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Youth Employment

– in the House of Commons at 2:38 pm on 13th July 2011.

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Votes in this debate

  • Division number 325
    A majority of MPs voted in favour of providing more training and employment opportunities for unemployed young people between the ages of 16 and 25, supported by payments from banks out of their bonus budgets.

Motion for leave to bring in a Bill (Standing Order No. 23)

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak 2:39 pm, 13th July 2011

I beg to move,

That leave be given to bring in a Bill to establish a programme to provide training and employment opportunities for unemployed young people between the ages of 16 and 25;
to establish a comprehensive careers guidance service for young people seeking to enter the job market;
to enable Apprenticeship Training Agencies to assist small businesses in employing apprentices;
to provide small businesses with a National Insurance contributions holiday;
to make provision for grants towards the wage costs of apprentices employed by small businesses;
to make provision for a mechanism through which banks and other providers of financial services are required to allocate part of their bonus payment budget to support these measures;
and for connected purposes.

Obviously, I welcome the small reduction in the figures announced today, but the truth is that we do not really know how high youth unemployment is in this country. The Prince’s Trust, which does such fantastic work with young people, claims that there are enough unemployed young people to fill every football stadium in the premier league, with almost 200,000 left queuing outside. It is true that youth unemployment is now much higher than it was in the second quarter of 2010. About 1,300 young people in my Selly Oak constituency are known to be unemployed. We also know that we now have the highest youth unemployment since 1992, and that one in five young people are unemployed.

John Philpott, the chief economic adviser of the Chartered Institute of Personnel and Development, argues that the best way to understand the full impact of unemployment on young people is to look at those not in education, employment or training. Helpfully, the Department for Education publishes those figures quarterly, and we can see from its statistics that youth unemployment is hovering around the 1 million mark. That is too high for a civilised society and a modern economy. How can we be optimistic about the future if we are prepared to subject our young people to a life of worklessness? How can parents have faith in a Government who are willing to let this happen? I witnessed it happen to a generation in the 1980s, and I do not want to see it happen again. That is why I am arguing that we need a fresh initiative to tackle the problem.

I want us to create a training and employment programme for those aged 16 to 25, because I believe that that is the only realistic way to tackle a problem of that size. That kind of unemployment can have long-term damaging effects. It is estimated that a period of unemployment at the beginning of someone’s career can have a significant scarring effect through their entire working life. Bell and Blanchflower argue that unemployment when young, especially for a lengthy period, causes permanent scars. It raises the probability of being unemployed in later years and institutionalises a wage penalty over the course of a lifetime.

Those effects are much greater for younger people than for older people. Gregg and Tominey used the national child development study to argue that youth unemployment imposes an impact on individuals’ wages of 12% to 15% by the age of 42. Inactive young people are also more likely to be involved in crime, and significantly more likely to be unemployed later in life, as well as having a higher propensity for physical and mental health problems, and drug and alcohol abuse. We owe it to our young people to do everything we can to prevent that scar of unemployment.

We need an employment programme that offers hope and opportunity, and we need training designed to address the structural gaps in our system. There needs to be more focus on science, technology, engineering and maths to help to reduce some of the mismatches between young people and employers. STEM skills are essential in sectors that are key to the future of UK competitiveness, such as IT, pharmaceuticals and high-value manufacturing, yet two fifths of employers report difficulties in recruiting STEM-skilled staff.

As part of a sustained programme to tackle youth unemployment, we also need to sort out the mess that has developed in careers advice and support for young people, especially the vulnerable and those whom we describe as NEETs. This is exactly the wrong time for the confusion and doubt sweeping the country as the Connexions organisation reels under the weight of local government cuts. We were told that cuts in the Department for Education area grant would have a limited impact, but we now see careers advice across the country decimated. In Birmingham the jobs of 200 Connexions staff are in doubt, and in some parts of the country provision is already being reduced to little more than online advice and a telephone help service. Barnardo’s, which specialises in work with vulnerable young people, says that it is extremely concerned that the closure of Connexions centres will leave many young people without advice and support this summer.

When the Tory party talked about an “all-age careers service” in its pre-coalition, pre-election manifesto—we should remember that that is what people thought they were voting for—I wonder how many realised that that was code for transferring specialised support to Jobcentre Plus advisers. I am sure that those advisers do a good job, but they do not have specialised skills in working with young people, and of course they can work only with the 16 and 17-year-olds who receive jobseeker’s allowance, which means they will not be helping the vulnerable, such as the NEETs, and those who too easily slip through the net.

