friend makes an extremely important point. There is, of course, a double-whammy: not only are jobs not being created because the work is not taking place, but there will not be the extra places that would have been available to people to retrain and reskill. At a recent forum on the new deal that I chaired in Maidstone, I heard from someone who had been on the new deal and from an employer, both of whom said that the right training was not being provided and that it did little to help people to get into work.

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Photo of David Evennett David Evennett Shadow Minister (Business, Innovation and Skills)

I am listening to my right hon. Friend with great interest and I support what she is saying; she is putting the real situation vividly before the House. Does she share my concern about the growing number of young people who are not in employment, education or training? Is not that another example of Labour failing in government?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I could not have put it better myself; my hon. Friend makes an extremely valid point. [ Interruption. ] We hear laughter from those on the Government Front Bench—laughter about the fact that so many young people are not in education, employment or training, and that their life chances are being affected as a direct result of decisions taken by this Government. It does not look from the reaction that we have had so far as if this is going to be possible, but I had hoped that Ministers might want to accept that reform is desperately needed. [ Interruption. ] I am grateful to my hon. Friend Mr. Clappison for pointing out to me the increase in the number of young people who are not in education, employment or training. Over the period from 2007 to 2008, there was an increase from 655,000 to 857,000, so 200,000 more young people are in that position.

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Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

My right hon. Friend is talking about the new deal. Does she agree with the Select Committee on Work and Pensions that there must be great concern about the viability of the flexible new deal now that, on Government accounts, there will be some 300 per cent. more entrants to the scheme than was first thought? How can it be viable with the same amount of money and so many more people?

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I am very conscious of what the Select Committee report said about this point. As my hon. Friend says, it raised some genuine questions about what the Government are doing. We need clarification from the Secretary of State as to where things stand on the flexible new deal, because the numbers have increased. I would have hoped that the scheme would resolve some of the problems that we have seen with the Government's new deal programme, but not only have concerns been expressed in the Select Committee report, but there has been a lot of speculation in the press that there are considerable problems with the contracting process and that the October start date is in jeopardy. I hope that today the Secretary of State will be able to guarantee to the House that the flexible new deal will start in October, as promised.

However, that scheme represents only small steps towards the kind of welfare reform for which my party has been calling for years. I hope that the Government will be in a listening mood and that we can finally persuade them to take proper measures to tackle this recession and the unemployment crisis. First, we need a proper national loan guarantee scheme, because businesses need to get credit flowing again; then firms can keep people in their jobs and the unemployment rate can be checked. We urgently need to protect the jobs that exist. I hope that the Secretary of State will accept the need to introduce a proper scheme that covers all businesses of all sizes and in all industries.

Secondly, we need more support, and sooner, for everyone who is unemployed. The flexible new deal will bring the wait for support down from 18 months to 12, but that is still too long. Under Conservative welfare reform proposals, no one will have to wait more than six months for a personalised employment programme, and for those under 21 support will be available after three months. Youth unemployment is at its highest point since 1995, and it is essential that people just starting out in their working lives do not become detached from and disheartened about the whole process of trying to find work. For everybody who has been unemployed for three months or more, we are calling on the Government to provide employers tax cuts for new jobs. With a record low of vacancies in the economy, it is essential that people have the skills to allow them to compete for every job they want to, so we need to relax jobseeker's allowance rules to allow everyone the opportunity to go on a full-time training course from day one of their claim. This is not the time for half measures and timid steps forward. I urge the Secretary of State to be brave and to take the proper action that these times call for.

In the past few weeks, the Secretary of State and the Minister for Employment and Welfare Reform have been keen to reassure us that jobcentres are better because they no longer look like those seen in the film "The Full Monty". I have been somewhat bemused by their preoccupation with that issue, for what matters is not what the job centre looks like, but the service that it can offer. Whether someone is blue collar or white collar, when they lose their job such distinctions seem immaterial—they just want help and they want it as soon as possible.

The last 12 years of Labour government have left us woefully ill-prepared to deal with this recession and its impact on employment, but I call on the Secretary of State to prove his progressive credentials and to adopt our proposed measures. That would offer immediate help to people worried about their jobs and to people waking up everyday without a job to go to, and it would make a real difference to the lives of millions of people.

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Photo of James Purnell James Purnell Secretary of State, Department for Work and Pensions 4:20 pm, 10th March 2009

I beg to move an amendment, to leave out from "House" to the end of the Question and add:

"notes that unemployment is rising in Britain and across the world;
believes that unemployment is never a price worth paying and that as unemployment rises the amount of support that is offered should be increased;
further notes that the Government is investing nearly £2 billion extra into giving additional assistance for the unemployed and that this will provide additional help to people losing their jobs, including a national rapid response service to react to redundancy situations, advice from day one of unemployment on skills and finding a job, assistance to pay mortgage bills to prevent people losing both their jobs and their homes, cash incentives for employers to recruit and train unemployed people, more training opportunities to help people back to work and more places on the New Deal employment programme;
believes that it is preferable to invest millions into helping people now than to spend billions of pounds of public money on benefits in the future;
further notes that in previous recessions the numbers on inactive benefits were allowed to increase dramatically;
further believes that the mistakes of previous recessions must be avoided by investing now to prevent people becoming long-term unemployed today;
and further believes that the Government should increase the support offered to people trapped on benefits by previous recessions."

We are debating a serious issue today, and I expect that there will be some areas on which we agree. There is no disagreement in my party that this is a serious recession. We all recognise that unemployment is rising sharply. Although the Conservative motion does not refer to it, I think that Mrs. May will agree that rising unemployment is a global problem and that countries around the world are being affected by it. In the UK, for example, unemployment is 6.3 per cent. It is 6.9 per cent. in the United States, 8 per cent. in Germany and France and now nearly 14 per cent. in Spain. Industrialised countries are all trying to respond to the same challenge, and we are all trying to do two simple things: first, to prevent job losses wherever possible, and, secondly, to get people back into work as quickly as possible.

I am sure that the right hon. Lady agrees that those should be our aims, but there is a difference between us about how we should respond and, in particular, about how we should fund that response. In that respect, I thank the right hon. Lady for calling today's debate to highlight the fact that she would cut £2 billion from the employment budget precisely when unemployment is rising.

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

The right hon. Lady says that she would not, but she confirmed it in answer to my question. She refused to say that she was in favour of the fiscal stimulus, so she would not put the £2 billion in. When my hon. Friend Rob Marris asked her where any of her policies were coming from, she refused to answer that question as well. She can intervene now if she wants to, and confirm that she would put that £2 billion in. Where would it come from? Exactly—she knows, and the whole House can see, that she would cut £2 billion from the budget precisely when unemployment is rising, repeating the mistakes of past recessions.

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Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Does my right hon. Friend agree that an official Opposition whose motion proposes at least three plans to tackle the extreme difficulties facing our work force, but who refuse on the Floor of the House to put any figures on their plans, are merely full of hot air and are not a serious Opposition?

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

The first test of a serious Opposition is whether they are able to say how policies are funded, and they have completely failed that test today. As is so often the case when people try to divert attention from the fact that they are embarrassed about their policy, all the Opposition have succeeded in doing is draw attention to the fact that they would cut £2 billion from the budget. That is why, as my hon. Friend says, their motion is a mixture of straw men and fantasy policies. Their policy on national insurance is a fantasy policy; they have absolutely no way of funding it. They cannot say that they will cut tax on employers without saying where the money will come from. That is a fantasy policy—the sort of thing that the Liberal Democrats do most of the time. I would have thought that they at least aspired to meet the test of being more intellectually credible than the Liberal Democrats, but they have failed in that as well.

The right hon. Member for Maidenhead says that people should be able to train from day one. That is a straw man: they can train from day one, as long as they are looking for work. People are doing that all around the country. The Opposition want to say that they would increase the pace at which the invest-to-save policy is rolled out. That is our policy, so that is another straw man. If they are saying that that would fund the £2 billion hole in their spending plans, it is not just a straw man, but a fantasy policy as well.

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Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Scotland), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs)

I am listening to the right hon. Gentleman talk about cuts and straw men. Let us leave the straw men to one side. Will he answer this question, which no one else in his Government has: why are his Government cutting half a billion pounds for Scotland over the next two years?

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

We are increasing spending in Scotland. Indeed, the money we are spending here will be spent in Scotland as well. The £2 billion will be spent in the normal way through Barnett consequentials in Scotland.

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

I think the right hon. Lady wants to intervene to tell me where the £2 billion is coming from.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I did indeed want to intervene on points that the Secretary of State is making, particularly about invest to save. He is absolutely right—he has followed our policy on welfare reform and he is adopting our proposals on invest to save. However, he is being timid about it, which means that people will not get the help that they deserve as quickly as they should. Will he not now adopt our welfare reform proposals in full, rather than take the rather timid approach that he has taken hitherto?

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

The right hon. Lady's new boss—I am sorry to mention him again—said clearly that it would

"take at least six years to roll out a full system of provider contracts", which is exactly what we are doing. She is obviously happy to have him as a Tory Front Bencher, but she cannot say that he is right and then suddenly say that he was talking nonsense when he said that we were proceeding at the right pace. I am glad that she agrees with our policy on introducing that system.

The Opposition's motion is a do nothing motion. They are not prepared to spend the money, so it is a motion full of fantasy policies. This is not just a theoretical debate, it is about real people. Every time someone loses— [Interruption.] They might want to listen to this, because it is about real people. Every time someone loses their job it is a crisis, but the fundamental thing to do to prevent it from becoming a tragedy is to help people back into work as quickly as possible. The inability to do that was not a theoretical debate in the past; it was Government policy. In the 1990s' recession, the number of people claiming incapacity benefit increased by half a million. The unspoken Government policy at the time was to shift people off the unemployment roll and classify them as sick and disabled. As if that were not a sick enough policy, the truly sick thing about it was that when people were put on to benefits, they were given no help to get better and no help to get back into work. It is because of this Government that people are getting that help.

The reason unemployment was considered a price worth paying under the Conservative Government was simple: they were not prepared to spend the necessary money on employment services. The people who paid the price for their policy were the long-term unemployed. We are determined to ensure that that does not happen again.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I am grateful to the Secretary of State for his generosity in giving way for a second time. If his Government's policies on people on incapacity benefits were so great, why do we still have 2.5 million people on incapacity benefit?

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

The number tripled under the Conservative Government. It went from 700,000 to 2.6 million. It is only because of our policies that it is starting to fall. I am happy to deal with welfare reform at the end of my speech, but I shall go through it in the right order.

We know the history of previous Tory Governments and their mistakes, but the extraordinary thing is that the Opposition want to repeat those mistakes. It is as though they believed that the '80s and '90s were not mistakes, and that they followed exactly the right policy all along. They are not prepared to pay the cost of increasing borrowing, so they would not be prepared to help people back into work over the next two years. We would therefore pay the cost over the next two decades, as we have over the past two.

When it comes to the Tory response to unemployment, it is not about theories. It is about the history of our constituencies and of too many families that were abandoned by the Tories' policies. The danger of the right hon. Lady's policy is that that could be the situation in the present, too. It is important to ask ourselves what an employment policy without the extra £2 billion would look like. That is the question that she wants desperately to avoid.

In considering that question, let us start with the rapid response service. Today, if a company announces redundancies, it is helped by the rapid response service. We announced last November that we would double the funding for the service, and we will double it again next year. That is not fantasy policy but real delivery. The right hon. Lady said that we have announced policies but not actually delivered them. Through the rapid response service we have already helped more than 800 companies, and we will continue to help. That is not fantasy policy but real delivery that is helping people, through jobs fairs, advice on writing a CV, debt advice and reskilling. If the Tories had their way, of course, those things would not be funded and we would have to cut the rapid response service.

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Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

Woolworths closed with 30,000 redundancies. What has the Secretary of State's rapid response service done for those people?

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

We have been working with Woolworths ever since it went into liquidation. [Interruption.] We have provided help for people in job searches, and we have provided jobs fairs and a wide range of help. Indeed, a large number of people who worked in Woolworths have found work through Jobcentre Plus. Clearly the situation is very worrying for anybody who has not yet found work, and it is our responsibility to continue to help them.

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Photo of Julia Goldsworthy Julia Goldsworthy Shadow Secretary of State for Communities and Local Government

Many constituents have come to see me not because they have lost their jobs but because their hours have been reduced—a lead indicator that businesses are in trouble and people are at risk of losing their jobs. Should not the Government pay more attention to supporting those businesses to ensure that redundancies are a last resort, and can be avoided when possible?

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

The hon. Lady is right—that is important. Losing overtime and hours is clearly a challenge. However, the right response is the tax credits policy, which we introduced. It will significantly cushion the reduction in people's funds, but I believe that the Liberal Democrats oppose it. The right response to people who must reduce their hours is to say that the tax credits policy will help cushion that. She might like to discuss not opposing it with her colleagues.

Under the Conservatives, the rapid response service would be rolled back. The right hon. Member for Maidenhead nearly said some kind words about Jobcentre Plus. I agree with Tony Baldry that it has done an incredibly good job. Many people already recognise it as world class, but, in the past few months, it has really earned that reputation. For example, despite the doubling of the claims with which it deals, we are processing claims in 10 days, down from 13 days two years ago. The right hon. Lady said that it was wrong to close jobcentres, but I thought that Conservative party policy was to make public services more efficient. We have done exactly that. We have improved the service that people get and reduced the time that they have to wait to get their benefits, while decreasing spending on back-office processing and increasing front-line advisers. We have made the welfare state more active by making it more efficient. I would have thought that she supported that.

