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Motion to Take Note

EU: Youth Unemployment (EUC Report) – in the House of Lords at 7:34 pm on 17th June 2014.

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Moved by Baroness O'Cathain

To move that this House takes note of the Report of the European Union Committee on Youth Unemployment in the EU: AScarred Generation?(12th Report, Session 2013-14, HL Paper 164).

Photo of Baroness O'Cathain Baroness O'Cathain Chair, EU Sub Committee B - Internal Market, Infrastructure and Employment 7:37 pm, 17th June 2014

My Lords, I am truly delighted to have the opportunity to move the Motion for debate so promptly after the publication of our report on 10 April this year. The report, Youth Unemployment in the EU: A Scarred Generation?, is the product of an eight-month inquiry focused on the youth unemployment situation from an EU perspective. The members of the committee have been passionate about the subject throughout, and were very keen to bring our reflections to the attention of the House as soon as possible. In that vein, I should like to start by thanking them for all their self-imposed hard work. We had a very demanding timetable to meet the production date.

I thank the range of interesting witnesses who contributed through written and oral evidence. Our confidence in our conclusions was bolstered by the fact that we had heard from a truly wide range of witnesses including pan-European—or rather pan-EU—businesses such as McDonald’s and Marks & Spencer; a wide range of international think tanks; EU and UK trade unions; and charities that work directly with young people, such as the Prince’s Trust. Special thanks are due to the young people whose contribution was invaluable in witness sessions in the House, on visits to Birmingham and Liverpool, and indeed in Brussels.

Producing a report such as this would never have been possible without the sterling work of our clerk, Nicole Mason; our policy analyst, Paul Dowling; and the committee assistant, Deborah Bonfante. All of them are endlessly patient and so very helpful. It was an absolute joy to work with them. I am sure each member of the committee agrees with me on this. Our selection of John Bell, our specialist adviser, was inspired. We are immensely grateful to him for helping us navigate the wealth of evidence and other information at our disposal.

It is a shame now that I feel I have to introduce a sour note. The government response was due on Tuesday 10 June. It was received yesterday at 11.05 am, on Monday, after a weekend when members spent many hours crafting their speeches for this evening. This is unacceptable and was described as such, and worse, by members at our meeting yesterday afternoon. Worse than that, the response has all the appearance of being a very shoddy piece of work. The authors of the response could not even copy the title of the report. The heading reads HouseofLordsEuropeanUnionCommitteeReportonYouthEmploymentin—in where? Perhaps they were unaware that we were just addressing youth unemployment in the EU. The response does not address the conclusions in our report in many places. It is badly drafted. There is no covering letter.

And, to cap it all, there are no page numbers. Layout is certainly user-unfriendly, and cut-and-paste was probably the order of the day.

I was very interested to come late into the previous debate and hear almost the same sort of comments about the Government’s response to that committee’s report. What has happened? Let us get a grip. I am not having a go at my noble friend the Minister, and we will of course formally consider the response and then write to my noble friend imminently.

Our reasons for deciding to conduct an inquiry on this topic are perhaps self-evident. We are all aware of the shocking situation of youth unemployment in the EU. The title Youth Unemployment in the EU: A Scarred Generation? might sound somewhat dramatic. However, the more we learnt about the situation and its effect on millions of young people, the more we realised that this is a question not just of jobs but of the potentially devastating impact on many, many young people, some of whom could easily be scarred for life. What damage does it do to the self-esteem, self-confidence and self-reliance of our own young people?

In March 2014, youth unemployment across the 28 EU member states stood at 22.8%, more than double the overall unemployment rate of 10.5%. This is a very slight improvement on the rate of 23.5% a year earlier. The rate of youth unemployment is also reducing in the UK. The figure in April 2014 was 18.5%, down 1.3 percentage points from the previous quarter and down two percentage points from the previous year. This level of unemployment, however, is still considerably higher than the level in the first quarter of 2008, of 14%.

It is true, and we should be very thankful for it, that the levels of youth employment are on the rise. We hope that the shock to the system that we have experienced, and indeed are experiencing, will not deflect our attention from the very serious situation that still exists. Complacency has no place in this subject, and we shall continue to look for solutions to the problem. Time and again we hear stories of the impact these levels of unemployment are having on young people.

I was particularly moved by the right reverend Prelate the Bishop of Durham’s observation of the impact of youth unemployment in his excellent maiden speech on 10 June. He spoke movingly about the young people in schools and colleges who are concerned that they will never find fulfilling work in an area in which they are interested. He thoughtfully acknowledged that some have lost all hope and aspiration long before the end of school, let alone college and university, having been told that their value is in work and economic contribution rather than being “great human beings”.

I agree wholeheartedly with the right reverend Prelate. To tackle the issue of unemployment, we need to think beyond just finding young people jobs. The conversations I had with the young people we visited in Liverpool and Birmingham brought this fact home to me. Many of these young people faced complex personal barriers to work—for example, insecure accommodation, caring commitments and criminal records. Through talking to them, I realised the importance of an approach that enables them to build stable and fulfilled lives before being able to find meaningful employment.

Therefore, I wish to preface my further commentary on various other factors affecting unemployment and the solutions to it with my belief that youth unemployment cannot be properly addressed in the absence of a holistic approach. The aim of our report was to take this knowledge of the very real impact of unemployment right across the EU and consider what the role of the EU should be and how European funds should be used.

To be fair, the issue of youth unemployment has long been central to the EU strategy. It has been targeted through the European Social Fund, which was set up in 1957. In recent years, the European Commission has shown a renewed focus on addressing youth unemployment through various measures. It has increased funding so that, between 2007 and 2013, 68% of the European Social Fund went toward such projects. Additional funds have been allocated to deal with the problem. The Youth Employment Initiative comes to €6 billion in total, with a pledge from member states to add a further €2 billion. This money is intended to go to regions with more than 25% unemployment. In the UK there are five such regions: inner London, Merseyside, south-west Scotland, Tees Valley and Durham, and the West Midlands. Not all member states were eligible for such funds because not all member states have these areas of 25% youth unemployment. Another measure is the youth employment package, which was proposed in 2012, one of whose significant elements was the Youth Guarantee.

Despite the funds at EU level, the amount of money spent at national level by each member state dwarfs the amount of available EU funding. We concluded that it was right that the responsibility for dealing with youth unemployment should rest primarily with member states. There are, however, clear benefits from the EU co-ordinating the member states’ responses, sharing good practice and using EU funds for specific tasks that complement action at national level.

I turn now to the issue of the Youth Guarantee in more detail. It is an example of the EU spreading good practice. We must never forget that nobody—no Government, no institution, no international institution —has a monopoly on good ideas. All member states should and must learn from others and avoid a “not invented here” reaction. Surely it is part of the internal single market to have this relationship. The Youth Guarantee proposal, which the committee supports, is an example of the EU spreading good practice. In essence, it is an undertaking that all young people aged under 25 should receive a good-quality, concrete offer of employment, continued education, apprenticeship or training within four months of leaving education or becoming unemployed. It was pioneered in the Nordic countries. One witness said that the operation of a guarantee scheme was likely to be the reason for the very low rate of long-term unemployment in these countries.

The Youth Guarantee could, and probably would, look different in every country, but the key benefits are: immediate support, not waiting to offer help until young people have been lingering in unemployment for some time; personalised support, finding the outcome that is right for the young person, which could be an internship, employment, personal mentoring or something else; and support for all unemployed young people.

The concept of the Youth Guarantee is different from the current system where the help is not immediate. The Minister said that because most young people on benefits come off them after six months, “It would be inappropriate to put support in earlier”. We found this rationale problematic as it does not account for those young people who have found unsuitable or temporary employment.

Implementing a Youth Guarantee scheme would be an opportunity for the UK to use EU funds to try something new which we know has worked in other member states. I repeat that we were disappointed by the Government’s lack of engagement with the EU’s recommendation that member states should implement a Youth Guarantee. Of the eligible member states, the UK was the last to submit a report outlining whether and how it would use a youth guarantee scheme. Our Government submitted it on 3 March, more than two months after the 21 December deadline. That does not show a lot of enthusiasm or interest.

In the report, the Government confirmed that they would not implement a Youth Guarantee scheme and used the report to describe how current initiatives served the same purpose as would a Youth Guarantee. We were disappointed by the Government’s decision, which we think would complement efforts to tackle youth unemployment at national level. We recommended that the Government reconsider this decision and use the funds to pilot a Youth Guarantee scheme in the five areas eligible for the extra funding. A Youth Guarantee scheme would tackle unemployment at an early stage before the feeling of being worthless and the loss of aspiration kick in.

A Youth Guarantee scheme is focused on the specific needs of the individual and therefore would complement UK measures, such as the Youth Contract with its focus on changing the labour market, making it easier for businesses to take on young people though providing wage incentives and support for those who are looking for work experience. We welcomed the September guarantee for 16 and 17 year-olds and the Youth Contract’s support for getting the most disadvantaged into a job or training or on to an apprenticeship scheme. Similar support needs to be offered to all young people struggling to find employment.

Throughout our evidence, we heard that one of the unusual aspects of this youth unemployment crisis is that it is affecting a wide range of young people, not just the most disadvantaged. Will the Minister say what the take-up of the Youth Contract has been? Has it improved? The initial figures show that between April 2012 and November 2013 only 10,030 wage incentives were paid to employers who had taken on an unemployed person, which is considerably less than the 160,000 available.