The Federation of Small Businesses, whose knowledge and experience of small businesses we should listen to, is calling for a nationwide effort to encourage apprenticeship training agencies to act as host employers for small businesses. It points out that only 8% of small businesses have taken on an apprentice in the past year, but that 14% would be encouraged to do so if a separate organisation dealt with matters such as training, administration and employment.

The FSB is urging the National Apprenticeship Service in England to promote the benefits of apprenticeship training agencies to small and micro-businesses. It is also calling for a national insurance contributions holiday to help small businesses to give our youngsters a chance. The current national insurance holiday helps only start-ups that employ up to 10 people. It may come as a surprise to hon. Members, but start-ups employing 10 people are not common—the FSB says that most of its 205,000 members actually employ five or fewer staff.

Government data suggest that about 3,000 businesses are benefiting from the current scheme, but the Government promised that 300,000 businesses would be set up as a result of it. That suggests that money is available to help micro-businesses that employ five or fewer staff. Ultimately, the Treasury would benefit from extending a national insurance holiday, because more people would pay tax.

Youth unemployment costs more than £23 million in benefits every week, and lost productivity costs about £10 million a day: £600 million pounds would be enough to fund 100,000 young people directly, and perhaps more, in a proper Government work and training programme. It could also be used to stimulate businesses, which could mean that 10,000 more youngsters were given a chance.

The public are ahead of us on this matter, because they know that we should fund such a programme from a levy on the money set aside for unearned bonuses for wealthy bankers, who are continuing to pay themselves money that they have not earned while the rest of the country suffers as a result. I commend the Bill to the House.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 2:50 pm, 13th July 2011

It is with deep regret that I oppose this Bill, and my hon. Friend Steve McCabe. I realise that his plan is well intentioned, but it contains several serious weaknesses, and in one instance a literally fatal flaw.

The first of my concerns are relatively minor, but they still need to be addressed. My hon. Friend proposes to re-establish the careers service scrapped by the previous Government—the Connexions service—but regrettably the proposals are not specific about the scale or location of that service. They do not explain who would be responsible, how it would be paid for or how many members of staff would be employed. They are too general on those matters. They also propose the establishment of apprenticeship training agencies to assist small business—but, to be frank, it is not small businesses that will provide apprenticeships. The bigger gains will come from large employers, which are not pulling their weight at the moment in developing apprenticeships. I regret therefore that my hon. Friend’s proposals do not focus on the large employers.

The outline proposals also say that there will be an inducement to small firms in the form of national insurance cuts and grants to small businesses. I have some anxieties about that, because in the three most recent Finance Bills both the previous Government and the present Government have significantly reduced corporation tax for small businesses and increased capital allowances. My hon. Friend also said that his proposals would be funded by bonus payments to banks and the financial services, which would subsidise the development of apprenticeships. I fully agree with part of that, although it would have been better had he supported my amendment to the Finance Bill on the Robin Hood tax—but perhaps he succumbed to pressure from the shadow Chancellor, as did other Members.

My main concern about the proposals for the Bill, however, is about the lack of reference to a key question about apprenticeships: how can they be made safe on the shop floor? That was one of the key issues addressed by the previous Government, so I regret that my hon. Friend made no reference to it in either his outline proposals or his speech. The previous Government promoted apprenticeships from 1997 onwards, and in the early 2000s the numbers expanded greatly. We all supported that—it was supported across the House—but one element was not put in place: the implementation of health and safety measures when apprenticeships went on to the shop floor.

In 2003 nine apprentices died as a result of a lack of health and safety measures in the companies in which they were placed. As a result, my hon. Friend Mr Lewis, who was then the skills Minister, rightly brought in the civil servants, identified the problem and allocated resources—under legislation and with duties attached—to the Learning and Skills Council, which were then inherited by the Skills Funding Agency. A team of staff were appointed to go into firms where apprentices were placed and carry out a health and safety assessment. In that way, we reduced nine fatalities a year to none. However, that problem is not addressed in my hon. Friend’s proposals.