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Photo of Sandra Osborne Sandra Osborne Labour, Ayr, Carrick and Cumnock

Will my right hon. Friend confirm that, when people lose their jobs, the rapid response team or those at Jobcentre Plus will inform them of all the benefits to which they may be entitled, and that the onus will not be only on the person to find out for what they are eligible? A constituent made that allegation to me last week, so I would welcome the Secretary of State's confirmation that that is not the case.

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

The rapid response service cannot go into all companies—sometimes companies do not agree to that—but, wherever it goes in, benefits are clearly an important part of the information it gives people. I can therefore give my hon. Friend that assurance.

In November, we announced £680 million extra, which the right hon. Member for Maidenhead would oppose, for Jobcentre Plus. She claimed that we had announced but not delivered that, but we have already recruited 4,000 of the extra 6,000 staff that we said we would fund. Again, that is not fantasy policy, but genuine delivery. What would happen under Tory policy? Conservatives would cut all that help and revert to the position in the 1980s, when it was no longer necessary to sign on to receive benefit. Consequently, it is estimated that the claimant count in 1986 was around four percentage points higher than it otherwise would have been. That cost more than £4 billion in today's money of extra benefit spending. Conservative Members would make exactly that mistake again today. They are not prepared to put the money in now to help people get back to work, and they would therefore increase the cost in future and the amount that taxpayers had to pay. The Conservatives thought that public spending was not a price worth paying; consequently, the long-term unemployed paid the price.

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Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

My right hon. Friend mentioned statistics. I know that he was in short trousers at the time, but I remind him that, when the Conservatives were in government, they changed the figures 18 times—an average of once a year. They cooked the books for what counted as unemployment and what did not. I pay tribute to the Government, who changed the figures once in 12 years to put them on the International Labour Organisation standard. The Government have kept the figures transparent. Does my right hon. Friend fear that, if the Conservatives got in, they would start cooking the books again on measuring unemployment?

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

My hon. Friend makes a powerful point in his usual way. He is right—the Conservatives were more interested in fiddling the figures than in helping people back to work. That was no accident; they were not prepared to increase spending to get people back to work. As I have said several times, they would repeat that mistake.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I thank the Secretary of State for his continuing generosity in giving way. Before Rob Marris interrupted him, the right hon. Gentleman made a point about being prepared to put money in to provide a service to people. The Department's budget will be lower in real terms in 2010-11. What changes will he make?

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

I will deal with that later in my speech. [Hon. Members: "Ah!"] I can do it now, if hon. Members want. We will continue to make efficiency savings because, like any industrial organisation— [Interruption.] It is extraordinary—the Conservatives claim that they can fill their spending black hole through efficiency savings in all Departments, without affecting front-line services, yet, when a Department achieves £1.5 billion of efficiency savings, they immediately say that they are cuts. We have been able to improve our services, reducing processing times from 13 to 10 days, precisely because we have achieved efficiency savings, but that has released money to go to the front line. We will continue to have those efficiency savings, by using automation, computerisation and better working practices, but we will also put in £2 billion of extra money. [ Interruption. ] The Opposition say that they would do that too, but they would not put in the extra £2 billion. They did not do that when they were in power, so why would they do it now?

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

Does the Secretary of State agree with the Minister for Employment and Welfare Reform that the £230-odd million allocated for the first phase of the flexible new deal is adequate, or does he accept the concerns of the Select Committee on Work and Pensions that it is not adequate for the numbers flowing on to the system?

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

Actually, my right hon. Friend said that we had to look at that, and that is what we are doing. One of the uses to which we are putting the money from the pre-Budget report is increasing the amount going to the flexible new deal, precisely because the costings are increasing. However, the hon. Gentleman can ask me about that issue again when I turn to it later in my speech.

I was glad that the right hon. Member for Maidenhead recognised that job clubs already exist. Perhaps she should tell the Leader of the Opposition, because he keeps saying that we should introduce them. The truth is that job clubs continued after her Government lost power, but we modernised them, contracting with the private and voluntary service providers to deliver them. What we announced yesterday was an extra £40 million to ensure that we can widen the service and ensure that everybody gets a service that is personalised to them, so that, for instance, professionals and blue-collar workers get the right service for them.

That is exactly the right thing to do and, since the right hon. Lady asked, the programme will start in April, along with the rest of the six-month offer. [ Interruption. ] She says, "Along with everything else," but that is when we said we would introduce the programme. We announced in January that we would introduce it in April and we will introduce it in April. She may not realise that the difference between being in opposition and being in government is that people actually have to do things in government—they cannot just put out a press release on something and somehow it magically comes along. When people want to do things in government, they need a certain amount of time to implement them. We said that the programme would start in April and it will start in April.

Let me turn to welfare reform. As I am sure the right hon. Lady would agree, the Government have made strong—and in some respects remarkable—progress on welfare reform over the past 10 years. That is a genuinely impressive record. Does she disagree with the soon-to-be-Lord Freud's views on that issue? No. So I am sure that she will agree with him that we have made remarkable progress over the past 10 years. She will welcome the fact that 300,000 more lone parents are in work now than in 1997. She said that the level of people on sickness benefits was too high in this country. Actually, it was lower than in Finland, Denmark, Holland, Sweden, Australia and the United States. This country was at the bottom of the league of international comparison, precisely because we reformed the welfare state and had a labour market that got people into work.

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

Can the Secretary of State confirm the story in The Observer at the weekend that only 6 per cent. of claimants on incapacity benefits working through private companies secured employment? Can he also tell us why that report has not been made public?

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

I am sure that the hon. Gentleman has seen the letter in the Library from our head of statistics on 13 February—before the press speculation, therefore—which explains precisely why, in his professional judgment, he has to wait for the figures to be validated before they are issued in a parliamentary answer. We have to follow the advice of our head statistician.

I am happy to speak to the hon. Gentleman about the policy in general, however. Overall, private and voluntary sector providers have helped us to improve performance significantly. Last year, they got more people into work than the year before, despite the fact that the economy was declining. However, that is in no way to criticise Jobcentre Plus or to say that it does not have a fundamental role; rather, the truth is exactly the opposite. It has always been a false choice between public and private. The point is to have a system that, through competition, gets the best out of both and ensures that people can get the contracts that they can best deliver.

With pathways to work, we also had a number of teething problems when Jobcentre Plus started working with those groups. Hon. Members might remember people who had been on incapacity benefit—often for a long time—being subject to mandatory referrals. We recognise that we need to improve performance—that is an issue for our providers, but it is also an issue for us and for Jobcentre Plus. We need to work on how we are referring people to those private providers and ensure that our systems are properly integrated. That is what we are working on, and performance is already improving. As soon as the figures are validated, we will release them through a parliamentary answer.

The right hon. Lady asked me about the flexible new deal. There is no mystery about this. Jobcentre Plus has had to change its plans and get more money, to reflect the fact that unemployment is rising, and we have had to do exactly the same thing with the FND. Doing that with private providers in the middle of a contracting process has meant that we had to write to them and ask them to amend their plans, which they have done. We continue to be committed to getting this in October, so, far from being in crisis, as the right hon. Lady's motion says, all that is happening is that we are adapting the policy to reflect the fact that the economic situation has changed since we started the contracting process. I hope she will withdraw the allegation that the system is in crisis.

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Photo of Theresa May Theresa May Shadow Minister (Women), Shadow Secretary of State for Work and Pensions

I did indeed ask the Secretary of State a specific question about the flexible new deal. I did not say that it was in crisis; I said that there were problems with it. I recognise that there has been a need to go back to the contractors, but what I specifically asked him was whether he would guarantee that it would start in October. It is due to start on 1 October, and he has said that the Government are committed to an October start. Will he guarantee to the House that the flexible new deal will start in October?

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

Yes, we are committed to doing it in October. The right hon. Lady should read her own motion, which talks about

"the failure of the procurement process for Flexible New Deal".

I hope that she will not be saying that again. She had not even read her own motion; that much is clear.

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Photo of Tony Baldry Tony Baldry Conservative, Banbury

Is not the issue that we have two sorts of unemployment? There are those who have been unemployed for a considerable time, whom the welfare reform measures are trying to get back into work. The old job clubs were helpful for such people. Then there are the newly unemployed, about whom we hear practically every day in all our constituencies. They are desperate to get back into the world of work—they want to do it tomorrow. We require a step change in how we help those people by supporting them while they are out of work and getting them back into the world of work as speedily as possible. There is no lack of motivation among those people. I do not wish to make a partisan point, but I have to tell the Secretary of State that, until one started in Banbury, there was no job club in Oxfordshire. We are trying to meet the needs of those who have lost their jobs and who want to get back into the world of work tomorrow, if at all possible.

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

Two or three years ago, the people who came on to jobseeker's allowance with very high qualifications—if they came on to JSA at all—were getting back into work very quickly. In the new economic circumstances we have had to adapt our policy and to expand job clubs. The hon. Gentleman is absolutely right to say that there should be more help for people early on, and that is exactly why we are putting in an extra £2 billion. I hope that he, unlike those on his Front Bench, will support that.

The hon. Gentleman is also right to say that there are two broad categories involved. The first includes people who have been out of work for a long time, including workless parents and those who are sick or disabled. For them, we need to ensure that we keep up the pace of welfare reform. Some people say that we should postpone that reform until the economy recovers, but I profoundly disagree. That would involve saying to someone who was sick or disabled, "Okay, you're not going to get any help for the next couple of years", or to a lone parent, "You're not going to get any help with your skills or with motivational courses." It would also involve telling drug users that they were not going to get any help to get clean and get back to work—

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

I did not accuse the right hon. Lady of having that policy, but I am happy to make that accusation, given that it actually is. She is obviously a bit too sensitive about it. We have to recognise that it is going to be harder for people to find work in the next couple of years. That is precisely why we should redouble our efforts, and not postpone welfare reform. I know that she agrees with that point.

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Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

Does the Secretary of State acknowledge that the problems relate not only to those with significant skills who are going to find work fairly quickly? There will also be a big rise in long-term unemployment as people with skills that would have got them a job a year ago will not find a job very quickly in the current climate. The estimate that we on the Select Committee were given was that there would be a three to fourfold increase in long-term unemployment over the next three years. Does the Secretary of State agree with that estimate?

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

That is precisely the point that I was making. A few years ago, people with those qualifications would have found work very quickly. Now, we need to increase the help for them, because it will be harder for people in those groups to find work due to the state of the economy.

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Photo of David Evennett David Evennett Shadow Minister (Business, Innovation and Skills)

I am listening intently to the right hon. Gentleman. Does he agree that adult and community learning provides an important route to training for many people who have been long-term unemployed? Have not the Government cut the number of community learning opportunities over the last couple of years?

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

On spending on further education, £83 million of the £2 billion extra spending that we announced—I risk boring the House by pointing out again that the Opposition are against it—is intended for training, so perhaps the hon. Gentleman will have a word with his Front-Bench team and try to persuade them to give up this frankly insane policy, which would repeat the mistakes of the past.

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

Perhaps the hon. Lady is going to say that the policy is insane.

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Photo of Anne Main Anne Main Conservative, St Albans

On training, I recently participated in a debate on the curry industry, which has vacancies for skilled chefs. So far, however, the proposal to set up a specialised NVQ training for ethnic cuisine has fallen on deaf ears so far as the Government are concerned. Is the Secretary of State prepared to give more support to set up specialist training so that we can fill the vacancies in the curry industry, as some unemployed people would like to see better opportunities provided in the catering industry?

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

As I have said, we have announced an extra £83 million to help people who are out of work back into work—and the hon. Lady has Innovation, Universities and Skills questions every month if she wants to put that question to the relevant Minister.

We can redouble our efforts, unlike the Conservative party, because we are prepared to increase our investment. We can also increase conditionality because we can increase our investment. The Conservatives would reduce that investment, cutting support and, in the end, they would cut the conditionality, which is exactly what happened when they were in power. That is why they ended up using unemployment as a tool of policy; that is why they said it was a price worth paying, because they were not prepared to pay the cost of the right policy. The right policy is to increase support for people: we are doing that and we are prepared to pay that cost; the Conservatives are not, and the people who would pay the price if the Tories ever got back into power would be the unemployed.

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister 4:47 pm, 10th March 2009

I, too, welcome the opportunity to debate unemployment. Aside from the loss of a family home or a bereavement, there can be few more traumatic things than losing a job. Yet since we last debated this topic on 7 October last year, another 146,000 people have lost their jobs and unemployment is predicted by the CBI to reach 2.9 million by the start of 2010. The claimant count was 1.23 million in January 2009—the highest figure since July 1999—and is up 480,000 on the year. The total number of economically inactive people of working age now stands at 7.86 million. As Mrs. May said, more than 5 million of those are on inactive benefits. We all know that many of those people want to get back into the job market.

Unlike in previous recessions, today's unemployment is not restricted to manual jobs or to the north, Wales or Scotland. No, it is rising evenly across all employment sectors and in all parts of the country.

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Photo of Peter Bone Peter Bone Conservative, Wellingborough

I am listening to the hon. Gentleman and he is quite right to say that unemployment is one of the most devastating things that can happen. Does he agree that it is strange that only one Government Back Bencher is in the House, while the Opposition Benches are full? Does that not say something about how seriously the Government take this issue?

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I agree with the hon. Gentleman that this is a hugely important subject; the presence of several Ministers reflects that. Some Labour Back Benchers seem not to agree with some of the Government's proposals, which might well be another reason why those Ministers are here.

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

Well, David Taylor may be one.