Inevitably, a great deal of the evidence we received was UK-specific, particularly the evidence we received from representatives of local bodies and from the noble Lord, Lord Heseltine, who worked with Birmingham City Council on its growth strategy in the aftermath of the publication of his government-commissioned report, No Stone Unturned: In Pursuit of Growth.We received much evidence that the best way of connecting with harder-to-reach young people is by using local specialised charities and other organisations. We were most impressed by organisations in Birmingham and Liverpool. It is easier for young people to connect with these grass-roots specialist organisations. Local authorities are in the best position to identify them. We welcomed the Government’s move toward greater decentralisation of funding and recommended that local enterprise partnerships, in partnership with local authorities, should be enabled to oversee the management and delivery of programmes. This would enable a move away from large-scale contracts towards the use of smaller service providers with knowledge of and, commitment to, the local area—in effect, localism.

In a Damascene moment, one that no committee member will forget, a member of the committee said, “We are investigating, discussing and taking evidence on youth unemployment, so we should take evidence from young people”. That was so true. We rapidly rearranged timetables, enabling the committee to schedule two visits, one to Birmingham and the other to Liverpool. Thanks to the great support of our committee staff and specialist adviser we set about remedying this problem. The young people were illuminating. There were open, no-holds-barred sessions. When the young people were asked about their attitudes towards various government initiatives, some of the language was unprintable and certainly unparliamentary. One youth witness commented that some of the policies in the area of youth unemployment would never have been put forward by a young person. The need to include young people in decision-making is another argument for localisation. It is easier for young people to be involved with local bodies, as they probably know some of the people involved. Young people prefer to stay in their own locality, where they have their friends as support groups.

There is certainly room for improvement in involving young people in decision-making. Local enterprise partnerships currently do not have to consult young people when making decisions about their youth unemployment strategy. We suggest that local enterprise partnerships should, as a matter of course, have to consult and involve youth groups about policies that affect them.

The final issue I want to touch on is skills mismatch. There are currently about 2 million unfilled vacancies in the EU. The digital skills area is a particular concern as nations in south-east Asia, India and many other areas appear to be far ahead. Skills mismatch is a particular problem in the UK. In its 2013 country-specific recommendations, the European Commission said that, despite progress in recent years, a significant number of young people did not have the necessary skills to compete successfully in the labour market. The Commission found that there was an oversupply of low-skilled workers in the UK and that the unemployment rate of low-skilled 15 to 25 year-olds in the UK was 37.2% in 2013, which was significantly above the EU average. We recommended that the European Social Fund be used to bolster skills training in this area and to ensure that young people get careers advice that matches their skills to the job market.

As an aside, I welcome the new House of Lords ad hoc Digital Skills Committee. I have to admit that I put it forward, and I am on the committee. We have our first meeting tomorrow, and I am truly looking forward to it. It will be chaired by the noble Baroness, Lady Morgan. If noble Lords were in their place during her contribution to the previous debate, they will know how fortunate we are. Digital skills is one area in which youth unemployment could be on the way to being solved.

I know I have stretched the House’s patience, but I thank noble Lords for being patient. I believe that there are four key changes which could ameliorate the current dreadful situation for the youth of the EU. There should be more of a focus on consulting and involving young people in developing youth unemployment policy. The Government should learn from best practice abroad and bring forward new ideas and initiatives, such as the Youth Guarantee. There should be a localised approach to devising and managing schemes that aim to address youth unemployment, which should involve local businesses, charities and specialist organisations. Finally, there should be better matching of skills to qualifications. I beg to move.

Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords) 7:59 pm, 17th June 2014

First, I, too, express my thanks to our witnesses for giving us the benefit of their experience; to our special adviser, John Bell, for his understanding and knowledge; and to our clerks for their hard work and diligence. They all made this work possible. I also thank our chair, the noble Baroness, Lady O’Cathain, for her leadership, and, indeed, fellow members of the committee for their companionship.

I join the noble Baroness in saying that we received the Government’s response only 24 hours ago. It was impossible for all of us to study it and make a proper response, so as she said we shall have to reply by mail. It really is most unsatisfactory.

There was a time when we thought that young people who did not work were feckless: it was their own fault. That was a time of plentiful jobs and liveable wages. Now it is different. In the EU it is a time of austerity and of industrial and commercial change, which has eliminated many entry-level jobs, and technology and globalisation have eliminated or exported a lot of less-skilled work. Pay for the under-25s has actually fallen, in some areas to the same level as in 1997.

At the same time, young people live and breathe in an IT revolution, with its opportunities and challenges, to which the noble Baroness has just referred. These things are still not fully understood. Ways of doing business are changing. In some work, such as retail, IT skills replace the older technical and commercial skills. A LinkedIn profile can be as important as a CV. Your page on Facebook, or pictures on Instagram, or words on Twitter can strongly influence any potential employer. There is free movement throughout Europe, so that in some cases highly educated people go down the ladder in search of work and push less-educated workers further down, and those at the bottom get pushed off entirely.

This work of understanding and evaluating youth unemployment in Europe today revealed to me that young people have become the real victims in the aftermath of the financial crisis. Like the noble Baroness,

Lady O’Cathain, I think we were all shocked. Evaluation proved difficult, partly because the system of transition from school to work varies in each member state. It also became clear that youth unemployment in the EU not only affects those who are poorly educated and without skills, it also affects young graduates. All this makes exact evaluation and comparison of the numbers not in work difficult. In our report, we use figures based on the ILO definitions; the noble Baroness gave us the numbers, so there is no need to repeat them.

What steps are being taken to reduce youth unemployment in the EU? The EU funds a youth guarantee scheme through the Social Fund, to be spent nationally and locally, subject to certain rules and standards. Where the unemployment rate is above 25%, the EU youth employment initiative provides further funds. Five such areas have been identified in the UK; the noble Baroness listed them. Ministers recently announced £170 million for a youth employment programme in five of our deprived areas. Can the Minister say whether these are the same five areas that the European Union youth employment initiative identified for extra funding? Is the source of the £170 million all or partly EU money?

Here in the UK we have the Youth Contract, which targets the neediest young people. There is also an employment allowance, which targets businesses by giving them a reduction in national insurance contributions. The Youth Contract is market-driven. Several witnesses told us that contractors had underperformed. We believe that there is a need for both the EU and the UK schemes. The government scheme uses payment by results to get young people into work, but is it enough? Market forces may deal with the skills mismatch, as long as it is addressed in a co-ordinated way. Market forces may produce worthwhile apprenticeships and traineeships as long as standards are high. Both of these we address in our report. However, will market forces deal with the need for young people to be work-ready? Will they provide the good face-to-face careers advice that we also seek in our report?

On the other hand, the EU schemes are part of a social contract, the kind of thing warmly welcomed by the Fairbridge programme run by the Prince’s Trust in Liverpool. We went there, and the noble Baroness spoke of this. Of the 207 young people it supported, nearly half had been affected by drugs and a quarter by alcohol. A quarter had poor mental health. Many were offenders or ex-offenders. Some were single parents or young carers. Market forces will not deal with these problems. Because EU funding is more of a social measure than an economic measure, we were impressed by the way other member states used the youth guarantee scheme to bring together employers, trade unions, charities and local and national government so that they all worked with each other.

The youth guarantee scheme has produced good results elsewhere in Europe, and we can and must learn from that experience. The lesson is surely that getting a job certainly changes a young person’s life, but many have to change their life before they can get a job. That is why we need both. It is because of these complex pressures and needs that we strongly recommend that EU and national funding should be spent locally—on the “grass roots”, as the noble Baroness put it—in consultation with young people, local employers, local charities and welfare organisations. They can deal with the human and social problems that often stand in the way of getting a foot on the employment ladder.

Elsewhere, the Government say that they strongly support the objectives of the youth guarantee but choose to deliver the objectives by other means. They justify this with the statement that 80% of 18 to 24 year-olds move off jobseeker’s allowance within six months. They move off to what? We received ample evidence that the schemes that take them off have,

“generated … a very confused marketplace”,

with a,

“plethora of support and … financial packages”.

Indeed, we were told that the CBI had counted 44 schemes coming from three government departments.

Other evidence that we took indicated that many of those young people coming off jobseeker’s allowance had stopped seeking employment; or had become so-called “self-employed”—the previous debate dealt with that; or were in short-time or part-time work without any opportunity for occupational development; or were living with multiple forms of insecurity; or were engaged in schemes that simply extended their adolescence; or were placed in some kind of community work without any motivation. Perhaps this is why, although we in the UK have more people in work than ever, we are less productive than we were in 2008, and 24% less productive than our key competitors in the European Union.

That indicates that something fundamental has changed in our labour market that will not be cured simply by a steady increase in the jobs count. The change will limit our economic growth potential unless we face up to this and work with the European Union on its schemes. Does the Minister agree that we need to be more ambitious and that the purpose is not to push people around to get the jobless numbers down? As the noble Baroness, Lady O’Cathain, reminded us, there are 2 million unfilled vacancies in the EU, despite the economic crisis and the free movement of labour around the Union: vacancies waiting to be filled by these young people. Surely the purpose is to empower them through the youth guarantee and the Youth Contract—as we say in our report, to empower them to contribute to our economy and to our society in the European Union; otherwise they will be left behind to become the scarred generation.