Since securing health and safety protection for apprentices we have maintained an excellent record, but there is a tragedy waiting to happen. The very staff whom the previous Government appointed—a small unit of 25 in the Skills Funding Agency—are to be sacked in September. Regrettably, the Bill does not address that issue. I would have expected my hon. Friend to include in his proposals a further statutory duty for any proposed apprenticeship training agency to ensure that health and safety are respected and promoted.

It is a matter of regret that these members of staff, who came to meet us yesterday, are to be sacked in September. None of them will be available for the implementation of the Bill. There will be no inspections of workshops, factories or offices, or wherever else apprentices are to be placed. As a result, I predict that there would be a return of injuries and fatalities, and I believe that the House would have some responsibility for those deaths. I would therefore expect my hon. Friend to insert into his Bill a clause giving any Government seeking to develop apprenticeship schemes a further legal duty to ensure that whenever an apprentice is recruited there is a duty of care to ensure that wherever the apprentice is placed complies with health and safety legislation.

The argument that the Government have put, and which might be made in the debate on the Bill, is that the job of the Health and Safety Executive is to ensure that a health and safety regime exits in such companies. I am afraid that that is no longer the case. As a result of the cuts that the Government are implementing, the reduction in staffing for health and safety and the threat from the recent White Paper, health and safety inspections no longer take place on the same scale. That means that when apprentices recruited under this legislation entered the workplace, they would be at serious risk. I would therefore expect any legislation promoting the recruitment of apprentices—I fully agree with apprenticeships, because they ensure that people get a decent training—at least to establish a duty to ensure that those apprentices are safe.

In 2003, when nine youngsters died, my hon. Friend the Member for Bury South took advice from a range of experts—we can offer the correspondence to the

Minister for Further Education, Skills and Lifelong Learning—and that advice was very straightforward: we needed to take additional responsibility to protect the health and safety of apprentices going out to work. These people are not experienced workers and are therefore even more at risk than those who have been in the workplace before, so we have a special responsibility. Legislation is being promoted that we hope the Government will accept, which would vastly expand the recruitment of apprentices and opportunities for young people—particularly, as my hon. Friend the Member for Birmingham, Selly Oak mentioned, for those not in education, employment or training, who are the people most desperately in need of work and apprenticeships of this sort. If we undertake an expansion on that scale, we have a responsibility to ensure that those youngsters are safe.

The ten-minute rule Bill unfortunately does not address that issue. I hope that this debate will enable my hon. Friend to reconsider the matter and propose a more appropriate Bill that addresses this issue. More importantly, I hope that the Government are listening. In less than 12 weeks, the health and safety team in the Skills Funding Agency will be sacked. As a result, youngsters will be put at risk. I urge the Government to think again on this matter, because as a result of that action we could revert to 2003, and I remember the nine fatalities that occurred as a result of inappropriate protection for those youngsters, as we expanded the apprenticeship scheme at that time.

I say to my hon. Friend the Member for Birmingham, Selly Oak that although this Bill is well intentioned, although it has good elements and although he has clearly identified a range of issues that need to be addressed, this is not the appropriate way to go about it. I do not believe that he has identified the appropriate mechanism, nor do I believe that he has addressed all the issues, in particular the health and safety of the youngsters concerned. I would urge him to take his proposals back, redraft them and engage in a dialogue with the Government. Let us examine the issue with the staff who are about to be sacked. Let us try to put in place appropriate protection for those youngsters, so that when we give them an apprenticeship not only will they receive training, but they will be protected and appropriate health and safety measures will be in place to ensure their security.

Question put (Standing Order No. 23).

The House divided:

Ayes 241, Noes 35.

Division number 325 Youth Employment Bill — Youth Training and Employment — Bank Bonus Budget Tax

A majority of MPs voted in favour of providing more training and employment opportunities for unemployed young people between the ages of 16 and 25, supported by payments from banks out of their bonus budgets.

Aye: 237 MPs

No: 31 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 374 MPs

Abstained: 4 MPs

Absents: A-Z by last name

Abstaineds: A-Z by last name

Question accordingly agreed to.

Ordered,

That Steve McCabe, Mr Jim Cunningham, Valerie Vaz, Ms Gisela Stuart, Ms Margaret Ritchie, Siobhain McDonagh, Kate Hoey, Mr Frank Field, Richard Burden Kate Green, Jim Sheridan and Mr Iain Wright present the Bill.

Steve McCabe accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 219).