Young people have been the hardest hit by the recession. Over the past 12 months, we have seen a 48 per cent. increase in the number of 18 to 24-year-olds claiming jobseeker's allowance—the highest increase of any age group. Back in 1997, 18 to 24-year-olds represented 24 per cent. of the unemployed; today they account for 32 per cent. The Government's plans to increase the number of apprenticeships are laudable, but with more than 1,000 redundant apprentices in the construction industry and approximately 150 apprentices previously employed by Woolworths now unemployed, where are those companies willing and able to take on young people without some form of fiscal stimulus to assist them?

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Photo of Julia Goldsworthy Julia Goldsworthy Shadow Secretary of State for Communities and Local Government

Does my hon. Friend agree that local authorities are leading the way in this respect? A number of local authorities are helping to support young people who are finding it difficult to get into work by providing apprenticeships. Is that not something that the Government should support—devolved responses rather than trying to direct everything centrally?

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I entirely agree with my hon. Friend. Indeed, I intend to refer to such an example from my constituency. People who traditionally have never been unemployed are losing their jobs, and the support and advice given to those people have to be reviewed and changed.

I want to share with hon. Members an account of the experience of a former Woolworths employee who went to our local job centre in the new year. More than 550 people from Woolworths were made redundant in Rochdale. This is what she said:

"The kind of support that I expected was advice on bill payment, debts, council tax etc., opportunities to retrain and grants and bursaries available... The JCP seems to be woefully understaffed and I had to wait 20 minutes for my last appointment, with the amount of people waiting to be seen it has the overall effect of an assembly line or cattle market."

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Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

A constituent of mine has written to me about Woolworths in Letchworth, saying that she has not had any help from a rapid response unit. She thought there was special help. Where is it? I have written to the Secretary of State today to ask him what is going on. In response to my intervention, he said that a lot is happening. Has the hon. Gentleman seen any evidence of it?

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

Like the hon. Gentleman, I met the local Jobcentre Plus manager to discuss that. To be fair, I know that there were some problems with the receivers in allowing Jobcentre Plus staff into Woolworths, but once those redundancies had happened, the help referred to in the motion tabled by the official Opposition and in our amendment to it was not available—it is not there at the moment. That is one of the main differences between the policies of the Opposition parties and Government policy.

Many people who are currently not long-term unemployed have never been unemployed before. The lady I referred to worked at Woolworths for 35 years, but suddenly she finds herself redundant. Those people need advice not only on benefits and job seeking, but on debt counselling and mortgage advice, which my constituent referred to. If someone's weekly income suddenly drops from £500 a week to £60.50, radical lifestyle changes are needed, and people need support and help to make those changes. Those changes and that help are not available at the moment, but the Government amendment to the motion and Government policy reiterate support for the Government's welfare reform proposals and the flexible new deal.

There is an almost daily drip of the announcement of new initiatives. Yesterday, the Secretary of State announced £45 million for white-collar workers, but where is the coherent strategy? What help is coercion of the long-term unemployed when those newly unemployed have to wait 12 months before they can access the full range of services that Jobcentre Plus has to offer? How are young people such as those who started a new deal for young people programme after six months out of work helped by that period being changed to 12 months? Those policies were written for the labour market of two years ago and are totally inadequate for the current circumstances.

The Work and Pensions Committee report "DWP's Commissioning Strategy and the Flexible New Deal", published last week, raised major concerns, including whether the £236 million budget for phase 1 is enough. The Centre for Economic and Social Inclusion has estimated that to achieve the flexible new deal targets, an additional £1 billion would be needed in 2009-10. Can the 37.5 per cent. improvement in job outcome performance over what has been achieved by DWP contractors in the past be met in the context of a significant reduction in funding? What is the evidence base for the wholesale marketisation of welfare-to-work provision in the United Kingdom?

The position has not been helped by reports in The Observer at the weekend suggesting that the Minister for Employment and Welfare Reform had suppressed figures showing that private firms

"placed just 6 per cent. of incapacity benefit claimants on their books into work, rather than the 26 per cent. they had claimed would be possible when they bid for contracts. This compared to 14 per cent. achieved by state job centres during the same period."

I note the Secretary of State's response, but perhaps he should remind the Prime Minister of the rules regarding the release of statistics. He certainly did not apply the same strictures when it came to the release of knife crime figures.

Ideologically, as Liberal Democrats we are not opposed to marketisation, although we are concerned about the headlong rush into it with what appear to be inadequate resources. The DWP's own research, shown in the review of adviser discretion released on 16 February, showed that

"advisers... believe they could get better results if they had discretion".

We agree with that, and would give people the help that they need from day one.

Both the Government and the Conservative Opposition propose giving employers subsidies for taking on unemployed people. In January the Government proposed £2,500 golden hellos, while the Conservatives have proposed tax breaks for those taking on unemployed people which would cost £3 billion. Where is the evidence that that sort of generalised employment scheme works? Back in the 1980s and 1990s there were numerous employment schemes, including the national insurance contribution holiday, which ran from April 1996 until 1999. It was expected to attract 130,000 applicants, but there were only 2,718 applications. The work start scheme ran from July 1993 until April 1998. John Atkinson of the Institute of Employment Studies found that the

"NIC Holiday appeared to be a bonus for recruiting a long-term unemployed person, rather than an incentive for so doing."

We fear that, regrettably, the Government's golden hello and the Conservatives' national insurance holiday are likely to have the same result.

The real problem facing businesses and stopping them from recruiting is not just a lack of credit, but a real and prolonged lack of demand for their goods and services. That is why the Liberal Democrats' proposal to launch a "green road" out of the recession, using the £12.5 billion being used to fund the VAT reduction, is so important. It will fund insulation and energy efficiency schemes in 2 million homes, and will begin a five-year programme to insulate every school and hospital.

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Photo of Graham Brady Graham Brady Conservative, Altrincham and Sale West

I am very interested in what the hon. Gentleman is saying. How much of the £12.5 billion has already been spent?

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

That is a question for Ministers to answer, but I would imagine that a proportion, probably a third, has already gone. When commenting on a policy, however, it is important to suggest an alternative. At least we are costing our policy, which is more than the Conservatives are doing.

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Photo of John Mason John Mason Scottish National Party, Glasgow East

Does the hon. Gentleman agree that if the money used for the VAT cut had been invested in capital construction, about twice as many jobs would probably have been created?

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Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I do agree. We would expect between 90,000 and 100,000 extra jobs to be created with that £12.5 billion if our proposals were implemented. We consider ours to be a more constructive and long-lasting approach. We would build 40,000 extra zero-carbon homes and provide a raft of public transport schemes that together would create 100,000 jobs. Most of the money would be spent now, this year—not in the future—and would leave us with a lasting legacy that would save energy, reduce fuel bills and fight climate change. It is supported by the Renewable Energy Association, which has argued that investment is essential to ensure that the UK catches up on what Europe, the US and China have already committed towards green energy. Investment in people—their skills, homes and communities—is the best way to demonstrate faith in people and show that that "Yes we can" approach can be adopted.

We need flexibility and a willingness to adapt and build on the strengths of our communities. Last year, part of my constituency, Falinge, was highlighted by the media as the "benefit capital of Europe", and ranked the worst in England—and the Secretary of State visited it. In addition, it is ranked third worst for people with poor health, sixth worst for income and 15th worst in overall deprivation. It is very easy in the current climate to give up on areas such as Falinge. However, that has not happened in Rochdale; the council, the Jobcentre Plus, the primary care trust, the police, Churches and the local community have come together to develop, first, the key themes, and then key areas of transformation. Over the past six months, more than 350 people have taken part in that process. That process comes to a head today, when all members of the local strategic partnership board are touring the estate and meeting residents. There is a plan and there is a range of activities, but, above all, there is a belief that things can be changed for the better. That commitment, flexibility and support for the long term is what is needed not just locally, but nationally and globally.

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Several hon. Members:

rose —

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Before I call any Back Benchers, may I remind all hon. Members that Mr. Speaker has imposed a 15-minute limit on Back-Bench speeches?

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Photo of Alan Simpson Alan Simpson Labour, Nottingham South 5:01 pm, 10th March 2009

I am pleased to follow on from the concluding comments of Paul Rowen, because it is terribly important that this debate does not end up as a contest between different parties in which they make comparative claims as to who can offer the better quality of unemployment. Somehow, we have to reach beyond the merits, or otherwise, of jobcentres and Jobcentre Plus, to address the nature of employment in the UK, rather than the quality of unemployment.

Probably the only good thing that we can say about any recession is that it gives the Government of the day, and the country, the chance to come out at a different place from where we went in. We do not have to try to reconstruct parts of the economy that have gone into recession and contraction, and that probably are not suited to the nature of the economy in which our children and grandchildren will have to find a secure place. So we can use the trauma of a recession to give ourselves a transformation moment, and that is what the House needs to discuss.

That transformation moment must address not only where the work will be, but how we will create a society that is able to meet other non-negotiable obligations that we will all have to meet. That includes dramatic reductions in our carbon emissions—how we will achieve reductions in the ecological footprints that we place on society. I want to try to address the issue of unemployment in relation to those unavoidable obligations, and this is the key question that I want to ask of all parties and Members: where are the jobs that we see ourselves seeking to construct, in a society that will be able to live sustainably as we come out of the recession?

In the past couple of weeks there have been two important reports that should be shaping this debate. This week, there was a report from the Met Office Hadley centre in Exeter, which said that, on our current policies, if all goes well we still probably have only a 50:50 chance of surviving this century. By implication—and, in some cases, quite directly—it is saying that nothing in the current framework of public policy, other than "a flip of a coin" prospect will deliver the scale of carbon reductions that will allow society to survive in any civilised way by the end of the century. It is telling us that we need a dramatic shift in our priorities, in our intervention strategies and in the jobs we seek to deliver in order to get us out of the mess we are in and into a different future.

The second report that should frame the terms of reference of this debate is "A Climate for Recovery", which was produced by HSBC. It is an assessment of the intervention packages pursued by different Governments around the world in trying to address the recession into which we have all been thrown. It looks at how far the nature of our intervention strategies relates to a transformation moment rather than a recreation of the past. The report specifically produced a league table placing different countries in a pecking order based on their green stimuli. A great deal of publicity has been given to that, both in the UK and in other countries.

The difficulty is the gap between what we claim and what we do. Just before the Prime Minister gave his press conference about this issue last week, the United Nations Secretary-General, Ban Ki-moon, and Al Gore had a letter published in the Financial Times. In that letter, they not only warned about the consequences of and threats to the world from climate change, but they pointed out the opportunities. They said that, worldwide, there are now more jobs in renewable energy industries than in the entirety of the gas and oil sectors. They thought that this represented not just a policy choice and shift but a real opportunity to bring together employment agendas and strategies for getting out of global crises.

However, the HSBC report pointed out that, although Britain tries to claim that it wants to lead the world from the front, only £1.5 billion of our current economic recovery package goes into green initiatives and green stimuli. By comparison, France is spending three times as much, Germany is spending six times as much and China is spending 110 times as much, in straightforward cash terms. Britain may wish to lead the world, but it is difficult to do so from the back of the pack.

To address the point slightly differently, I should point out that Lord Stern has said that in order for us to have a viable and sustainable economy for the future, this country needs to be spending about 20 per cent. of its economic recovery packages on green investments. The tragic thing is that the current figure for the UK is about 6 per cent. Even on those percentage terms, the UK compares badly with other countries facing the same recessionary problems. Germany is spending 13 per cent. of its economic recovery package on green stimuli, and the figures for France, China and South Korea are 21, 38 and 81 per cent. respectively. Those are real resources going into a green transformation to deliver sustainable jobs for a sustainable future.

It is somewhat embarrassing to read the HSBC report, because the UK is one of only three of the evaluated countries that it puts into a category referred to as "pending". I do not think that we have a way out of the recession if our intervention measures cannot get beyond the category of "pending". It is the gap between the promises and the delivery that leaves us in this "pending" category. I do not doubt for one moment the good intentions of Ministers and Secretaries of State in different Departments. The difficulty is levering the matter out of the Treasury, so that the recovery measures for the real economy can be at least as generous as they have been for the financial economy, which got us into the mess in the first place.

The real challenge that we have to address is the fact that the Government, as well as the Opposition parties, need an employment strategy, not an unemployment strategy. It is not enough for the Opposition to table a motion that barely mentions an employment strategy. That is the great weakness of what the House is being invited to vote on today.

It is helpful that at least the motion refers to the national loan guarantee scheme. I thought that it said a lot about the Opposition that it was not mentioned at all in the speech made by their Front-Bench spokesperson. It fell to the Secretary of State to refer to the scheme, but at least there is recognition that it is an important part of the platform that we have to address. My concern is that the House should describe fairly specifically the nature of the scheme.

I invite the Minister for Employment and Welfare Reform, the Secretary of State and the House to consider the model for such a scheme that can be found in a microcosm of the UK economy. In Kirklees, a remarkable initiative known as the RE-Charge scheme has offered households interest-free loans of up to £10,000—as a second charge against the house, redeemable only at the point of sale—to enable them to shift into energy-saving and energy-generating systems. The response has been overwhelming. The lesson for us is that giving the public the chance to make that shift shows a hunger in the land to live more sustainably and more lightly than we do at the moment. We need to start to attach such conditions to the way in which a national loan guarantee scheme should work.

It is not enough to talk about guaranteeing a business just because it is in business. We have to use the levers of intervention mechanisms to deliver a business that will be fit for the future rather than a legacy of the past. The way in which the scheme needs to be extended has been set out for us in the references made by the hon. Member for Rochdale to the follow-up report produced by the Renewable Energy Association.