Photo of Lord Shipley Lord Shipley Liberal Democrat 8:10 pm, 17th June 2014

My Lords, I am glad to speak in this debate. I was not actually a member of the committee but I have a keen interest in issues around youth unemployment and have spoken previously in your Lordships’ House on the subject. As someone who was not involved in the deliberations of the committee, I find the report a very impressive piece of work. It is very detailed and contains a very helpful discussion of all the issues around youth unemployment.

I will mention two things in particular that I like about it. The first is the title—Youth Unemployment in the EU: a Scarred Generation? I think the question mark at the end is important. I think there is a very real danger that we are going to have a scarred generation, but it does not necessarily follow that we will if the right policies are adopted in what appears to be a period of continuing growth from now into the future. The actions suggested in the report that could alleviate the impact of youth unemployment, together with the actions the Government are already taking, mean that we can get more young people into productive employment.

The second thing that I am particularly pleased about is the report’s clarity on the varying definitions around youth unemployment and the associated definitions around NEETs—as we know, those not in employment, education or training—and inactivity, which is not quite the same thing as NEET, because it relates to anyone who is not working at all and is not available or looking for work.

There are many statistics across the EU and within the United Kingdom, but the truth is that whatever statistics you use—for example, whether you categorise students in full-time education—youth unemployment is too high both in the UK and across the EU. We simply have to get more young people into work. The report is right when it states that more control over EU funds should lie locally, and is also right when it acknowledges that the EU’s main role besides funding is to advise on successful innovation and good practice. I support the committee’s view that ESF funding should be assessed on real outcomes rather than just the cost and numbers of participants in schemes.

I hope that we may now be seeing the start of a downward trend in youth unemployment in the UK. It may be too early to say but there seem to be some signs of it. The number of young unemployed people who are not full-time students has now fallen by just under 100,000 since 2010. The number of NEETs is lower than at any time since 2005. One thing we have to do is to continue work closely with small firms because they are responsible for four of every five jobs created between 2010 and 2013. It is important to understand this because this performance by the SME sector in recent months has been impressive—as has the performance of the Government in encouraging apprenticeships.

Since 2010 1.6 million apprenticeships have been created and I welcome the plan to build this up to 2 million apprenticeships by 2015. Many of these apprenticeships are in the private sector. The previous Government created short-term placements predominantly in the public sector, and half the people on them returned to benefits. What this Government are doing is much more sustainable and we need that sustainability because youth unemployment has structural causes. It is not just a recent problem, although without doubt the financial crisis in 2008 and the consequent recession made it worse.

The youth unemployment rate across the EU in 1994—20 years ago—was 20%, very close to the current level. Thirty years ago, in 1984, youth unemployment in the UK was very similar to what it is now. Spain today has very high youth unemployment but in 1987 it actually stood at 45%. Even in 2006 in the UK, following a four-year period of growth, there was still very significant youth unemployment.

I think there is a structural issue, because Germany—which I will come onto in a moment—does not have that same structural problem. There is a cost to the Exchequer in this because youth unemployment costs several billion pounds. Some estimate it as more than the entire budget for further education for 16 to 19 year-olds in England. We would agree that it is better for young people and our economy to spend that money on training and apprenticeships and getting young people into jobs.

The committee has clearly had a debate about the Youth Contract and the Youth Guarantee. Its view on the Youth Guarantee differs from that of the Government. Clearly there is going to be a further discussion around that and I hope it might be possible for everyone to get round a table to have it. The Youth Guarantee is a guarantee for young people leaving school that they will have an immediate opportunity of employment.

My view is that the Government and all their partners must be focused on outcomes, which means that young people need to be suitably prepared to enter apprenticeships, employment or training. That means that they need a pathway at a personal level to enable them to move seamlessly from school to an apprenticeship, to vocational training or to college or university without waiting, and that they are “work-ready” when they enter the world of work rather than being expected to learn on the job.

The Government’s reply is that the Youth Guarantee model would not fit the UK. However, I think it could. What matters in this is the individual—that every individual has a personal plan and that they feel wanted and engaged. The statistics around NEETs and those who are inactive suggest that not everybody feels wanted and engaged. Therefore the principles behind the Youth Guarantee seem very important.

I will mention the role of Newcastle Gateshead, my home city, which is a Youth Contract pathfinder, in helping 16 and 17 year-olds into employment, education or training. It is interesting to note that almost half of 16 to 17 year-olds who have taken part have moved into employment or training; others are in education. That seems to be a sign that the policy is working. If so, that is an example of good practice that can be spread.

There is a very interesting statistic about the north-east in the Library briefing for this debate. It has the highest level of youth unemployment in the UK at 25%, but has a lower rate of youth inactivity than many regions, seven of which—including London—have higher rates of inactivity. I have puzzled over what the cause of that might be and have drawn the tentative conclusion that the Youth Contract is now helping. Over the past two months, 1,124 apprentices were taken on in the north-east. The National Apprenticeship Service has just announced this figure two months into its 100 Days Apprenticeship Challenge. Some 650 regional companies have taken on those apprentices, backed by the North East Chamber of Commerce and training providers, and impressively supported by the region’s press. That is partnership working at its best.

I will say something further about Germany’s youth unemployment. It is under 8%. Germany has high levels of youth employment and almost no unemployment among those in education. It has apprenticeships and vocational training in secondary education. That leads me to the role of our schools. Schools have a statutory duty to provide a careers service, yet a few months ago Ofsted reported that three-quarters of secondary schools were not executing their statutory duties satisfactorily.

Advice and guidance is broader than just careers advice. Students need to understand better the qualifications and skills required to enter an apprenticeship, particularly in science, maths and IT. They need programmes of visits to local employers to experience what the possibilities might be. Schools are central to the development of relationships with local employers through programmes or visits, exchanges and other opportunities.

In conclusion, the UK is doing better than many eurozone countries. Youth unemployment is far too high; we must learn from Germany. However, we have to use every lever within our power and remember that this is everybody’s problem to solve, not just the Government’s.

Photo of Lord Wilson of Tillyorn Lord Wilson of Tillyorn Crossbench 8:20 pm, 17th June 2014

My Lords, it was a very great pleasure to take part in Sub-Committee B, which drafted this report under the chairmanship of the noble Baroness, Lady O’Cathain. As other noble Lords have said, we were enormously well served by the staff and by the witnesses who came to give evidence.

I will deal with a couple of general points first and then deal in slightly more detail with the section of the report that deals with the job market for youth in the EU and with the question of migration. On my first general point, there is some evidence of improvement in the unemployment situation, including for youth recently, and for the overall situation for unemployment. That is obviously a good thing, and it is a good thing, too, that we in the United Kingdom have not been among those who were hit worst by the unemployment problem during the recession. Equally, however, we have not been among the best at dealing with the issue. We have been beaten by a long way by Germany, Austria, the Netherlands, Denmark and, somewhat to my surprise, Malta. We are not at the bottom but we are not at the top or nearer the top, where it would be nice to be. Despite this improved situation, what struck many of us and came out so strongly in the recent maiden speech of the right reverend Prelate the Bishop of Durham was the sense of despair among many young people—the feeling that they would not be able to get a job in their lifetime, that there was a tangle of ways to make progress, but that they were not capable of finding out what to do or how to do it. That is a very real psychological problem.

Another general point is that it was clear from the evidence we received that it is far better to deal with most of the issues of unemployment on a national basis. The differences between countries of the European Union are so great in that area—the disparity between the methods of employment and the structures are so great—that to try to deal with them on a one-size-fits-all basis for the European Union will not work. Therefore I am sure that the majority of the work on unemployment should be dealt with on a nation-state basis. But, equally, if funds are available from the European Union, we should make every effort we possibly can to access those funds.

I shall make one or two points about the jobs market within the EU. It was very interesting that there appeared to be a growing realisation that vocational training is just as important as purely academic training. One interesting bit of evidence was from Barclays Bank. It stated that it now had a new point of entry and it was for people who were not graduates. It explained that when it had only a graduate point of entry, many of those graduates found that what they were expecting to happen in terms of the job they were going to be given did not occur and therefore they left early. Therefore, it recruited people, appropriately trained and educated, for the jobs they were going to do. For many years we have downgraded the value of vocational training. It is rather good to see the circle turning and we are now valuing it again. That is a good thing. The noble Lord, Lord Shipley, referred to the number of apprenticeships and apprenticeship schemes. They are now being reintroduced and valued, but from the evidence we received there was a problem area here. Perhaps it is just a dumbing down of language. What is an apprenticeship? Some of the apprenticeships we heard about were a very long way from the traditional schemes of training people in skills for long-term employment. Some of the schemes, indeed, produced some pretty caustic comments from members of the committee because they did not seem like apprenticeship schemes at all—it was just a good headline to use. Apprenticeships, good; dumbed-down apprenticeships, not so good.

We need to be careful about wording that we use for all these different schemes: apprenticeships, traineeships and internships. It became clear—it became clear also in the Government’s reply to our report—that there are differences in different parts of Europe about what these schemes mean. Nevertheless it is a pity that the Government seem to be opting out of what is called the quality framework for traineeship schemes which the European Commission has put forward on the grounds that the criteria for these traineeships are not the same in other parts of Europe as they are for us. It seems worth trying to find common ground with other countries within the European Union which would help to promote traineeships and apprenticeships and also help to access EU funding for that.

It may be instructive if I quote from an interesting exchange which comes from the sayings of Confucius. I thought it might be rather nice to have sayings from Confucius when the Chinese Prime Minister is here. One of Confucius’s disciples said to him:

“I hear that the King of Wei wants your help in running his Government. What are you going to do first?”

Confucius replied:

“What is necessary is to rectify names. If names are not correct, language is not in accordance with the truth of things. If language is not in accordance with the truth of things, then the affairs of state cannot be carried on to success”.

I think it was a good point, considering how long ago it was said. He went on to say that if things are not done properly, then the consequence is that punishment cannot be meted out correctly and, as he put it,

“the people will not know how to move hand or foot”.

We do not necessarily need punishment, but we need people to move hand and foot. Correct use of language may be helpful in this and may be helpful in accessing funding from the European Union as well. We need to know what we are talking about when we put forward schemes for apprenticeships, traineeships and internships. On a slightly different point, we also need to avoid schemes such as internships in particular becoming some form of low-cost exploitation—just a cheap way of recruiting labour. All these schemes surely should be designed for long-term high-quality jobs and training for that.

Another area which perhaps presents a similar problem to this is zero-hours contracts—much discussed and by many people much criticised, including by some of our witnesses. The committee concluded and indeed the evidence very clearly supported the fact that zero-hours contracts are helpful in present conditions. They allow young people to get experience and they reduce the amount of youth unemployment. Again we need to ensure that they do not become some form of exploitation. There are rules to protect workers and workers’ rights, and things such as minimum wages. Those rules need to be known and they need to be used.

Another area that is somewhat controversial but should not be shied away from is the issue of job migration. Understandably, the Government want to ensure that free movement is free movement to seek work and not to seek welfare, but we surely should not forget how much we in the UK have benefited from the migration of workers—nor should we forget how much our own young people can benefit from taking jobs elsewhere in Europe. It is marvellous experience and very good for what they do later in life. Migration of youth seeking and getting work is invaluable. It seemed from the evidence given to us that more could be done to publicise those sorts of schemes and opportunities. There is a scheme called Youth on the Move, which has a website that gives details of job vacancies all over the European Union. It was very clear in talking to people that most of them had never heard of it and that even fewer had actually accessed it. There is a job there for schools, colleges and any employment agencies, such as the Jobcentre Plus system. There are opportunities, and it would be very nice to see them used.

I raise one final small point on youth entrepreneurship. There seems to be a growing interest among young people in entrepreneurship—in other words, in creating jobs rather than just going out to find work. The report recommended that the European Commission should make it more explicit that two of the funds, the European regional development fund and the European Social Fund, should be used to back these schemes. Somewhat surprisingly and oddly, the Government in their response demurred; they said that, although nothing explicit appeared in the regulations on this, the funds can be used, and they saw no reason to alter the regulations. This is one of the issues that the wit of man should easily be able to resolve. The funds can and have been used, greater encouragement could come from the Commission so that they are used to a greater extent, and there is no need to change regulations, which is always a tremendous problem—so QED. As we went through all the evidence, there seemed to be a number of cases where we have got terribly tied up on questions of definition and small bureaucratic points, when with a bit of freethinking it would be possible to solve those problems. Would that all problems of youth unemployment were as easy to resolve as questions like that.

As others have said, the unemployment situation is clearly getting better, and that is very encouraging. However, it remains the case that unemployment for anybody is a tragedy and debilitating, and for young people to go into adult life believing that they will never get a job is highly destructive. We need to do everything possible to avoid that happening and to avoid having a scarred generation. One hopes that this report in some small way will help to achieve that.

Photo of Lord Freeman Lord Freeman Conservative 8:33 pm, 17th June 2014

My Lords, it is a great pleasure to follow the noble Lord, Lord Wilson. I agree with virtually everything that he said and pay tribute to his experience and his contribution to the Select Committee. The noble Baroness, Lady O’Cathain, paid tribute to our clerk and the staff, which I very much endorse, but on behalf of my colleagues on both sides of the House I pay tribute to her as our Lord chairman for her patience for almost 12 months in dealing with many witnesses but also in bringing together an excellent report, for which the House should be very grateful.

As other noble Lords have said, we are dealing with a scarred generation, but there are some hopeful signs. In the past three months, youth unemployment in the United Kingdom has fallen by 60,000. That is a very small part of the total problem we face, but at least things are going in the right direction.

In my brief contribution tonight, I shall simply share with your Lordships two lessons that I have learnt. The first is one that I learned from my former colleague, my noble friend Lord Heseltine, in the Cabinet Office when he—and I, trying to assist in some ways—was trying to deal with issues such as unemployment, particularly youth unemployment. I think that his contribution to the debate, if he were here tonight, would be that we have to place the emphasis locally. We have seen that in Birmingham, on our visit, and certainly in Liverpool. National initiatives are fine, but very often the documents are read and discarded, or not implemented at a local level. If you focus locally, particularly where there are pockets of youth unemployment, which we saw in Birmingham and also in Liverpool, one can target effort, initiative and money, with the co-operation, obviously, of the local politicians. So, local emphasis is very important for me. That is the first lesson that I have learnt during the course of this inquiry.

The second lesson, which is probably counterintuitive for many colleagues, is the importance of looking at those 14 to 16 year-olds who will, when they leave school, in some cases join the NEETs—not in employment, education or training. It was an initiative of Gordon Brown, the then Prime Minister, to fund an organisation through the Ministry of Defence called SkillForce, which I have had the honour of chairing for the past 10 years. We have taken 50,000 schoolchildren who have been disruptive in schools through regular courses, where they are taught life skills and encouraged by former service men and women. Over the past 10 years, 85% of them have got into employment—in other words, they are not categorised as NEETs. I think that that emphasis is quite important. I am trying to encourage my colleagues in the Department for Education, and, indeed, in the Cabinet Office, to look not just at the 16 year-olds who are leaving school, but also at the category I have just referred to, who perhaps only have a single parent, are causing disruption in school and, if nothing is done to encourage them and provide some life skills, will end up unemployed and adding to our great problem.

Those are the two lessons. I promised to be brief and I am going to offer concrete action to my noble friend Lady O’Cathain. I am going to the Vote Office, I am going to buy 12 copies of the report and I am going to send them to 12 chairmen of the largest companies in this country with my encouragement that they should take action where necessary, where they have employment, factories or workforces, to help us reduce even further the level of youth unemployment.

Photo of Lord Brooke of Alverthorpe Lord Brooke of Alverthorpe Labour 8:38 pm, 17th June 2014

My Lords, I am a member of Sub-Committee B and was, happily, very much involved in the production of the report. Like others, I express my gratitude and pay tribute to the noble Baroness, Lady O’Cathain, for her brave leadership and determination to get the facts and to stick to making recommendations, even though they may not be too popular, necessarily, with her own Government. She has certainly ploughed an individual line there, well supported by her committee. My grateful thanks go, too, to our clerk Nicole Mason, to our policy analyst Paul Downing and to Deborah, as well as to our specialist adviser John Bell, who is up in the Gallery, for all the guidance and assistance which he gave to us.

Since we started this inquiry, as many others have mentioned, unemployment has declined, happily, which is welcome. Youth unemployment in the UK has also gone down, as indicated in the letter sent to us yesterday, although it has not gone down by quite so much as the general reduction in unemployment. None the less, that is a move in the right direction. However, we are still concerned about the underlying trend of 16 to 24 year-old NEETs. That is still a significant problem and a hard one to crack, as the Minister will know given that he tried to assist in the efforts of a previous Government to resolve this long-standing issue. This problem first reared its head in 2003-04, when the underlying figure for NEETs rose notwithstanding the growth in the economy and the general expansion of GDP.

As others have mentioned, there is also a very serious youth unemployment problem in many EU member states—hence the intervention of the Commission and the Council to try to help. We were not surprised to find that many EU countries were in a much worse position than the UK. However, as other speakers have identified, some are doing better, notably Germany, which is well ahead of the rest. Austria has also done well in this regard, as has Holland, and the situation in

Scandinavia has improved. It was interesting to note that a significant change has taken place not just in Malta but in Finland. Those countries put that down to embracing the Youth Guarantee.

We considered what the winners in this situation were doing and whether we could emulate that. It is interesting to note that each of them has a more highly developed social partnership economy than we do. We tend to have a more flexible and laissez-faire approach than is the case in Germany and Holland. We also noted that all those countries had embraced the Youth Guarantee. Indeed, all the European countries have embraced it with the exception of the UK. That is an important difference and I shall devote most of my speech to addressing that issue. I appeal to the Minister not to stick too strictly to his brief when responding to the debate.

As we have heard, the committee took a lot of evidence and visited different parts of the country as well as Brussels. We found that the majority of people who submitted evidence to the committee, particularly people in this country, were in favour of adopting the Youth Guarantee. We produced a report in which we set out what we thought were cogent arguments for instituting a number of changes. We particularly wanted to persuade the Government that they should adopt the Youth Guarantee. We have been fairly modest in not asserting that it should be applied across the whole country and to all those who come off JSA after six months. We have suggested that the Youth Guarantee should be introduced only in limited areas, and that the Government should address those areas with 25%-plus youth unemployment.

Regrettably, the Government have resolutely tried to persuade us that what they were doing was more effective than the Youth Guarantee and praised the UK’s Youth Contract. However, many of our witnesses did not share that view of the Youth Contract, although it was interesting to hear what the noble Lord, Lord Shipley, said about how he sees it working in the north-east. We are grateful to the Government for sending us a 36-page document seeking to persuade us to drop our line that there was something special about the Youth Guarantee that ought to be explored. However, we have stuck to our guns. Indeed, we note that the written response still seeks to make us change our minds in that regard. I hope that the noble Lord might be prepared to reflect a little again on what we have put before him. Incidentally, I share the view of the noble Baroness, Lady O’Cathain, that when we get these long letters it would be a great help if the paragraphs were numbered in the way in which we have numbered our report. It would then be much easier to pick up individual points and refer the noble Lord to them.