I am sure that other organisations around the country are able to spell out where the jobs might be, but the REA is the first that I have come across that has tried to do so. It has said to the Government, for instance, that if we were to expand the low-carbon building programme to deliver 70,000 renewable energy systems in the next two years, that could deliver 10,000 jobs. Those jobs would go to people in the construction industry who are being discarded from jobs and who have skills, rather than our having to deliver those skills from scratch. The tragedy is that, if we lose the skills, by the time we make that transformation the only people who we will find to do the work will probably be in France, Germany or other parts of Europe, where they are already intervening to give themselves the skills base, and the jobs base, for a different future. If we were to extend the programme, that would allow the Government to deliver the commitments that we have made to turn 7 million houses in the UK into energy-efficient houses by 2020. We will need those skills if we are to make that transformation and act even remotely to timetable.

If we extend the thinking behind the conditionalities of the national loan guarantee scheme, we can see how it could impact in various other sectors. In transport, for instance, we should not offer loan guarantees for the purchase of yesterday's vehicles instead of tomorrow's. Germany has introduced a scrapping scheme under which people are paid incentives to trade in their old cars in favour of low-carbon vehicles—the vehicles of tomorrow. The scheme will keep people in car manufacturing in work, but for tomorrow's models rather than yesterday's.

Britain could do the same. To underpin the 2012 Olympics, the Government could make a simple commitment to convert 500 buses and other vehicles in London to run on biomethane. That shift in sustainability could be part of a national strategy to provide jobs, vehicles and transport systems, and it is an example of the direction in which we must move.

In the energy sector, we need to bring forward our commitment to feed-in tariffs. We must not allow their introduction to slip back to 2010, because we need them this year. We need Government funding for demonstration projects on heat networks, biogas injection into the grid, smart grids and decentralised transmission networks. We also have to remove restrictions on the carbon emissions reduction targets—CERT—so that we can replace the 4 million band G boilers. All those changes would translate into jobs, and that will be the test against which the Government are judged.

The Government should not be judged on promises, or on the network of jobcentres or Jobcentre Plus offices. They should be judged on where the jobs will be delivered tomorrow. It is right for the UK to want to lead the world, but to do that we have to change the plan. If that is going to happen, it will be driven by deeds from the front, not by words from the back.

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Photo of Graham Brady Graham Brady Conservative, Altrincham and Sale West 5:16 pm, 10th March 2009

I am pleased to follow Alan Simpson. His contribution made up in quality for the lack of quantity on the Government Benches that my hon. Friend Mr. Bone noted.

I am also pleased to participate in a debate that is crucial, because unemployment is rising nationally. We have heard the figures that show the extent and rapidity of the rise, but some of the deeper analysis offers profound cause for concern. The House of Commons Library does a good monthly analysis and it shows that unemployment in my constituency has risen by 88 per cent. in the past 12 months. That is by no means the highest increase, but on current trends it is not far below the point where it will have doubled in that period.

The increase in unemployment has tended to be concentrated in the private rather than the public sector—in finance, property, retail and so-called "executive" jobs. The balance has changed, as has the distribution pattern for higher unemployment.

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Photo of John Barrett John Barrett Shadow Work and Pensions Minister

Does the hon. Gentleman agree that the worst is yet to come? The Royal Bank of Scotland's headquarters are in my constituency. The bank has announced 2,300 job losses, but the new chief executive who has taken over from Sir Fred Goodwin has said that the full number will be around 20,000. There are more job losses to come in that sector.

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Photo of Graham Brady Graham Brady Conservative, Altrincham and Sale West

I am afraid that the hon. Gentleman is right: worse is still to come. The trend in job losses continues to rise, and he has referred to a sector in the economy that has been especially harshly affected.

Beyond that, we await the so-called "second order" effects in the economic crisis. Another crucial reason why we have to care so much about the rise in unemployment is that people who lose their jobs are more likely to default on their loans and mortgages. That will add to the problems in the banking and financial sector that are already afflicting us.

Like a number of hon. Members who have spoken already today, I recently took the opportunity to visit my local jobcentre. I was hugely impressed by the dedication of the staff and managers, who over 12 months or so have had to cope with a dramatic increase in their work load. They are recruiting more staff, and are coping very well. They are acutely aware of the changing pattern and distribution of unemployment, and of the different kinds of clients with whom they have to deal.

On the subject of the little exchanges that took place earlier on the subject of job clubs, and the appropriate kind of provision for the executive or white-collar unemployed, I found that the staff at my local jobcentre were happy to accept that in the recent past they had not needed that kind of provision, and that it needed to be augmented. They are alive to the issue, and are very open to propositions, some made by constituents who have recently been made unemployed. They are working with staff to try to move forward, and that is very welcome.

David Taylor raised concerns about private sector welfare-to-work provision, but my local jobcentre is very relaxed about the mixture, and about the use of private sector provision, when it can be brought in most effectively. It is many years since I served on the Employment Sub-Committee of what was then the Select Committee on Education and Employment; I did so in the 1997 Parliament, when the new deal was first introduced. I vividly remember that when the Committee went to New York to see the nature of the active labour market policy being pursued there, we were astonished, even then, to see the quality of some of the provision from the private sector and voluntary organisations. They were delivering far better outcomes, in terms of people being placed in sustainable work, than was typically the case under the new deal in this country. They were also doing that work at a dramatically lower cost.

I have become less involved in that aspect of policy over the years, but I have watched with fascination as the Government have regularly said that they accept that that can be the case. They say that they are determined to introduce those different methods, and will move forward on that, but so little seems to happen. That is frustrating, because from listening to earlier exchanges it seems that Members on both sides of the House agree that the private sector can contribute. There is a huge amount of evidence internationally on ways in which that can happen, but we are still debating the subject all these years later. Organisations such as Wildcat, which I saw in New York, were brought before the then Department for Education and Employment to advise us on how the new deal might be improved, but there has been tragically little effect, compared with what we saw all those years ago.

The cost of the new deal has always been a significant concern. All that time ago, I made my own estimates; my very conservative estimate was that it cost £11,000 for every job created. The Minister at the time—I think that it was Tessa Jowell—estimated that the cost was more like £4,000. The Select Committee—I think that at the time, I was the only Opposition Member serving on it—noted in its report that we believed that the Minister's figure was a significant underestimate. The cost was certainly between £5,000 and £11,000 per job created through the new deal. Other programmes—not just internationally but in this country—have been shown to deliver better outcomes at significantly lower cost.

In the early years of the new deal, I remember seeing evidence submitted by the Greater Manchester Low Pay Unit; it flagged up, even then, the danger of young people, in particular, moving in and out of employment, becoming disillusioned as a result, and regarding themselves as being trapped in a revolving-door system. Over the years, I have followed the extent to which that revolving-door system appeared to be present in the new deal programmes, and I have periodically tabled written questions to establish how many people are passing through that revolving door.

Perhaps it is time to ask the question again. On 18 February 2008 I received an answer pointing out that the total number who had entered the new deal for young people was 1.25 million. The number of those who had entered only once was 890,000. Nearly 250,000 had entered twice, and nearly 80,000 had been through three times. That is a huge number of young people who have been going into new deal programmes, typically from long periods of unemployment, sometimes finding brief periods of work afterwards, then going back into new deal programmes, or returning to unemployment and to further new deal programmes.

Earlier we heard the old claims about unemployment statistics and the method of counting being changed. It is important that we remember the effect of the new deal revolving door in the context of the Government's claims about long-term unemployment. They claim that long-term unemployment has fallen dramatically over the past decade or so, but once people have been through the new deal programme, they come off the long-term unemployment count. Even if they do not get sustainable work and go back into a new deal programme, they are no longer long-term unemployed.

We have in those figures the evidence that a huge number of people are, to all intents and purposes, long-term unemployed. They have not been finding sustainable, worthwhile, productive work. Instead, they have been kept off the statistics by being put through a programme that potentially costs up to £11,000, or perhaps more, every time somebody gets into employment. The cost per individual going through the merry-go-round is immense. We might not be too concerned about the cost if they were going through into genuine long-term sustainable employment, but when they are not doing so, the cost is unforgivable. In the current economic climate it is incumbent on the Government to look carefully at that, and to recognise that the cost cannot be justified at those rates of return.

It was recognised seven or eight years ago that 40 per cent. of people would never go into sustained jobs from the new deal schemes. The definition of a sustained job was remarkably easy to meet: it meant going into employment for a period of just 13 weeks. Being in employment for three months counted as moving into sustainable employment. That definition was inadequate for the purpose.

We know that the new deal was not a great success even in the boom years of the past decade. I vividly recall the number of witnesses who gave us evidence at the outset of the new deal, as we were trying to establish how it would be possible to evaluate the success or failure of the scheme. They said that it would be difficult ever to evaluate the success or failure of such a scheme, especially because all the evidence is that active labour market policies are more likely to be effective in a time of economic growth and tight labour markets, when people are getting work anyway. The schemes are much better at assisting people into employment when they might have got into employment in a little while in any case than they are at creating new opportunities that did not exist at all.

That is a serious concern for us. Programmes that have, at best, been achieving modest results at significant costs in the economic circumstances that best suit them may now achieve even worse outcomes in adverse circumstances.

In an intervention, I mentioned the Treasury Committee's visits around the United Kingdom in the past 10 days or so. Some of the themes that I have mentioned have come through clearly in the meetings. What we have found most striking is not only the level of unemployment that already exists, and the concern about that, but the palpable fear of unemployment. We visited Belfast, Edinburgh and Leeds, but we saw that fear most particularly in Halifax last night. HBOS has dominated employment in the town, and a huge number of people there are living in considerable fear for their future and their livelihood.

It is vital that we work to help the existing unemployed back into work, but I would like to emphasise a point that arose earlier. It is critical that we do everything possible to ensure that people who need not become unemployed are kept in work. That is much easier to achieve; it is less costly and gives us far better prospects of maintaining economic success in other regards as well. On the recent visits, Treasury Committee members have been hearing endless stories, especially from small and medium-sized businesses, about the Government schemes and guarantees that have been promised but do not appear to be there when people visit the bank manager. Those schemes, such as the enterprise finance guarantee, need to have a real and immediate effect. We have heard that there are massive problems with trade credit insurance. That is a huge difficulty for so many businesses, which may be faced with making redundancies if the problems are not overcome. Action needs to be taken, and quickly.

Finally, I emphasise again the importance of helping people, not only for their economic well-being, but for the wider economic well-being of the country. If unemployment continues to rise as it has been rising, that will rapidly compound our economic problems in a worrying way.

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Several hon. Members:

rose—

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Mr. Speaker has imposed a 15-minute time limit on Back-Bench contributions. If Members voluntarily impose an even shorter time limit on themselves, more may be successful in catching my eye.

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Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire 5:33 pm, 10th March 2009

I start by agreeing with the point that my hon. Friend Mr. Brady just made. There is a fear among people about unemployment, and it comes from the knowledge of what a searing experience it is to be unemployed, particularly for some time. I also agree with my hon. Friend's analysis of the new deal. In its early days, it had limited success at great cost. It did not do what the experience from America suggests such schemes need to do—that is, concentrate on providing a flexible, personalised package of help to an individual. The new deal was a more general form of help for large groups and classes of individuals.

To a large extent, the new deal in its early days involved the Government's taking credit for the natural effect of economic improvement on employment, rather than their helping individuals who had barriers to work. One of the sad things about the past 10 years has been the number of people who desperately want to work but have barriers to employment, so they cannot do so. Some 2 million people face such barriers, particularly people with disabilities. Over the past few years, unemployment has fallen by about 300,000. While 2 million extra jobs have been there in the economy, they have gone not to those people but largely to young men from other parts of Europe and the world. Although one is in favour of the globalisation of labour markets, giving free access and so on, it was important that we should have given people with barriers to work a fair deal and a good chance to get a job.

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Photo of Peter Bone Peter Bone Conservative, Wellingborough

My hon. Friend is making a powerful point. Does he fear that when jobs start to be created again, they will go to the fit young people who are now being made redundant, so it will be much more difficult for people who have been long-term unemployed to get into work?

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Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

I totally accept my hon. Friend's point, which is the main point that I intended to make.

Before doing so, I want to comment on what Alan Simpson said. It is important that we use the recession in a purposeful way to ensure that when we come out of it, we have made improvements to the skills of our work force and created businesses in the green sphere so that green jobs are coming through. We should not just assume that in three years' time, or whenever the recession is finally over, the world will be the same as it is now. I agree with the hon. Gentleman that we could do far more in the green sphere. In Germany, 250,000 photovoltaic plates are being put in each year for solar energy; last year in Britain, there were only 356. There are a whole range of other green opportunities that we should take, and with which the Government should do more.

The grave threat in this recession is that we will see a massive rise in long-term unemployment. That is likely because, looking at the overall jobs market, unemployment has risen very fast in the past year. The headline figure is 1.97 million, and it is up by 438,000 year on year. At the same time, vacancies have fallen by an alarming number. Monthly vacancies are down by 200,000 compared with 2007. Of the half a million or so vacancies, more than half are in sectors where jobs are hard to fill or there are skills shortages, so the actual number of jobs available for people to apply for is tiny relative to the numbers looking. I mentioned Woolworths earlier. We have lost stores in my constituency. A constituent from Letchworth wrote to me saying, "Where's all the extra help that we believed had been promised? We need it." She said that 22 people were looking for each job in the retail sector that might be available to someone from Woolies. The position as regards vacancies is particularly worrying.