I read that letter carefully overnight. I do not have a speech that responds to all the points, but I felt that the letter makes an underlying case for a trial of the Youth Guarantee. The more I read it, the more I thought, “They are making the case for us”. What comes through clearly is that there are areas in which—the noble Lord’s officials were open and straightforward with us on this when they gave evidence—they do not track everyone. In particular, I should like to ask a question about 16 and 17 year-olds. The noble Lord says that the number of NEETs has reduced significantly. We were unable to find the figures that related to these people. His department’s officials could not tell us how many were in that category. How many people just disappeared? When they left school, the officials did not know where they had gone. I should be grateful if the noble Lord could tell us the numbers and how he has managed to find them. When his people came before us in the autumn, they were unable to tell us.

This involves the worrying group that disappears into the ether. In our opinion, people in that group should be picked up because they are, effectively, trainee NEETs. If they disappear in this way, many of them will end up being permanently unemployed. We thought that if the Minister was prepared to look at the Youth Guarantee, he would find that they would be required to come into the system within four months of having left school or college. There would be a requirement to put them in the system and follow them through it.

I say to our friend the Minister, whom I refer to as a friend because he has worked on this issue for both sides, that it is difficult to see among the arguments he has advanced—given that we have European money and particular locations with special problems, and we are not asking him to run this across the whole country but only in limited areas—why he is so steadfastly opposed to the Youth Guarantee, when it has seemed to work elsewhere, has been effective and could be effective in the UK. Even if he is not prepared to look at the five areas—although I know that devolution means that Scotland has responsibility for what happens in Glasgow—and even if he went to just one of the four other areas, I am sure that our committee would be happy if we saw the noble Lord trialling the Youth Guarantee in one area.

Ultimately, while we share the direction in which the Government are travelling, to devolve down the line, we find that there are so many different interests with a finger in the pie that it is difficult to identify who, at the end of the day, has full responsibility for each individual who gets lost and ends up being permanently unemployed or workless. We have colleges and schools with a finger in the pie, as well as the careers service, the LEPs and the local authorities, which pick up people who fall into difficulties—but only where they have a responsibility to ensure that such people are cared for. We need to start looking at providing a worker who can help each person, take them into employment, training or education, and keep them out of this ever-growing category—a cohort that stays workless for many generations. It comes through clearly in the noble Lord’s letter that there are too many fingers in the pie. We need to focus on individuals who can actually deliver.

The Minister could use the money from Europe to trial the Youth Guarantee to see whether it works. It is perfectly in line with the compelling evidence that we received from the noble Lord, Lord Heseltine. This is not a party-political issue at all. We all have a serious issue and are trying to resolve those underlying problems. Ultimately, it should not be just at the four-months point when intervention should take place to try to get the numbers down; in due course, such intervention will have to be when they leave college or schools. That is not in our report and it is not going to happen. Perhaps in the mean time, however, the Minister could at least reflect on whether to carry out a trial, implementing it at the four-month point in one of the areas of the country where we have 25%-plus unemployed.

Photo of The Earl of Liverpool The Earl of Liverpool Conservative 8:49 pm, 17th June 2014

My Lords, as a member of EU Sub-Committee B, I should very much like to associate myself with the remarks of my noble friend Lady O’Cathain and other noble Lords in expressing sincere thanks and gratitude to our clerk Nicole Mason, to our policy adviser Paul Dowling, to Deborah Bonfante for the secretarial help she provided, and lastly, but by no means least, to our specialist adviser John Bell. The committee had 20 oral evidence sessions and 54 written submissions. The period from the first call for evidence to the printing of our report, as my noble friend Lady O’Cathain said, was eight months.

During that time I travelled with others to Liverpool, where we met young unemployed people on the Prince’s Trust Fairbridge project. I then went to Lithuania, where I and our clerk attended a two-day chairpersons conference, which our chairman was unable to attend, on the youth unemployment problems in the EU. It has been quite a journey—one which it would have been impossible to undertake without the advice, guidance and support we received from our staff.

The first and perhaps obvious thing I will say is that there no one-size-fits-all solution to youth unemployment problems, which all countries in the EU face. As paragraph 3 of the summary on page 5 of our report says:

“We consider that the responsibility for dealing with youth unemployment rests primarily with Member States”.

However, much can be achieved by learning from good practice across Europe. We heard from the Centre for European Studies, which attributed Germany’s economic success to reforms enacted by the Schroeder Government back in 2003-04, which involved working with social partners to enact corporate downsizing and restructuring, and wage reticence on the part of the unions.

The TUC, UNISON and the British Chambers of Commerce said that social partnership was less well developed in the UK, but all expressed a willingness to work together on such issues as career advice in schools and improving representation of the young in their organisations. We welcome this increased co-operation and encourage social partners to work even more closely with the Government and with each other.

There is an urgent need for that to happen, because we heard from a number of people, particularly the young, that careers advice in schools was generally poor. A recent report by McKinsey & Company confirmed there was a problem across Europe. The report found that less than one-third of the 5,300 young people surveyed in eight member states felt that they were getting good careers advice at secondary school level. That means that nearly 70% thought they were not receiving good advice. I find that truly shocking. My noble friend Lord Shipley referred to that problem.

By a happy quirk of fate, I have a young student of 17 doing some research work for me this week. Seeking his views on the committee’s report seemed like too good an opportunity to miss. I asked him what stood out as the issue most relevant to him. His immediate reply was the poor quality of careers advice he had received to date. I believe that there needs to be better dialogue between local businesses, schools and career advisers. We recommend in the report that careers advice should be better co-ordinated and that the National Careers Service should be extended beyond the 12 centres currently in the UK and act as a one-stop shop to refer young people to the different sources of careers advice.

We also received evidence about the skills mismatch, which is more of a problem in the UK than the rest of Europe. This is one of the main causes of particularly high unemployment rates among low-skilled young people. We therefore recommended that the Government integrate the EU Skills Panorama into careers services provided at national level through schools, job centres and online resources.

I was surprised to learn from the evidence given to the committee by Go ON UK that digital literacy—that is, IT skills—was worse in the UK than in some other member states, with 6% of young people in the UK lacking the basic online skills required to send an e-mail. The recommendation made in paragraph 103 that we could use,

“the European Social Fund and European Regional Development Fund to support enhanced provision of both basic and higher level ICT training and skills training in general”,

therefore seems particularly relevant, and I hope that this will be adopted by the Government.

During the education process, not enough emphasis is placed on the need to teach and encourage soft skills and social skills. Indeed, another organisation called WORKing for YOUth said that,

“employers tell us in no uncertain terms that it is the soft skills—the communicative skills, the social skills—that they find most lacking by the time people leave school to come to them”.

Surely this is something that schools should be teaching as a matter of course and I hope that message will be received loud and clear.

We were told by the Prince’s Trust how beneficial mentoring can be in building confidence and achieving positive outcomes. It also said that, for certain young people, becoming entrepreneurs and setting up their own businesses was a good option. We need more entrepreneurs, as other noble Lords have said, and I believe that my noble friend Lord Young of Graffham, with the support of our Prime Minister, is proposing that it should be included in the school curriculum and fostered and encouraged as a skill set.

Going forward, local enterprise partnerships—LEPs—can play a pivotal role in identifying the next generation of entrepreneurs. With the funds that they will have at their disposal, is it too much of a quantum leap to imagine that they could set up local quasi-venture capital funds, where good ideas are supported by funding on favourable terms over a reasonable timescale? Perhaps these could be run in tandem with the Government's excellent start-up loans scheme, which includes mentoring support. In the two years since its formation by BIS in 2012, I understand that the scheme has loaned over £91 million to more than 18,000 new businesses. This bodes well for the future creation of many SMEs and, it is hoped, as time passes, large public companies.

Statistics show that countries with a strong balance of payments surplus have low youth unemployment. This means that we have to invent and make things that people want, and this is where the entrepreneurs of tomorrow can make such a tremendous contribution. Last Tuesday in this Chamber, my noble friend Lord Bamford made his maiden speech. It was an excellent contribution, and I hope that noble Lords will bear with me if I quote just one passage from it, as I think it is very relevant to our debate today. The noble Lord said that,

“we have a duty to identify and nurture young talent. That is why, in 2010, we opened the JCB Academy in Staffordshire. The academy is now giving 500 14 to 19 year-olds a hands-on technical education … not just for the benefit of JCB but for British industry as a whole”.

He went on to say:

“We are creating real opportunities in industry for our young people. In recent years there has been much progress in the field of technical education. We need, however, to do more—much, much more”.—[Hansard, 10/6/14; cols. 267-68.]

University technical colleges can play a major part in producing the entrepreneurs of tomorrow, which in turn will make us rediscover our manufacturing skills, promote exports, reduce our balance of payments deficit and, most important of all, play a major part in bringing down unemployment. It is rare indeed to find an initiative with the potential to offer a quadruple win, and I hope that the 17 or so UTCs which we currently have in the UK will prosper and multiply. Indeed, I believe there are plans for another 30 to be opened by the end of 2016, which is really excellent news.