The chief economist of the Social Market Foundation gave evidence to the Select Committee about how he saw the way forward given the research that he and his colleagues have been doing. They believe, based on current economic projections, that the number of long-term unemployed—people who have been out of work for more than 12 months—is likely to increase by 300 to 400 per cent. over the next three years. Let us look at what that means. There are roughly 150,000 long-term unemployed at the moment, so to go up to 600,000 would be a huge increase. Every one of those represents a tale of somebody who is reaching despair by the time they have been out of work for a year.

The flexible new deal is being introduced to help people who have been out of work for a year. The original estimates of how many clients there would be were much lower than they are now. The Government have written to the Select Committee saying that they expect the figure to be 300 per cent. higher than they originally thought. That fits in with the projection of the Social Market Foundation; it is not that far off. If there is a fourfold increase in long-term unemployment, that brings back the spectre of the horrific problems that long-term unemployment has caused in the past. It is not enough for the Government to say that they are talking to the contractors involved with the flexible new deal. The process is just not viable without proper resources, which need to be adequate for a large number of extra people.

I am a fan of the flexible new deal. I was one of those, along with my hon. Friend the Member for Altrincham and Sale, West, who criticised the early new deal because it was not flexible, and in my pamphlet, "Auditing The New Deal: What Figures For The Future?" in 2004, I proposed a flexible, personalised new deal using private contractors to help, and I cited the examples in America that my hon. Friend mentioned. It was well received—and I should mention my co-author, Mark Waldron, because he did a lot of the work. It set out the way forward to which the Government eventually came round, and I am pleased that the flexible new deal will go ahead. But let us not kid ourselves that we are now looking at the same proposition as introducing a flexible new deal that was intended for 150,000. It will end up having to cope, working in a detailed way, with 600,000 people. It will need a lot more resources, and it will have to be properly organised.

My concern is that we are not organised adequately as a country to cope with the scale of the challenge of long-term unemployment. It is all very well to take shots at what happened in the 1980s, but the youth opportunities programme, which started in 1978, was a Labour scheme. It was already in trouble by the time the Conservatives won office in 1979, and was heavily criticised because it did not do enough for each young person. It continued to be criticised after the Government of Margaret Thatcher came in. The same is true of a range of schemes over the years; there is often criticism of them. The lesson is that the quality of such schemes is hard to maintain if they involve a large number of people, and the Government must consider that issue. If there is to be a large number of extra unemployed, we will need much greater provision in the jobcentres and in the flexible new deal. There is no way round that, and the Government need to come up with solid proposals to deal with it.

We should use the recession to train the people of this country so that they have the skills they need. Some 5 million people in this country are functionally illiterate—unable, for example, to write to a bank and explain that they have changed address. It is a shattering thing that every year 40,000 young people leave our schools in that condition. We have a big problem, and it is sad because a lot of those young people are quite capable of learning to read and write. I remember a visit to Rainer in Sheffield, where I met a young man who had a few problems, and who wanted to be a dry liner. He had to learn to read to get his health and safety certificate. He learned to read very quickly—it took him about two months—but he had spent 11 years in our education system without managing to read and write properly. That is a staggering indictment. We should not be dealing with such problems when people are 19, but when they are seven, or six. It is important that we get literacy and numeracy right in this country.

My other point about training concerns apprenticeships. The Government have made great claims about increasing the number of apprenticeships. We have never quite got the promised increase—I believe that the Prime Minister promised 320,000 places and we got 239,000—but apprenticeships are vital if we are to improve skills. I am worried about their quality, however. Traditionally, the academic standards underpinning an apprenticeship have been at level 3; it has basically been an A-level, but in a technical area.

Now, most of the apprenticeships coming through are rebadged Government training schemes at a lower level. They are at level 2, and are not at A-level standard in technical subjects. The question is whether they will give people an advantage in employment. All the evidence is that the traditional level 3 apprenticeships give a great advantage, but there are fewer of those now. The level 2 apprenticeships are being used to top up the numbers.

I make a plea to the Government to use this recession not just to paper over the cracks with poor-quality schemes but to get the training right for a change. We must ensure that when we come out of the recession, far more of our people can read, write and add up properly, and that young people who have been on apprenticeships genuinely have the skills that they need to do jobs in the future.

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Photo of John Mason John Mason Scottish National Party, Glasgow East 5:45 pm, 10th March 2009

Following on from the points made by Alan Simpson, I wish to discuss the creation of jobs as well as some of the other matters that have been raised. Clearly, Scotland has been dragged into this recession by the UK— [Laughter.] I see that I do not have unanimous agreement on that. Some people thought in the good times that we were benefiting from being in the UK, but they are now realising that things are much worse because we are in the UK.

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Photo of Peter Bone Peter Bone Conservative, Wellingborough

I am listening with interest to the hon. Gentleman's opening remarks. Does he agree that if Scotland had had to deal with the banking problem on its own, it would have had to put in £13,000 per household? Having the UK means that the amount has worked out at less than £2,000 per household. How does that tie in with his remarks?

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Photo of John Mason John Mason Scottish National Party, Glasgow East

In the first place, the amount has not yet been worked out and we do not yet know whether the UK will survive this crisis. Secondly, it is possible that if we had been independent, neither HBOS nor the Royal Bank of Scotland would have been in such shape, and that they would not have been as large or as much trouble as they currently are.

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Photo of David Jones David Jones Shadow Minister (Wales)

Perhaps the hon. Gentleman will tell the House whether the First Minister of Scotland still regards Iceland as a proper model for emulation.

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Photo of John Mason John Mason Scottish National Party, Glasgow East

We have always compared ourselves with a number of different countries, and the main one is Norway, because it is similar to Scotland with regard to population, oil, fishing and so on. The special point about Norway is the huge oil fund that it has set aside, as have American states such as Alaska. Norway has put aside money from oil instead of frittering it away. That is why it has to be the best comparison. I shall now continue with paragraph 2 of my speech.

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M

Interesting that the hon member's party choose Norway as an example: Norway is the very same example that Euro-Sceptics use for a prosperous state, independent of the EU but trading quite happily with Europe.

Submitted by Marty York

Photo of Simon Burns Simon Burns Opposition Whip (Commons)

Will the hon. Gentleman first be kind enough to answer the question asked by my hon. Friend Mr. Jones about Iceland and the First Minister?

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Photo of John Mason John Mason Scottish National Party, Glasgow East

I have said that we compare ourselves to a range of countries. Iceland was one, although it has to be accepted that Iceland has a micro-economy that is similar in size to that of Dundee. There is also a valid argument on behalf of Iceland that its banks were deliberately and unnecessarily pulled down by the current Government, but I shall not spend too much time on that just now. Ireland is another comparison, but I return to Norway, which sets a fantastic example of wisdom in putting aside oil money instead of frittering it away on nuclear weapons, wars in Iraq and so on.

One problem with an economy such as that of the UK is that, like a tanker, it is large and takes a long time to turn around. The distance between ordinary people and government is too great. Now that we have the Scottish Parliament, the comment is frequently made in Scotland that businessmen, colleges and ordinary people can contact Ministers in a way that they could not before. If our country could borrow, we could do a lot to help get us out of the recession. More capital expenditure means more jobs. It is encouraging that Scotland's capital expenditure is being accelerated; that will support more than 4,600 jobs in the next 15 months.

Construction has been especially hard hit throughout the UK. I sat in on a jobcentre interview a few weeks ago and watched an unskilled construction worker being interviewed and taken through his job options. The Jobcentre Plus staff did their best for him, but there were clearly not many jobs for people such as him. He had previously got jobs through contacts, but sadly that was no longer happening.

In passing, I want to refer to Glasgow city council and a relatively small construction project costing some £300,000. The council has taken so long to work through planning permission and building warrants that the project has not gone ahead for a long time and people's jobs have effectively been at stake. I appeal to councils such as Glasgow to speed up the planning and the building warrant process. That would create jobs.

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Photo of Anne Moffat Anne Moffat Labour, East Lothian

On planning applications and employment, will the hon. Gentleman comment on the Scottish Executive's refusal to give planning permission for new build in nuclear and thus create jobs in Scotland?

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Photo of John Mason John Mason Scottish National Party, Glasgow East

I do not think that the people of Scotland want nuclear weapons or nuclear power.—

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Photo of John Mason John Mason Scottish National Party, Glasgow East

We want jobs in other ways. The money that is wasted on nuclear weapons would create many more jobs in the navy, the air force and the army that we would have as an independent country.

We welcome the £120 million that is being brought forward in the affordable housing investment programme in Scotland. In comparison, in England, which is 10 times the size of our country, only £550 million is being provided, and it took three months longer to do it. That is disappointing, and I appeal to the Government to give the people of England as good a deal as people in Scotland are getting. The front-loading of European structural funds is welcome. Again, Scotland was well ahead with that compared with England.

All parties agree that small businesses are important for jobs and the economy. In Scotland, they will get 100 per cent. rates relief from April if their rateable value is £7,000, whereas the relief is to be only 30 per cent. in England. Helping small businesses is a tremendous way of creating jobs and keeping people in them. I recently met the Federation of Small Businesses in Scotland, and there is much anxiety among small businesses in Scotland that the Government are too concerned about the banks and the big car companies, and not concerned enough about small businesses.

I welcome the commitments made by both the Scottish and the UK Government to pay suppliers more quickly. That is extremely good, but sometimes large contractors do not pay smaller contractors as quickly, and deliberately hold back money. I wonder whether Companies House or some other body needs to be more proactive in forcing larger companies to pass on the payments, especially if they receive money from the public sector.

I have already mentioned the cut in VAT. Did that really create the jobs that it could have done? It is estimated that the £1 billion has created some 7,200 jobs in Scotland, but a similar capital investment programme of that amount could well have created 14,900. I have some ridiculous personal examples of buying an electric shaver in Boots and clothes in Marks and Spencer. I see the price on the items and I am happy to pay it—I am on an extremely good salary. However, I get to the till to find that there are a few pounds off because of the reduction in VAT. The VAT cut has been badly targeted if it includes people such as us, who are relatively as well paid.

The Government often criticise the Conservative party for doing nothing, but I sometimes wonder whether they go to the other extreme and act simply for the sake of doing something. Perhaps that is the reason for the VAT cut—the Government felt that they just had to do something. Surely taking any action even if it is bad cannot be the way out of the current crisis.

Last July, I promised my constituents that I would keep asking what was happening to the gap between the rich and the poor. Clearly, people at the bottom are losing their jobs, but so are people who are better off. The harsh Welfare Reform Bill will further damage those who are struggling and losing their jobs. Rather than punish people who realise that jobs are not there or that they pay so poorly, we could do with fewer sticks and more carrots. One such carrot would be better minimum pay for people who seek jobs. That would incentivise people more than taking away limited benefits. Meanwhile, well-off people, such as us, save in VAT. There is something wrong if some people are benefiting from the recession. Members of Parliament are better off through the recession while others lose out. Surely the richer people should tighten their belts as well as those who are less well off.

Cutting public expenditure is not right in a recession. In the United States, President Obama's stimulus package is boosting spending in individual states. Yet in Scotland, Wales and Northern Ireland, we face cuts to our budgets.

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Photo of John Mason John Mason Scottish National Party, Glasgow East

As my hon. Friend, who is rushing me through my speech, says, in our case the cut is £1 billion over two years. We estimate that that means 8,600 jobs lost through the Government's action.

We are already making efficiency savings. My understanding of efficiency is that we get either a better service for the same amount of money or the same service for less money. However, if we get less money and a poorer service, as the Government propose, that can be described only as a cut. If we are to lose 8,600 jobs, including 4,500 in the public sector and nearly 2,000 in construction, which is the last thing we need, where do the Government suggest that we cut them? Should we have fewer teachers and fewer nurses? Perhaps they can explain it to us.

It is not only bad economics but bad politics to make cuts in a recession. If the Unionists in government want Scotland to stay in the UK, they must give us a better deal to persuade us to do that. Cuts to the budgets of Scotland and of Wales at this time will make people ask, "Why is London doing this to us? Is it to prove that the UK Government don't favour Scotland, so they go to the other extreme of deliberately damaging Scotland?" According to that way of thinking, HBOS was sacrificed so that the Government could not been seen to help a Scottish organisation. Now that the Government want to cut Scotland's budget, many people will think, "Wouldn't we be better in a recession to go off on our own? We're not getting any dividend from this Union." I warn the Government to be careful; they are playing with fire.

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Photo of David Evennett David Evennett Shadow Minister (Business, Innovation and Skills) 5:58 pm, 10th March 2009

I am pleased to participate in this important debate on unemployment in the UK. I do not want to follow the line of John Mason, but I am delighted to follow my hon. Friends the Members for Altrincham and Sale, West (Mr. Brady) and for North-East Hertfordshire (Mr. Heald), who made constructive and important points.

The motion highlights the current position nationally and the Government's failure to introduce welfare reform during their time in office and to increase the flow of credit to businesses in the past six months to assist with the current economic and financial situation. The Government have also failed to relax the rules for jobseeker's allowance to allow unemployed people rapidly to take up training opportunities, which they often desperately need. That is regrettable.

My right hon. Friend Mrs. May made a positive and enthusiastic speech about our policies to tackle the current position, and I was rather disappointed by the Secretary of State's response and his failure to take on board some of the serious problems that confront us.

In my constituency postbag, e-mails and surgeries, mentions of the economy and unemployment have grown dramatically in the past few months. There are fears in our area of Bexley about the economic future and the employment prospects—a fear of people losing their jobs; a fear that they will be unable to pay their mortgage or rent; and a fear of the regular bills and of a decline in people's standard of living. Those are the issues that are affecting people and underpinning the current situation. Pensioners and those on fixed savings also fear that they are not getting enough income from their savings to supplement any other income that they may have.

I want to say a few words about my constituency, but I also want to highlight the skills and training situation, as well as the shortages of skilled people and the lack of training opportunities for certain people who are unemployed, including the long-term unemployed. My constituents do not believe the Government—[Hon. Members: "Who does?"] Indeed. They believe that the Government have failed to tackle the skills shortages and benefit dependency, and that they have often used migrant workers to address employment shortages.

We have had a lot of spin—we have had some from the Secretary of State this afternoon—and the restating of previous policy announcements, which we get regularly from this Government. That seems to be the order of the day, but it will no longer wash. When someone becomes unemployed, it is a tragedy for them, for their family, for the community that they live in and, of course, for the country. What people need is early intervention and early assistance, which are crucial in helping them get back into jobs. The majority of people want to get back into jobs as soon as possible. They do not want talk, investigations or generalisations; they want action. The Government need to commit to reforming Jobcentre Plus, so that there can be an in-depth assessment to evaluate claimants' needs and capabilities within 24 hours of a claim being presented. Urgent and immediate action is required.

I want to say a few words about the Jobcentre Plus in my constituency. I visited it last year and met the district manager, the employees and a number of the clients. I had a useful morning seeing how Jobcentre Plus is endeavouring to help claimants. I have maintained regular contact since then—as I did before, of course. I have also received many comments from constituents about the service offered—many of them complimentary—and about how the staff have endeavoured to help with the problems that they face. I would like to commend the staff at that branch, because they are dedicated and hard working and because they are doing their very best to help people.

There are issues that the staff cannot deal with, however, because there is a bigger picture. Most claimants in my constituency find work within six months of making their claim. However, in the last period for which figures are available, 17 per cent. did not, which shows how the economic situation is changing, which is regrettable.

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Photo of Peter Bone Peter Bone Conservative, Wellingborough

As usual, my hon. Friend is making a powerful speech. His constituency has seen a rise in unemployment of nearly 90 per cent. in the past year. How is that impacting on Jobcentre Plus in his area?

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Photo of David Evennett David Evennett Shadow Minister (Business, Innovation and Skills)

It imposes serious constraints, because of the reduced time that staff can spend talking through clients' problems. More importantly, there has been a shortage of vacancies, so staff cannot send people out. The change has had a dramatic impact; none the less, I compliment the staff on all the work that they have been able to do for so many people.

On a more general, national point, it is the skills shortages and the training issues that concern me. We need to get people who are unemployed back into work and ensure that people who leave school get opportunities for work. That means that they must have basic skills, but I have severe doubts about the Government's training and education policies, which are not allowing those people to gain the skills that they need to meet the challenges that they could face.

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Photo of Anne Main Anne Main Conservative, St Albans

Green jobs were mentioned earlier. When the Secretary of State for Energy and Climate Change appeared before the newly formed Select Committee on Energy and Climate Change, I specifically asked him whether there was any buy-in from the Treasury to ensure that training was being put in place to deliver the skills that we need for the green jobs that we anticipate will arise in the future. However, I did not feel that we were given those assurances. It is no good looking to have green jobs in future if we fill them with people from other countries because we have not set up the necessary skills, training and educational courses. Does my hon. Friend share my concern about that?

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Photo of David Evennett David Evennett Shadow Minister (Business, Innovation and Skills)

My hon. Friend makes a powerful point and I agree with her entirely.

Regrettably, we have a low skills level in this country. Despite all the money that has gone in and the Government's attempts and aspirations, the reality is that the situation is not good. We heard from my hon. Friend the Member for North-East Hertfordshire that 5 million adults in Britain are classified as functionally illiterate, while 17 million are known to have problems with basic numeracy. It is a disaster that we should have such a skills shortage after so many years of investment in education and training. That is very worrying. Business potential is also restricted. I understand that three quarters of London businesses still have problems finding skilled staff. So many people are, regrettably, becoming unemployed, but they do not have the skills to be employed in businesses across Greater London.

I raised with the Secretary of State my concern about the money that has been removed from community learning. I am a big supporter of community learning. Adult and community learning is an important route to training for many people who have been out of the labour market for a considerable time. Despite his put-down, there are 1.4 million fewer publicly funded places than in 2005. That is not good news.

I mentioned to my right hon. Friend the Member for Maidenhead the number of young people who are not in education, employment or training. That, too, is a disaster. Those people are losing opportunities as they do not have the skills that are needed. We need to ensure that they are in one of those three categories. Men are affected most; the number of males who are NEET has risen by 27 per cent., from 264,000 in 1997 to 336,500 in 2007. That is not success, but a failure to train and give people the opportunities to develop their potential. That is regrettable.

I am also concerned that enrolments in further education are plummeting. Just when we need to be upskilling, training, retraining or reskilling people, FE enrolments are down. More money has gone in, but there are fewer learners. Targets have been missed on apprenticeships, as we heard from one of my hon. Friends earlier. All those things are regrettable at a time of economic deterioration. They need to be addressed by the Minister, who I know is a fair and reasonable woman. She needs to ask what more can be done to ensure that people are given the training and skills to take advantage of the situation.

In view of the time, I will bring my remarks to a close. It is important that we have a positive, determined and upbeat approach to the issue. Alan Simpson said that we should be positive—he was talking about the green agenda, which I support—but we need to ensure that that optimism is based on fact. This afternoon we heard wishful thinking from the Secretary of State rather than facts. We need to build hope and confidence for the future, but that requires more training and reskilling, to ensure that people who are unemployed are brought back into the labour market as they would want to be. The opportunities for the future have to be increased.

My right hon. Friend the Member for Maidenhead highlighted our policies on those issues, which I shall not reiterate. The Government seem to be unable to act. They seem to be bankrupt of ideas and rather discredited in their dying days. We need a new approach, to ensure that the unemployed are at the top of our agenda, with policies to restore our battered economy and give people hope and opportunities at this difficult time.

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Photo of David Jones David Jones Shadow Minister (Wales) 6:10 pm, 10th March 2009

It is a great pleasure to follow my hon. Friend Mr. Evennett. Members on both sides of the House have spoken about the recession's impact on employment in their respective constituencies and parts of the world. Indeed, the downturn has probably affected Wales and Welsh employment more severely than any other part of the country. In Wales, 100,000 people are now unemployed—some 7 per cent. of the economically active population, compared with the rate for the whole of the UK of 6.3 per cent.

In the time available to me, I wish to draw the House's attention to two principal issues—the slow delivery of Government initiatives and the impact of the downturn on the building industry. The construction industry is of particular importance to north Wales. Traditionally, it has been a major employer, and a number of major regional builders have their headquarters there. The downturn has had its effect, however. Redrow Construction of Ewloe, for example, announced the loss of 350 jobs last year, and David McLean Holdings, another major employer, went into administration with the loss of 134 jobs. This pattern is being replicated on a smaller scale across the whole of north Wales.

Many small builders are no longer building, not because they do not wish to do so—and not even, ironically, because of a lack of demand for their houses—but in many cases because they are simply unable to access funding from their banks. The principal of Beech Developments, a building firm in my constituency, tells me that he is anxious to begin developing a site near Colwyn Bay over which he has an option. His company has been in existence for more than 12 years, has never operated on an overdraft, and has an exemplary credit history.

Mr. Lee approached his bank, with which he has done business for very many years, but was told that it was impossible for him to obtain a loan to develop the site, because the bank had a blanket policy of not lending to builders. In fact, he was told that, because of that policy, it was not even worth approaching his bank's head office. Since then, Mr. Lee has approached several other banks and financial institutions, including Finance Wales, but none has been willing to provide him with the finance he needs. Consequently, that development will not take place, with the loss of 30 skilled jobs on a project that would have lasted at least two years.

That pattern is being repeated up and down the country. Skilled building workers are unable to find work because the banks—in many cases, the banks that have received Government support—are operating a blanket policy of refusing to finance building projects. The construction industry is a major engine of the economy, and if that engine seizes, the upturn will be a very long time coming.

The banks are clearly concerned about assessing property values and about saleability. However, the problem could be addressed if the Government were seriously to consider a properly funded national loan guarantee scheme, which the Conservative party has proposed, properly funded, to the tune of some £50 billion. The Government have their own scheme, which the Secretary of State for Business, Enterprise and Regulatory Reform unveiled last January. It is a far less ambitious proposal, worth only some £10 billion. Worse still, however, is the fact that the scheme has not yet been implemented.

The Minister with responsibility for small businesses, Baroness Vadera, referred some time ago—somewhat optimistically, many thought—to perceiving signs of the green shoots of recovery in the economy. However, companies that are attempting to throw out green shoots in the current hostile landscape are finding that they are withering because of a lack of Government support. In truth, until the building industry gets going again, the economy will not get going either, and the prospects for employment in areas such as north Wales will be all the worse.

The Government have adopted the slogan "Real help now", but the truth is that they are providing the vague promise of the potential of some help at some indeterminate period in the future. Initiative after initiative has been announced, but not yet implemented. A further example is the "golden hello" announced by the Secretary of State in January. We were told that it would provide an incentive of up to £2,500 for employers to recruit and train people who have been unemployed for more than six months.

I should like to give a practical example of someone who was credulous enough to assume that the policy was up and running. A constituent of mine, Ms Jan Ross, the principal of Merrall-Ross International Ltd, a company that provides professional indexing services, decided that she would try to take up the offer. She found the experience most frustrating. Last week, I received an e-mail from her, which I think is worth reading:

"I am the MD of a company based in North Wales and actually wish to recruit some new staff! I noted Gordon Brown's announcement of 12th January detailing 'golden hellos' for employers recruiting new staff. They seem to be elusive! I have tried the local Jobcentre Plus, the regional Jobcentre Plus, and they have tried a national Jobcentre office. I have e-mailed...the Department of Work and Pensions, the Treasury, phoned the Welsh Assembly, but alas no-one knows anything about it. Please can you take up my query and see if this was just pure hype by the Government or whether there is some substance to the announcement. What are the criteria and how does one go about obtaining help? We are a small SME, but growing, but need all the help we can get!"

My research reveals that the scheme that was announced those two long months ago is still not up and running, but that it might be in operation some time in April. I hope that the Minister who replies to the debate will indicate whether the scheme still exists, whether it is to be implemented, and—most importantly, from the perspective of Ms Ross and others like her—when that is to happen. Or is this a case not of real help now, but of jam tomorrow, or possibly the day after?

No one can deny that the problems besetting the country are worrying in the extreme. Hundreds of thousands of people right across the country live in constant fear of redundancy. No one can pretend, either, that the Government can possibly have all the answers, but the Government can help. Frankly, what they ought to be doing is not just promising again and again to introduce initiatives, but delivering real help. It is all very well for them to come up with rafts of new announcements and to unveil new initiatives, but if those measures are never implemented, they are worse than useless. They are cruelly raising the hopes of people who are already in a state of huge despair about their future. Those people need more than the promise of "real help". They need the substance, too.

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Photo of Peter Bone Peter Bone Conservative, Wellingborough 6:18 pm, 10th March 2009

It is a great pleasure to follow my hon. Friend Mr. Jones, who made a powerful speech putting the position in north Wales into perspective.

This debate has been interesting and wide ranging. I felt, however, that the Secretary of State got the mood of the House completely wrong in his opening remarks. Anyone who saw his performance, bouncing up and down at the Dispatch Box and taunting the Opposition, will have been very disappointed. We are talking today about the serious issue of unemployment, which really is not party political.

Before I became a Member of Parliament, I had the unfortunate duty to make people redundant. Telling people that they no longer had a job was one of the most difficult things I have ever had to do. Many of them had worked for me for many years, and it was not their fault that they were losing their jobs. The mood of the House today has reflected situations such as those, with the exception of the Secretary of State's opening speech.

I do not want to speak too long, but I want to raise two specific points that have not been made in the debate. First, however, I need to set my constituency in context. Unemployment in Wellingborough increased by nearly 100 per cent. over the past year. Jobcentre staff are doing an extremely good job, but it is very difficult for them to deal with what amounts to a 100 per cent. increase in their work load. They cannot provide the detailed support they would like to give to each claimant, as Paul Rowen said earlier. Claimants simply cannot be given the time and attention they deserve.

Unfortunately, unemployment in Wellingborough is now 26 per cent. higher than it was in 1997. I remember the pressures on the Government at that time—a failing Government as people saw them then—when there was such massive unemployment. We see the same happening now, but the present Government show no real concern about what is happening out there in the country.

My first point is about keeping people in work. Much of our debate has focused on how to help people who have lost their jobs, but it is important that we consider how to keep people in employment. I received a phone call yesterday from the managing director of a major employer in my constituency—I will not say who it is, but it is a major employer. This company has traded for many years and has run an extremely successful business. Like every other, however, it is seeing a downturn in demand—hardly surprising in the light of the recession expanding across the country.

The managing director told me that the banks, instead of helping him, were making his life a misery. He told me that he had been with his bank for 40 years and that it had made a lot of money over that period, but instead of helping the company and asking how to make its life a bit easier by reducing interest rates, which the Government have cut nationally, to make it less painful, his bank proposed to increase interest by 2.5 per cent. That means that the company will have to pay £750,000 extra in a year.