I was also struck by an idea proposed by the noble Lord, Lord Macdonald of Tradeston, in the same debate last Tuesday. He said:

“Finally, it is surely regrettable that half the UK’s large companies do not offer apprenticeships. We can no doubt change that if we sustain the cross-party consensus and support for vocational training. We should also look again at the proposal that the Government use the leverage of their billions of pounds spent in public procurement of goods and services to boost apprenticeship opportunities by requiring companies bidding for larger contracts to offer apprenticeships”.—[Hansard, 10/6/14; col. 270.]

I do not believe that the Minister who is responding to the debate this evening was able to indicate whether he favoured the noble Lord’s proposal, and so I end by asking him whether he might be able to give the House his views on this when he rises to his feet later this evening. I fear that I have gone slightly off piste on this last one and I hope that my noble friend on the Front Bench will forgive me.

Photo of Lord Clinton-Davis Lord Clinton-Davis Labour 9:01 pm, 17th June 2014

My Lords, one of the tasks that we set ourselves was to dispel, as far as we could, some of the hopelessness which affects young people today. We cannot possibly succeed in doing that entirely, but we can make a contribution, which is what we tried to do.

I wish that I could have gone along with my colleagues to Birmingham, Liverpool and so on, but unfortunately my health did not permit it. However, I think that we have done a worthwhile job and I pay a compliment to our staff, who were superb throughout. I also pay a compliment to our chair, who enabled all of us to make a contribution. She deserves the compliments of the whole committee as far as that is concerned. The sub-committee has been remarkably well led. She has shown a determination to involve all the members and, without exception, they have responded in full—sometimes, like me, rather too fully.

I also share our chairman’s view that it is outrageous that the Government should have responded to this lengthy report in the way that they have. We have a joint effort to make in tackling this important issue. Why have the Government been so late? Why have they chosen to come forward with their response so close to this debate? It is absolutely outrageous.

The sub-committee concentrated, of course, on the question of youth unemployment and, in particular, on the threat that it poses to young people and to society at large, here and in the European Union. How can the European Union assist member states on the question of long-term unemployment? Long ago I was a member of the European Commission, but I cannot recall a debate about this issue. Perhaps we were rather slow to tackle it or perhaps it was not of such concern at the time. All I would say is that this report sheds a certain light upon an issue that all too often is shrouded in darkness.

Of course, the foremost task lies with the member states—a point underlined by the sub-committee and repeated in this debate—but the EU can and should play a vital role in supplementing those efforts. I do not think that prejudice against the EU has any part to play in this. It is important to collaborate in order to find solutions for this important issue, if we can. Naturally, the EU cannot do everything and it does not try to do so, but it can indicate how member states might most usefully work together. The process of learning and working together can be hugely beneficial. The report rightly emphasises that we can also learn from the experience of others who are not members of the EU. They are suffering too, and they may have useful ideas to share. It is indeed in our mutual interest to do this. Moreover, as the report indicates, the EU’s Europe 2020 strategy has a prominent role to play in tackling youth unemployment in Europe.

As the report illustrates, although UK youth unemployment is lower than the EU average, we should not rest on our laurels. In fact, youth unemployment in the UK does not compare well with some other similar economies in the Union—a point that is highlighted in the report. In my view, the Government’s response is far too complacent about this issue. We contend in our findings that there is much to learn, and we have strongly suggested that EU funding should be far less centralised. The correct course for enabling Union funds is that they should be spread more sensibly among the people and organisations that are most affected so that they can be full partners in this enterprise.

The concept of the Youth Guarantee which has been advanced by the Commission is broadly supported by the sub-committee as an important initiative in the drive to confront youth unemployment. We have set out our support for the steps that are outlined for those parts of the EU which are most affected by youth unemployment. We have recommended that this youth employment initiative should be set up in five areas of the United Kingdom, which would receive that funding. This point has been made time and again in this debate, and we deserve a reply from the Government about what their intentions really are.

We also indicated the importance of young people working and gaining experience in other member states, but we must insist, as a vital ingredient, on the proper protection of workers’ rights, thus averting the exploitation of young workers.

My earnest hope is that the report of the sub-committee will help to advance the significant issues that are at stake. All in all, I close where I began by saying that the members of the committee, led skilfully by our chairman, have contributed largely to the findings that we seek to insist upon.

Photo of Baroness Uddin Baroness Uddin Non-affiliated 9:10 pm, 17th June 2014

My Lords, it is a great pleasure to follow the noble Lord, Lord Clinton-Davis, who has a long-standing record of contributing to these very valuable discussions. I thank the noble Baroness, Lady O’Cathain, for her leadership of this critical examination of this important matter. I was not a member of the group but, having spent three decades trying to connect neglected generations to potential employers, I took a great deal of interest in the report.

I found the report fascinating for its comprehensive analysis of the array of issues arising from young people’s prospects for employment. Some of the statistics are clearly worrisome. Despite not having been a member of the committee—or, I confess, having read the report as thoroughly as the noble Lord, Lord Brooke, clearly did—I should nevertheless like to take the opportunity to flag up two groups of young people that are of particular concern to me.

Jose Manuel Barroso, the President of the European Commission, said:

“I think it is probably the first time, at least since the Second World War, that a new generation faces the future with less confidence than the previous generation”.

The report also states that,

“as at February 2014 the seasonally adjusted rate of youth unemployment across the 28 EU Member States … stood at 22.9 per cent, more than double the overall unemployment rate of 10.6 per cent”,

although I believe that these issues do not arise just in the European Union states; it is a global phenomenon.

The report goes on:

“The current high levels of youth unemployment in the EU are not solely a consequence of the 2008 global financial crisis and the ensuing recession … For some Member States, it is due more to underlying structural issues in the youth labour market that have been accentuated by the financial crisis”.

It notes this welcome news:

Youth unemployment in the UK is not as high as it is in some Member States”.

The UK Government acknowledge that youth unemployment is “serious” but stress that it,

“has been consistently below the EU27 average”.

The report also points out that,

“Eurostat figures show that … the UK’s unemployment rate is above that of Member States with which it might traditionally compare itself economically, such as Germany, Austria and the Netherlands”,

as has been stated by a number of noble Lords.

I should have liked to see the report make some reference to the condition of minorities in the various European states. It would have been interesting to draw some comparisons—for instance, how Muslim groups experience access to employment, and how discrimination is a barrier to youth in employment, access to apprenticeships, mentoring and work placements. With that in mind, I flag up the consistently high unemployment rates among Bangladeshi men and women in the UK, even among graduates from that community, notwithstanding that many are living in the shadow of high-earning City high-flyers. From my brief reading of the report, it does not break down any details about the position of minority communities in the EU so it is difficult to form any opinions about the particular factors impacting on employment in certain communities. Although I am confident about the life chances for young people from minority groups in the UK and that they are likely to fare better in comparison, it would have been useful to have some context for the position of other European countries vis-à-vis people from minority groups—for instance, how the Turkish community fares in Germany and the Algerians fare in France.

The report makes a number of recommendations about funding streams, as has been mentioned, and highlights good practice. It suggests that the European regional development fund can provide support to small and medium-sized enterprises for innovation, new business start-up and entrepreneurship, which could be open to young people; it could support job creation for different skill levels, thereby increasing employment opportunities for young people; and it could support SMEs in taking on apprenticeships and training placements.

I agree entirely with the points made by the noble Earl, Lord Liverpool, about the importance of mentoring projects. For about five years I led and chaired a group called the People into Management Network, which worked specifically to develop mentoring connections for graduates within the minority community. We worked for three years with 500 young women in particular, and that led to an amazing transformation of their lives. It enhanced their opportunities, and their confidence, to access employment that was available to them.

European Council funding for youth employment is also available. It is a specific and dedicated budget to address increasing opportunities for employment. The report suggests some reluctance from the UK to utilise some of the European funding available. Esther McVey MP, the Minister of State for Employment, has said that,

“the primary responsibility for tackling youth unemployment rests with the Member States”,

while the noble Lord, Lord Heseltine, argues that the problem of youth unemployment,

“should be addressed by people who live in an area, know it and understand it”,

and that such funding should be used where the unemployment rate is 25% or over. I agree with many of these sentiments. The unemployment rate among Muslim young people in particular is indeed above that threshold, so I hope very much that at least for this group some of the European provisions can be utilised.

I also note our own scheme, which has also been mentioned in the debate: the Youth Contract, the Government’s flagship programme, also aims to reduce youth unemployment and provide opportunities for education, training and work experience. Alongside these, there are many other examples of good practice across our cities, where local partnerships with businesses, local authorities and statutory and private sector programmes are providing opportunities to benefit young people and help them to find their feet in the workplace.

As we survey the sunny uplands of economic growth and some good news about rising employment, a dark cloud continues to hang over our many forgotten citizens. The statistics that the noble Lord, Lord Freud, has celebrated belie the exclusion of vulnerable groups from the workplace, which we must address. It is a matter of economic literacy and social justice.

This brings me to the second group I should like to highlight. I refer specifically to people living with disability. Research suggests that only 15% of people with autism are in full-time employment. Two years ago the noble Lord, Lord Freud, eloquently lamented the hundreds of thousands of adults with autism who leave education wanting to work but are not given the opportunity, not,

“because they don’t have the skills, the commitment, or the drive, but because many employers just don’t understand the benefits of employing someone with autism”.

In response, he launched a business-led initiative to help autistic people into work. I ask the Minister exactly what progress has been made since he launched the Untapped Talent programme to increase employment among the one in 100 in this country with autism. The report makes disappointingly brief reference to the experience of people with a disability. Paragraph 89 states:

“The successful provision of support to young people to prepare them for work demands a holistic approach centred around the individual. Key issues specific to each individual, such as their access to transport, the need for a safe and welcoming environment at home and in their workplace, criminal records, learning difficulties and other personal considerations need to be taken into account”.

On many occasions in this Chamber we have heard that, as we educate more and more of our young people to degree level, the youth unemployment rate is persistently low. We also know that there are many parts of the UK where access to jobs, training and work placement remains patchy. Careers advice remains inconsistent and inadequate in too many schools. For disabled children, the situation is dire. Too many are written off before they have even had an opportunity to try. Will the Government commit to ensuring that disabled people are covered in any extension of job guarantees offered by so many of our European counterparts?

However, I concede that work is not for everyone at all times. Regrettably, some in our society are not in a position to cope with full-time employment. I read with great sadness the case of Mark Wood, who died last year at the age of 44. He suffered from mental health problems and had been diagnosed with Asperger’s syndrome, a form of autism. Unlike his doctor, Atos, contracted by the Department for Work and Pensions, declared him fit to work. His benefits were cut off, and four months later he was discovered, having starved to death. As benefits are cut, what will the Minister do to ensure that those with disabilities, including autism, are assessed correctly and, if able to work, supported into jobs? Will he reiterate his commitment to ensuring that people with disabilities who are able to work are fully supported to do so, and that they are helped into jobs by jobcentre staff who are adequately trained?

Individuals must be matched properly. Will the Minister assure the House that specialist support will be provided to vulnerable individuals such as Mark Wood, both at the point of their assessment and of moving those affected into work? We are wasting talent and we are stifling diversity. A diverse workplace is associated with happy workers and successful outcomes for all. Our economy and the fabric of our society will benefit enormously from action on behalf of all our citizens regardless of their colour, race, faith and disability.

Photo of Baroness Hooper Baroness Hooper Deputy Chairman of Committees, Deputy Speaker (Lords) 9:24 pm, 17th June 2014

My Lords, as a new member of the sub-committee last year, I was pleased to be able to discuss the choice of subject for the latest report and agreed wholeheartedly that the issue of youth unemployment was the one that caused the most concern, affecting the whole of Europe, and that it was vital for all our economies to tackle this issue anew in the wake of the economic crisis. The inquiry has justified this decision. A focus at EU-level has been worth while, even though most of the causes and solutions have to be dealt with at local level, country by country and often at regional or local level in each country.

Today’s debate has also underlined the importance of the issue as well as the extent of the problem. I agree with much of what has already been said. The process of preparing the report has been fascinating. I, too, congratulate my noble friend the chairman on the way that she outlined the background to the report and the main facts and conveyed the flavour of the discussions and debates that took place in the committee as a result of the many excellent sessions when we took evidence from a wide variety of witnesses. I also thank the committee clerks and our expert for their support and advice. I am glad that my noble friend Lord Shipley and the noble Baroness, Lady Uddin, who were not members of the committee, feel that the report is sufficiently comprehensive and wide ranging. I hope that it will make a valuable contribution to illuminating thinking on the problem.

I wish to focus on two aspects. The first is the use and relevance of European Union funding. I draw attention to chapter 3, paragraph 48, which points out:

“EU funds are limited in comparison with the scale of the crisis”.

It therefore seems that it is of the utmost importance that funds are used effectively and efficiently, not to subsidise existing national approaches and national funding but to try something new and then to evaluate it in the way that we recommend in paragraph 52. Criticisms are sometimes made about the system for obtaining Brussels funding. There certainly are defects in the system, which is complex and slow. Much of this we can control ourselves, as applications for European Union funding, whether made by national or regional bodies or by the voluntary sector, start in this country. My experience as a Member of the European Parliament was helped by the fact that in those days we had single-member constituencies. Mine was Liverpool. The committee made a useful site visit to Liverpool, which has been referred to. It is detailed in appendix 4. My experience dates back to the establishment of the Social Fund in the early 1980s. There was an active voluntary sector in Liverpool—remember, this was just after the Toxteth riots—and I was already in contact with many organisations. There was also severe youth unemployment. It was before the noble Lord, Lord Clinton-Davis, did his stint at the European Commission. In fact the noble Lord, Lord Richard, was then looking after Social Fund issues. I was able to set up seminars, conferences and teach-ins which explained how to go about obtaining funding from the then new Social Fund. This was especially relevant for the voluntary sector. The result was that Liverpool projects received well over 50% of all the funding available to the whole country. Things have changed since then, but that proves the importance of the role of local bodies and decentralisation and that if people are well informed about how to deal with these applications, they can go ahead and achieve things. European Union funding may be available, but if we do not claim it, we will not get it.

The other area of the report which I wish to underline is skills mismatch and careers advice. On the former, the statistics have already been quoted by my noble friend Lady O’Cathain. She also emphasised the extent of the problem. Chapter 5 covers the ground very clearly. However, a number of our witnesses commented on the poor quality of careers advice at schools and universities. Indeed, my noble friend Lord Liverpool has just made a valuable contribution on this. It has always been a concern of mine. I attended a recent meeting in the City of London at which the issue of youth unemployment was raised as a major concern for the leading companies that were represented there. They also pinpointed the need for better careers advice as part of a solution. The role of school governors was discussed, and it was felt that more could and should be done to encourage business and industry to become more involved. In this context, it was suggested that middle management, as well as governors, could act as mentors to encourage school leavers to consider careers of which their careers advice teacher might have no experience. It was even suggested that this could form part of the key performance indicators programme, which struck me as a good idea.

The whole issue struck a chord with me because the Education Reform Act 1988—which, as the then Lords Education Minister, I took through your Lordships’ House—was the legislation which first encouraged business and industry to become more involved in the governance of their local schools and universities. Clearly, legislation alone is not enough and there is a need to persevere in encouraging this to happen so that young people have contact with and advice from potential employers in their area. It is also important to be aware of what other European Union countries are doing to tackle unemployment and to share good practice. To be able to do this is an important element and benefit of our membership of the European Union.

For the many other matters that I would wish to refer to, I feel that I must leave the report to speak for itself. I commend it to your Lordships.

Photo of Lord Roberts of Llandudno Lord Roberts of Llandudno Liberal Democrat 9:31 pm, 17th June 2014

My Lords, I am grateful for the opportunity briefly to intervene and thank the noble Baroness, Lady O’Cathain, her committee and the team for their work. This is one of the most important issues that we face today. We have a generation, not only in Europe and the UK but throughout the world, of young people unable to dream of or aspire to any particular career, but in many ways wasting their lives. It can be a cause not only of great despair to them but of great danger. Where we have unrest, we have what comes from that unrest, which is a danger to democracy itself. I thank the committee for this report.

The noble Baroness, Lady Hooper, has just mentioned careers advice. That is why I am intervening: to make sure that we realise how important it is to have the best advice possible in our own country. At a time when we are cutting school budgets and so on, we must in no way demote careers advice and the guidance and mentorship in our schools which comes from that. It is so important that we can somehow give every child the best possible advice—and not by simply sitting him or her in front of a computer. There must be somebody who cares and understands, and possibly has a family in the same sort of situation. That is vital. That could of course lead to Jobcentre Plus, and I would like to know exactly what the link is between that and careers advice in schools. We must put this at the top of the agenda.

We should look not only at youngsters but at young people who want a second chance at their careers—who perhaps took the wrong road in the beginning, thinking that it would be easy. I could say that of myself: in school I chose Welsh instead of French because I already spoke Welsh. It was the easy way out. So often, we can make those wrong choices in our lives.

There is a lot more to be discussed, but this report is a step in the right direction. As other noble Lords have mentioned, the unemployment situation is not a level blanket across the country. You have places in the north-east and the valleys of south Wales, even though they are not included in this list, where the need is far more desperate than elsewhere. I looked at this list and there is such a difference between Wolverhampton and Wokingham: in one area you have possibly three times the unemployment rate of the other. In the north-east we have 25% of young people unemployed, whereas it is 15% in the south-east—so we need to prioritise.

We must not forget the other areas. How we do it, I do not know, but John Wesley would say, “Go to those who need you most”. That is my sort of thinking on this issue, and I thank noble Lords for giving me the opportunity to join in.

Photo of Lord McAvoy Lord McAvoy Opposition Whip (Lords), Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland) 9:35 pm, 17th June 2014

My Lords, I would like to associate the Opposition Front Bench with the tributes paid to the noble Baroness, Lady O’Cathain, to all the members of the sub-committee and to the staff who supported the members in producing the report.

Youth unemployment is certainly a grave issue that confronts the entire nation. This report should remind the coalition Government of their obligations to our young people. In a way, it vindicates the proposals set out by the Labour Party on our compulsory jobs guarantee as a contribution to providing a proper solution to this blight.

However, that is probably the only party-political point that I will make—I do not promise and I use the word “probably”—because, once again, I am impressed by the work of the House of Lords and its committees. The independence shown by the committee chairman, the noble Baroness, Lady O’Cathain, and the other members shows that it is completely counterproductive to try and force Ministers into a corner by making political points in this place. This place is unique, and I am coming more and more to appreciate its traditions because it works and I like things that work. In this place the style of operation works. The House of Commons, the other place, is a place for the heat; this place is the place for the light, and we have certainly got it in this report.