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Photo of Philip Dunne Philip Dunne Opposition Whip (Commons)

On the question of banks, particularly those that are majority-owned by the Government, helping businesses before they get into difficulty, the Wrekin Group was today tragically put into administration with a loss of 530 jobs, including 260 in Wrekin Construction on the edge of my constituency. The managing director is quoted in local newspapers as saying:

"It's cash that we have run out of effectively and there has been a total lack of support from our bank RBS.... We offered the bank shares in the business, the chairman offered to stand down but the bank was only intent on the cash. It's heartbreaking".

This is a story from today about a bank that is now owned by the Government; if the Government had implemented the scheme they announced in early December, that bank might well have been able to provide the facilities that the company—

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I have to say to the hon. Gentleman that we have a very tight time schedule, so making a very long intervention is unfair to those who have been waiting some time to speak.

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Photo of Peter Bone Peter Bone Conservative, Wellingborough

Thank you, Mr. Deputy Speaker, but I understand why my hon. Friend wanted to make that intervention, because what he told us is significant and tragic news for his constituents. I wish all those who have lost their jobs well. This reminds me of some of the problems I faced when I was in business. Leaders of a company—the chairman of the board or the managing director—sometimes have to fight desperately to keep it going, trying to find solutions by offering shares, for example, only for the bank to do the absolute opposite of what it should. It makes life more difficult and, in the case mentioned my hon. Friend Mr. Dunne, the bank has forced the company into liquidation or administration.

I remember my business receiving a £500,000 cheque from another company for some advance work, and the bank involved happened to be one of the now nationalised ones. It happily entertained me and took me to the very best cricket matches, irrespective of whether the company was doing well, yet just when we needed the money, the bank was not there. It did the opposite of what it should have done, demanding more fees and more interest. I am afraid that, as of yesterday, that is now the position of the company in my constituency. I do not want it to finish up in the same circumstances as my hon. Friend the Member for Ludlow described. I repeat that it is one of the nationalised banks that is taking this action. I know that Ministers are also concerned and I also know that there is no magic wand, but I am highlighting a real problem in my constituency. If we could get such problems sorted out, the potential to save jobs would be enormous.

My second point deals with the other end of the scale, when people have lost their jobs. I had an Adjournment debate on the subject recently, but the point is worth making again. Forty people lost their jobs last December in a well-respected company in my constituency, which had been in business for more than 100 years. The only way it could survive in business—by saving £600,000 a year in salaries—was by making those people redundant. Some of those employees had worked many years for the company—more than 30 years in some cases—so there was a £250,000 redundancy bill to pay. If it attempted to pay the redundancy money, the whole company would have gone under, with the remaining 80 people losing their jobs, too. The company therefore failed to pay the redundancy money, but the 40 people, who have been most restrained, have still not received their redundancy money.

I do not blame the company for not paying it—if it had, the whole company would have gone under—and I do not blame the Government, but there is a loophole in the law. The most obvious solution would have been for the redundancy payments office to step in and pay the redundancy money, subsequently claiming it back from the company over a number of years. In fact, there is a Government scheme that would have allowed that, but the problem is that the company has to approach the redundancy payments office first and negotiate with it; if the RPO is satisfied that the company is in financial need, it should pay the money.

In reality, however, when people are fighting to save their family businesses and face circumstances that they have never faced before—when they are trying to deal with banks to get extended credit and to keep the company going while having the horrible job of telling people that they have lost their jobs—they are not going to go to the redundancy payments office to negotiate a settlement.

My suggestion is to make a simple change in the law so that the RPO can be proactive and say to a company, "You've got a problem here; we'll pay the money and we'll try to get it back from you over a number of years if you trade out of the problem". That is not going to cost the Government any more money, because if the company fell, the Government would have to pay the redundancy money. In this case, the company went into administration and the RPO will pay the workers in due course. In my view, however, the workers should have been paid in December because the company would have had more chance to trade out of its difficulties. Such a change in the law or change in attitude would not cost the Government anything, and would benefit many people.

My final point is not at all party political. My constituency has had unemployment over a longer period and has seen immigration from central Europe. The problem is that some unemployed constituents blame the fact that they do not have a job on immigrants. This multi-ethnic area, which has had wonderful community relations in the past, now faces the problem of the British National party, which we never had before. We have to start talking about the issues and explaining what we are trying to do to solve the problem, but we cannot ignore it. We cannot say that there is not a problem and that people are not linking immigration with the fact that they do not have a job.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. Two hon. Members wish to contribute before the winding-up speeches begin at 6.40 pm. If they were minded to share the available time, that would be helpful. I shall call Derek Twigg and then Mr. Davies.

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Photo of Derek Twigg Derek Twigg Labour, Halton 6:30 pm, 10th March 2009

I shall be brief, but I want to make a couple of key points. First, I welcome the almost £2 billion of assistance that the Government are providing to the unemployed, the golden hello scheme to help employers to recruit and train the unemployed, the help for people to become self-employed and the general help towards skills training.

It is important that the Government, in helping businesses and companies, recognise that a number of them might be struggling at the moment, but will still have a market after the recession. We should be focusing on them in providing help and maintaining the skills that I have in my constituency.

I want to comment on a couple of areas, including apprenticeships. We must train more apprentices and work with companies and organisations, as well as the public sector, to get as many apprenticeships as possible. There are some gold-standard apprenticeships—for instance, those from the Ministry of Defence and Network Rail. I have visited both organisations to see the work that they are doing and there are tremendous training opportunities for young people. The overall package to provide support with education, training and skills training, as well as help for employers, is key to trying to work through a very difficult situation.

I also want to make a point about local authorities. The difference between now and the 1980s and early 1990s is that there is a much more vibrant, focused approach to economic development and regeneration in many areas of the country, often led by the local authority. In my constituency, Halton borough council, which is one of the smallest councils in the country, is involved with some of the biggest schemes to create employment and regenerate the area. I shall give some examples.

Daresbury science park in the borough of Halton is working with the Northwest Regional Development Agency, the science authorities and research councils to achieve some significant new jobs over the next five to 10 years, particularly in science and related industries. The 3MG project—a massive rail freight development—is working with Stobart's and O'Connor Container Transport to create many hundreds of jobs over the next few years. That is another example of a local authority working strongly with its partners in the community and in the region. The proposed Mersey gateway bridge will create 4,000 jobs, as well as 500 construction jobs, if it gets approval via the public inquiry that is due to be held shortly. Again, the project is driven by the local authority.

In this difficult period, local authorities have a crucial role to play in engendering the regeneration and taking the lead in working with various bodies. I know that they are working with partners—primary care trusts, the chambers of commerce or citizens advice bureaux—to provide help for the unemployed as well. They have a key role to play and the Government must do more to recognise that.

I am conscious of the time, so I shall finish by saying to the Opposition that I recall my constituency during the 1980s, when unemployment was regularly around 18 or 20 per cent., and youth unemployment was over 60 per cent. Halton was fifth worst in the country for youth unemployment and no real help was provided. In addition, we should not forget that a lot of people were deliberately directed on to incapacity benefit, so many thousands more were involved.

I hear the Opposition talking about working in partnership and working together. I welcome that, but I remember what the Tory Government were like back in the 1980s and early 1990s. No real help came forward to help the people of my constituency. This Government have put lots of effort into skills training, improving the jobcentre service with Jobcentre Plus, and providing help for colleges and schools. We also see capital spend—whether on hospitals, schools or other things—being brought forward through infrastructure projects to deal with this situation.

I welcome what the Government are doing. Of course they have to do more, but I also ask them not to forget what local authorities can do to help the unemployed and to lead the way on economic regeneration.

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Photo of Dai Davies Dai Davies Independent, Blaenau Gwent 6:34 pm, 10th March 2009

I want to raise a few issues that I do not think have been touched on tonight. The first is how redundancy and closure programmes are announced. I was involved in a redundancy programme back in 2002. The people I worked with were told of the closure through the media, which does not seem to have changed over the past seven years. Lots of people are stressed enough worrying about their future without hearing about it through the media. I hope that companies in that situation will listen to that and tell their work force first, before telling the media.

Secondly, I want to mention the 90-day consultation, which is set out in statute. The problem is that there is a huge difference between consultation and negotiation. I know from personal experience that it is extremely difficult to change a decision once it has been announced. There can be tinkering at the edges, but once the decision is made the closure or the redundancy programme invariably goes ahead. I ask the Government to intervene and do all they can to influence 90-day consultation—so that it becomes real consultation, not a talking shop.

The 90 days of consultation is stressful enough on its own, but if there is no closure and individuals have to apply for their jobs or go through selection criteria, the pressure, worry and stress are immense, leading sometimes to mental health problems. I know that that has recently been recognised by the Government but, again, the resources need to be there to support people through that very difficult time. We must not forget that not only individuals but families are affected, so there must be support not just for the ones and twos who are in work, but for the tens and twenties in the families.

The other issue is that when someone leaves employment, having been employed somewhere for 25 or 30 years, walking into a jobcentre, college or training establishment is extremely difficult. People need support before they get there, but often those support mechanisms are not in place. Jobcentres need to work more closely with other organisations and signpost people much better.

A week ago, the Secretary of State and I were at a presentation by a campaign group called Need Not Greed. We listened to some of the experiences of people who were struggling through the benefits system and the unemployment system, trying to find work. Jobcentre Plus does all it can, but huge numbers of people are falling through the net. Individuals are often not informed of the welfare rights that are available to them. Again, there is a failure to join up what is out there in the marketplace.

To follow on from what Alan Simpson said, we must look at what is in some respects the opportunity of how to come out of the recession, and part of that must involve social enterprise. We have scratched the surface in encouraging social enterprise in entrepreneurship—co-operative systems of house building, council house building, investment in new homes and creating enterprise zones, which we did some 20 years ago. We need to go back to that consideration. Renewable energy systems are also a huge opportunity for people to train in new skills and introduce those systems to our communities.

Over the past couple of weeks, we have spoken a lot about bank lending. In my constituency, a number of businesses have asked for overdraft facilities, while some had overdraft facilities in the past. Now the banks are refusing to do that. I ask the Government to ensure that what is the best fit for businesses is delivered. If it is loans, so be it, but we must look at other opportunities and options.

I urge the Government to use the debates on the Welfare Reform Bill, which we will be considering over the next couple of weeks, to listen to the concerns of the individuals involved. As I said, the Secretary of State heard at first hand some of the problems that those people are experiencing. We should learn from those, and listen to the trade unions and the representative groups that bring those problems to the attention of the Secretary of State. Let us not make the Bill something that damages employment; it must create it.

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K

Well said you have hit the nail on the head as to how people feel. Karen Williams

Submitted by Karen williams

Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions) 6:39 pm, 10th March 2009

This has been a good debate with thoughtful contributions that remind us how, in the words of my hon. Friend Mr. Heald, unemployment is a searing experience for so many of our constituents, many of whom are experiencing it for the first time, or for the first time in a long time. We are entirely right to bring the subject to the Floor of the House today, as we did in October. We are also right to set out our plans for how we would help people in that terrible situation. We have done so in the motion and my right hon. Friend Mrs. May did so in her speech.

We have heard good speeches throughout the debate. We heard a thoughtful contribution from Alan Simpson, who looked to the future, and a brief one from Derek Twigg, who spoke about his constituency. I hope he will not mind my describing his speech as something of a late entry in this context. That was it, however: that was the sum total of the contributions from the Labour Benches, which have been empty for large parts of the evening. In contrast— [Interruption.] Labour Members are trying to make up for it with the noise that they are making now, but very few of them were present earlier. We will not be drowned out.

We heard excellent speeches from my hon. Friends the Members for Altrincham and Sale, West (Mr. Brady), for North-East Hertfordshire, for Bexleyheath and Crayford (Mr. Evennett), for Clwyd, West (Mr. Jones) and for Wellingborough (Mr. Bone). Other Conservative Members had also hoped to contribute. Those who spoke gave specific examples of the way in which unemployment was affecting their constituents. My hon. Friend the Member for Clwyd, West described specific cases in which his constituents had tried to obtain help—real people who had not received real help from the Government so far. My hon. Friend the Member for Wellingborough told us what it is like to have to deal with unemployment personally, and described the experiences of employers in his constituency. My hon. Friend the Member for Bexleyheath and Crayford highlighted the failure to provide people with the skills that they needed.

We also heard speeches from the hon. Members for Glasgow, East (John Mason), for Rochdale (Paul Rowen) and for Blaenau Gwent (Mr. Davies). I hope that they and others will not mind if, in the short time available to me, I do not refer to the detail of their speeches.

In contrast to the way in which my hon. Friends have considered the present-day problems of unemployment, how those problems are affecting their constituents, how we can emerge from them and how we can best plan for the future, Labour Members have shown a tendency to look back to the past. That was no more evident than in the speech of the Secretary of State, who seemed much more comfortable when talking of the distant past than when discussing what is happening in the country today.

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Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

I will not give way to the hon. Gentleman, because he has not been present throughout the debate.

The final line of the Government amendment states, somewhat unbelievably, that the House

"further believes that the Government should increase the support offered to people trapped on benefits by previous recessions."

So now we know: unemployment is all our fault. We have been occupying the Opposition Benches for the past 12 years, but little did we know that the present terrible economic impasse was our fault. Hang on a minute, though: let me bring Labour Members a little more up to date. Was it not this same Government who promised, in their 1997 manifesto:

"We will introduce a budget within two months after the election to begin the task of equipping the British economy and reforming the welfare state to get young people and the long term unemployed back to work"?

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Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

So the hon. Gentleman says, but one of Labour's key pledges was:

"We will get 250,000 young unemployed off benefit and into work".

Today, as my hon. Friends have reminded the House, there are 140,000 more 16 to 24-year-olds unemployed than there were in 1997. That is the scale of the Government's failure. What is worse, however, is that it is not entirely connected with the present recession. The number of unemployed 16 to 24-year-olds started to rise long before this recession took hold. In their expert analyses, my hon. Friends the Members for Altrincham and Sale, West and for North-East Hertfordshire demonstrated that the Government's claims were a statistical fiddle, while throughout that time they were failing to provide the personalised help that people needed.

Yesterday—my right hon. Friend the Member for Maidenhead mentioned this—the Government told me in a written parliamentary answer that there were approximately 200,000 more young people aged to 16 to 24 not in education, employment or training than there were in 2000, when the recording of the so-called NEETs began. [Interruption.] The Secretary of State says, from a sedentary position, "What about the 2 million?" I think that he would do better to spend his time thinking about the problems that people face today. He was happy talking about the claimant count in 1986; why will he not talk about the claimant count today, and about what should be done to bring it down? He must face the fact—he must admit—that his policies have not been the success that the Government wished.

As Mr. Field wrote in The Daily Telegraph last week—and he is in a position to know, if anyone is—the new deal has

"not been the success that ministers claim."

Little wonder that the Government have chosen radically to alter, if not abolish, the mandatory new deal, and to put the flexible new deal in its place. As my hon. Friend the Member for North-East Hertfordshire pointed out, we want help to be provided for people, and we believe that our proposals would be far more effective in getting help to the unemployed. In the meantime, however, we need to ensure that whatever help is offered by the Government is put in place, and we need to hear a much clearer definition—a much clearer spelling out—of what will happen to the flexible new deal. Will the Government guarantee that it will be in place by 1 October this year? Thousands of unemployed people, including young unemployed people, want to know the answer to that question.

Far too often, instead of providing the help that is needed, Ministers have presented a picture of what is happening that is very far from the experience of the thousands of our constituents who are obliged to visit jobcentres. In October, when we last debated this subject, the Secretary of State said that whatever problems we brought to light, we could not

"detract from the fact that there are 600,000 vacancies in the economy".—[ Hansard, 7 October 2008; Vol. 480, c. 205.]

I will be corrected if I am wrong, but I think that there was an interesting silence from the Secretary of State today on the subject of the number of vacancies in the economy. What was the reason for that eloquent silence? Could it be connected to the fact that since the Secretary of State gave that figure in October, the number of vacancies has fallen in every month? In January, to which the most recent figures relate, the number of vacancies was barely 500,000. As for the number of vacancies advertised in jobcentres, the situation is bleaker still: the number has fallen from 383,000 at the time when the Secretary of State made his comment to 271,000, the most recent figure.

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Photo of James Clappison James Clappison Shadow Spokesperson (Work and Pensions)

Yes. The Government have broken another promise. They said that they would ensure that the vacancies were advertised in the jobcentres, but they failed. I think that the Secretary of State would do better to keep quiet rather than intervening from a sedentary position. What he fails to face up to is the reality encountered by so many of our constituents: that in jobcentres up and down the country there are many times more jobseekers than there are vacancies for them to fill.

I do visit such jobcentres. In Dartford, for instance, there are five jobseekers for every vacancy. In Harlow and Selby there are 12, as there are in Pendle. If the Secretary of State chose to visit his local jobcentre in Stalybridge and Hyde, he would find that there were 18 jobseekers for every vacancy in his constituency. He needs to reflect on that a little more, rather than talking about the past.

I can, however, offer the Secretary of State this consolation. He is good at finding consolation; it is one of his specialities. He may need to look for more consolation in the future. I recently visited a welfare-to-work provider in Hull. Apparently, in one of the Hull parliamentary constituencies there are 4,363 jobseekers and 74 vacancies. That means that there are approximately 60 jobseekers per vacancy. That is what this Government have done for the good people of Hull.

This is a Government who are failing to meet the challenge of the recession and unemployment. Everything that we have heard from them today suggests that here is a party that has lost its way. Its Back Benchers lack interest in the severe problems affecting many of their constituents, as can be seen from the pitiful turnout today, while its Ministers have run out of the energy and enthusiasm that are needed to tackle the problem. There is also a lack of policies. This is a Government who are failing to introduce timely policies to bring real help to people when they need it, and a Government without the vision to tackle the problems for the long term.

We need fresh thinking. We realise what a terrible experience so many of our constituents are undergoing, and we realise that this Government cannot provide that fresh thinking. In the meantime, we will do what we can to chivvy them along to provide some help, but the people of this country need far better help than they have been receiving. We have set out our plans for the future. We want to give the people affected by the recession hope for the future. This country needs fresh thinking, and it will fall to those on this side of the House to provide it.

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Photo of Tony McNulty Tony McNulty Minister of State (Employment and Welfare Reform; Minister for London), Department for Work and Pensions 6:48 pm, 10th March 2009

I am afraid that, for all the passion and for all the absence of substance in the speech of Mr. Clappison, if a speech does not include as firm as possible a commitment to the £2 billion extra that we are already spending, it is all hot air. It is all vacuity on stilts, counting for absolutely nothing.

Apart from the contributions from those on the Opposition Front Bench, however, we have heard some fine speeches. I pray in aid Mr. Bone. If he wishes to discuss with me some of the serious points that he made about redundancy payments and other issues, I shall be more than happy to examine them in detail. He reminded the House, as did Mr. Heald, that these are serious matters which should be dealt with seriously.

In formulating policy, neither a Government nor an Opposition should treat the British public as idiots, but I am afraid that, without the money, that is what is happening. If Mrs. May is seriously suggesting that all that has been done—in driving efficiencies through, the creation of Jobcentre Plus and the mammoth task of merging the benefits service with the employment service—is somehow, in some quasi-Trot fashion, all about cuts, she needs to learn a serious lesson. If she is trying to equate the £1.83 billion in efficiency savings made by that entire process with the £2 billion extra money, with extra jobs, targeted appropriately through Jobcentre Plus to give people real help now, she is on a different planet. We welcome—it cannot come soon enough—the ennoblement of David Freud in the other place to add weight to what is palpably such a thin team to deal with such a serious matter. [Interruption.] No, there is no fear of me being thin; I totally accept that.

Tony Baldry, who is not in his place at present, made some serious points, but equally serious was the remark from our side that, happily, until very recently Oxfordshire probably has not required such a thing as job clubs. That should be a matter of rejoicing, rather than being seen as a matter of policy absence. If the hon. Gentleman were present—as he is a very honourable gentleman, I am sure that he has his reasons for not being here—I would tell him that I would welcome talking to him further about jobcentres. The job club process has existed for some time in other jobcentres; across the entire network, it never went away. However, I commend what the hon. Gentleman has done in the current circumstances for his constituents and others in the area.

I also commend Mr. Davies on his speech, although I do not agree with everything he said. He delivered a focused speech that, again, brought us back to the humanity behind the figures, and the potential destruction of communities if we do not address these matters. He took the issue very seriously, and I will relay to appropriate colleagues in Government some of the broader points that he made about administration and the 90-day notice of redundancy, because, for all that we can do with the rapid response service at present, we say time and again to employers, "Let us in at the earliest opportunity." That can only thus far be after a request, and we will have to look at whether we can put a bit more substance around that—although, as ever with legislation, that will take longer than we might want.

However, I would not traduce—as some colleagues do in their enthusiasm—the rapid response service. Where it has worked effectively, it has worked very well. Some 800 employers have been involved at various times—that does vary. At some stages, it is about getting people to manage the process of unemployment, because of the current state of the labour market. At its best though, such as for Woolworths employees, people's feet have not touched the ground. In the case of the Trafford centre in Manchester, because the rapid response service was there, employees went straight from Woolworths into other retail jobs, and did not even get to the unemployed stage. I accept that there is a huge range along this continuum, and we have never said any of these components are the magic wand that will solve everything.

We do not resile from the fact that every job lost is a tragedy, and that the cumulative loss of jobs can cause real problems for communities, but I reject the vacuous notion that somehow the UK dragged poor old Scotland into the recession, as though there it was, sitting happily in the arc of affluence—I think that was the phrase—and, together with Iceland, it could have struggled along regardless of the global recession. Nor do I accept the suggestions of John Mason about capital expenditure. Given what the Scottish nationalist Government are doing with private finance initiatives and capital expenditure, and what they are not doing in terms of skills and apprenticeships—I have spoken to Ministers up there—they have no leg to stand on in even making a contribution on the economy or unemployment in this country, and they should be sidelined for the micro-little party they are, and will be again back in Scotland.

I take very seriously the points of the hon. Member for North-East Hertfordshire and my hon. Friend Alan Simpson—who is not present, and must have very good reasons for not being so. They made serious contributions, touching not only on our response to the current downturn, but on what should follow. Between them, they made some very astute points about matters such as the low-carbon economy, green jobs, and taking some time as we work through the unemployment that is currently with us to lay the groundwork for what the economy will look like afterwards. That is a difficult trick to pull off, but it is one that a Government of any political persuasion should be trying to perform.

I accept the point of my hon. Friend Derek Twigg about the £2 billion, because that is essential to keep Jobcentre Plus going and working effectively. I also take his point—not least because we recently announced the Houghton report—about the role of local government of all political persuasions in working with its local communities to do everything possible for local labour markets.

A point was made about the six-month offer that will come in from April. That will be for everybody at six months, and in this instance it is right and proper to say what we will do in January, to get on then with the design work, and to make sure it is available for people by the end of this month. That is the way it should be.

When the predecessor of the right hon. Member for Maidenhead announced a similar scheme last November, it was utterly for the birds for the following reasons: there was no funding at all; it was as if it had been written on the back of the proverbial envelope, which is the politically correct way of saying the back of a fag packet; and crucially, her colleagues had made utterly wrong assumptions about the cost of people being unemployed for 12 months, forgetting that, even now in the depths of this downturn, Jobcentre Plus does help people back into work—60 per cent. within three months, and 75 per cent. within six months. What the Opposition came up with was not costed; therefore, it was not worth the paper it was written on.

People must be offered substantial help, support and promise, rather than suggestions, all of which are fatuous if there is no money behind them. Because of its deception, that is a cruel way to conduct politics, especially given the serious nature of these issues. [Interruption.] The right hon. Lady chunters away from a sedentary position. She was asked time and again, notwithstanding the fact that she has two shadow Chancellors, to stand up to both of them and agree that the £2 billion can, and should, be spent now as a real help for people throughout Jobcentre Plus. Answer came there none—absolutely none. I still offer her the chance to do that, but she is still not forthcoming.

I do not want to dwell on the past, and I do not think the Secretary of State dwelt on it. This is all about the future, save for one point: we must learn from the past. We have learned from the good and bad elements of all aspects of the new deal over the past 10 years, and those lessons are informing the flexible new deal. We also can, and should, learn from previous recessions, and we will not face the people of this country without learning those lessons and ensuring we do not dump people sideways on to benefits just for the sake of it and leave them alone. We also do not—whoever said it earlier was wrong—cook the books and change the statistics 19 times for our own purpose, as we would far rather work with the numbers as they are. Also, it cannot be in anybody's interest—I start from the position that every Member of the House agrees with this—that we leave anybody to one side and do not help them. Therefore, we push on with welfare reform despite the downturn, and we offer everybody as much help as we can.

The one lesson from our recent history, regardless of the party politics involved in previous recessions, is that now, more than ever, we cannot stand idly by while anybody suffers from this recession. All of us must make sure that the UK gets out of this in as strong a position as possible—the country will not forgive this Chamber if that is not what prevails.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

The House proceeded to a Division.

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The House having divided: Ayes 161, Noes 349.

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Question accordingly negatived.

Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.

Question agreed to.

The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).

Resolved,

That this House notes that unemployment is rising in Britain and across the world; believes that unemployment is never a price worth paying and that as unemployment rises the amount of support that is offered should be increased; further notes that the Government is investing nearly £2 billion extra into giving additional assistance for the unemployed and that this will provide additional help to people losing their jobs, including a national rapid response service to react to redundancy situations, advice from day one of unemployment on skills and finding a job, assistance to pay mortgage bills to prevent people losing both their jobs and their homes, cash incentives for employers to recruit and train unemployed people, more training opportunities to help people back to work and more places on the New Deal employment programme; believes that it is preferable to invest millions into helping people now than to spend billions of pounds of public money on benefits in the future; further notes that in previous recessions the numbers on inactive benefits were allowed to increase dramatically; further believes that the mistakes of previous recessions must be avoided by investing now to prevent people becoming long-term unemployed today; and further believes that the Government should increase the support offered to people trapped on benefits by previous recessions.

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j

I have been on incapacity benefit for nearly a year. I have a number of physical disabilities,primarily cerebral palsy. I am becoming increasingly frustrated at the vilification of people on this benefit. Secretary of State for Work and Pensions James Purnell has introduced "Welfare to Work" American Style.Tough love to those on incapacity benefit. The punitive sanctions being introduced may result in British people having to cue in soup kitchens, as the economic depression worsens. I would chose not to live in such a society. The only people to benefit from the welfare to work legislation are private companies such as Learn Direct and America works, coming soon to a high street near you. What are these Learn Direct NVQS equivalent to? I can remember As levels and GCEs, they actually meant something to employers a recognized standard of educational achievement. In the future failure to attend one of these courses could result in lose of benefits or worse. How does this further Social Justice? The so called credit crunch has made matters worse. This is due in no small part to the Laissez-faire attitude of New...

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