The problem is a stark one. While the fall in youth unemployment is to be welcomed, the current figure is still too high and large discrepancies exist among the different regions of the UK. Areas in the north-east and in places like Grimsby and Bradford are youth unemployment black spots—places that have been forgotten. To what extent, then, will the Minister take steps towards combating the regional disparities in unemployment?

This report highlights a number of significant recommendations which the Minister would be wise to heed. Hopefully, it shows him that the current approach stands accused of failing young people, not just in terms of employment, but in terms of their conditions of employment. The current strategy, while appearing to deliver results, does not reach far enough and the quality of work provided must be called into question. The report highlights the need to ensure proper conditions of work to prevent a situation arising in the labour market where an increase in casual labour among young people leads to exploitation.

A situation has been allowed to arise where there is a rising tide of insecurity at work. I totally condemn zero-hours contracts. I do not accept that there is anything good about them at all. I know some young people who are on zero-hours contracts and it makes them feel under-valued, unappreciated and at the beck and call of employers. It is not a good way of convincing young people to make a positive contribution to society.

The Government could be accused of making it easier for companies to exploit a young and vulnerable workforce. The proportion of young people in low-paid jobs has substantially increased, with the unemployment rate for low-skilled young people sitting at 37.2% in 2013. We have a pool of readily available, low-skilled, low-paid labour, which can be used and abused by dropping in and out of employment.

The effects of that type of employment cannot be underestimated. It may deliver “results” in the long term, but will leave a terrible scar in the minds of many of the young people involved in the long term. Can the Minister try to reassure the House that the fall in unemployment among young people is not in part the result of the large increase in precarious and casual labour contracts of the kind previously mentioned?

The report is also clear on the drawbacks of the Government’s Youth Contract in comparison to the Youth Guarantee. Here I declare an interest as a small—a very small—employer. The bureaucracy involved in trying to claim youth wages, which I am trying to do at the moment, is quite obstructive. If I am finding it difficult, other people must be finding it difficult, too.

The Government’s overall focus on the demand side of employment, on waiting for the market to deliver a solution, is affected by a dogmatic belief that the market alone can provide and that everything that comes from the European Union is bad. I have not been a great fan of the European Union myself, but we have to be fair—it seems that quite a lot of good ideas have come from it. In tackling youth unemployment, those ideas should at the very least be looked at.

It is also interesting to note that the report also highlights a “mixed response” concerning the consultation with young people. The noble Baroness, Lady O’Cathain, already referred to the impact of speaking to young people. The British Youth Council highlighted the marked lack of engagement by the Department for Work and Pensions, noting that it was not as “diligent” in its engagement.

A far-reaching process, which takes a proactive and innovative approach, is required. I hope that my party is trying to produce a solution both nationally and locally. A shining example locally of such innovation can be looked to in Bradford. With the “Get Bradford Working” programme, Bradford Council is delivering on the ground, providing jobs, routes into work, apprenticeships and industrial centres of excellence, and providing training and education. Nationally, Labour’s compulsory jobs guarantee would, I hope, lead to real change, especially in those areas left behind, which need change most. We cannot afford to see a generation condemned to the slag-heap by wasting fresh and vibrant talent both socially and economically. The type of local innovation seen in Bradford, coupled with Labour’s jobs guarantee, would deliver for people right across the country, showing that there is a better, fairer and more effective way of battling against the scourge of youth unemployment and providing a recovery not just for the few but for the many.

I will comment in particular on what was, I am sure, the spontaneous pincer movement on the Minister conducted by the noble Baroness, Lady O’Cathain, and my noble friend Lord Brooke of Alverthorpe. I accept that it was spontaneous, but nevertheless, that is how this place works, and how it is working now. I add my voice to theirs in asking for the Minister to consider a small programme, using European Union money, which responds to the committee’s report. That would show the flexibility required to demonstrate that at least an effort has been made and that something different has been tried. Given that the suggestion comes from such weighty people as the noble Lords I mentioned—and, I hope, from all the members of the sub-committee—I hope for a positive response from the Minister.

Finally, the noble Baroness, Lady O’Cathain, made four recommendations, on consultation, best practice, management schemes and a better approach to matching skills to qualifications. Again, I support those recommendations to the hilt. I hope that the perhaps surprisingly conciliatory tone of my speech has added to the pincer movement.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions 9:44 pm, 17th June 2014

My Lords, as always, this has been a very high-quality debate, which I have very much enjoyed. I am very grateful for what has clearly been really hard work from this committee to put together a really interesting summary of these issues. I need to add my thanks to my noble friend Lady O’Cathain for running that work so well; I heard the tributes and the appreciation from the rest of her committee.

As noble Lords know, we have responded formally to this report and several noble Lords were able to pick out what we were saying, despite the fact—I need to apologise for this; I only discovered it this afternoon—that we actually sent out to colleagues a completely unformatted version of the response. I have taken steps to repair that so there will be something noble Lords can actually read. I am very impressed that many of them managed to do so anyway. I am sorry and I shall ensure that they get appropriate hard-copy versions. I do not know quite how it happened, but it did.

Let me start off by setting out where we are today. We have made really good progress on youth unemployment, and that has been particularly the case over the past year. As the economy begins to pick up, we are starting to drive out the cyclical rise in youth unemployment that we saw in the recession. The youth claimant count has fallen for the past 30 months and overall youth unemployment has been falling since last summer. Excluding students, it now stands at 565,000 youngsters. Of those leaving JSA—in response to the question of the noble Lord, Lord Haskel—about two-thirds go into work; others go elsewhere because the young move very dynamically.

We still face really big challenges. Long-term youth unemployment has risen in the recession and it remains at over 100,000 people above the pre-recession level. We have, though, seen a welcome drop in that particular figure over the past seven months, but it is vital that we maintain the trend. Through the Work Programme and Youth Contract, we have put in place about the most comprehensive response to long-term unemployment that has ever been seen.

As the noble Lord, Lord Brooke, said this evening, this is actually a structural set of issues with really deep roots. Even before the recession, more than 1 million young people were neither working nor in full-time education. That is why we are addressing those long-standing structural issues through our reforms to education and skills and by improving access to apprenticeships.

As the report explains, unemployment among young people is a really serious problem in many pars of the EU. Clearly the source of this is diverse and is different in different countries, with origins in structural or cyclical effects, or some combination of the two. It is important, as many noble Lords said tonight, to recognise that the structural causes of unemployment are issues that are most effectively tackled by individual countries and not by a one-size-fits-all solution.

Just to pick up the related point on what is happening in different parts of Europe and the point made by the noble Lord, Lord Roberts, on regional differences, 90% of the fall in the year that we have very happily seen in the youth claimant count has been outside London—so we are seeing some real regional responses.

There was concern, particularly from my noble friends Lord Liverpool and Lady O’Cathain about a skills mismatch. In 2010, we were left with a system that was simply not delivering what it should have for our young people. I know that noble Lords will have heard me talk about the Wolf report, which is one of the most interesting and disturbing reports that I have ever read about the situation in this country. It concluded that the system that was in place was,

“failing at least 350,000 of our 16-18 year olds, year on year”,

with substandard vocational training.

Improving access to quality training remains a key challenge, and it is one that we are facing up to. We are improving the standard of vocational training in this country and we are expanding apprenticeships. We are committed to tackling youth unemployment. Taken together, our package of labour market interventions, programmes and reforms tackles both structural and cyclical unemployment. This programme is supporting young people to equip themselves with the right skills to succeed. As the noble Lord, Lord Haskel, said, we need to be more ambitious—and we are not complacent. We cannot be complacent at this stage. There is more to do to support young people into work, and we are committed to building on some pretty outstanding improvements.

On the numbers issue raised by my noble friend Lady O’Cathain, we now have 65,500 youngsters starting a job based on the work incentive programme. The payments come a little bit later. We have 275,000 young people taking part in our work experience and pre-employment training, with 146,000 taking part in work placements and 48,000 in sector-based work academies. Some 390,000 young people have joined the Work Programme, and 89,000 have now got sustained employment.

On the point from my noble friend Lord Liverpool on entrepreneurs, the figures for that were just published today. There are now 8,280 18 to 24 year-olds with mentors on those schemes, and 3,370 are on the allowance.

Clearly, there is more to do. Universal credit, because of the way it is structured, will give young people under 25 in-work support for the first time and will encourage young people to try their hand at different jobs, while providing responsive and continuous support as they move in and out of work. That will become a really important support for youngsters as they do that necessary experimentation to find out what they enjoy and want to take forward as a career or job interest.

The Government will reduce the cost of employing young people by abolishing from next April basic rate employer national insurance contributions for people aged under 21. We are trialling new help for young people, including intensive support for 16 to 17 year-old NEETs not in receipt of benefits. We are piloting new, day 1 help for unemployed 18 to 21 year-olds to improve English and maths skills. To help schools to better meet their duty to provide independent careers advice, we are strengthening statutory guidance and developing the role of the National Careers Service. Ofsted will also be giving a higher priority to careers guidance in school inspections. We accept the point from my noble friend Lady Hooper that employers have an important role in course design by providing placements, sponsoring students and so on.

In response to my noble friend Lord Liverpool’s very pertinent point, the DfE is strengthening the teaching of digital skills in schools by replacing ICT with computing from September this year. We have introduced traineeships, which are available for young people aged 16 to 23 inclusive. These consist of pre-employment training, a work experience placement with an employer and English and maths training to GCSE level 2 for those who need it.

We have now got NEETs down to the lowest level since we started to count them in 2001, so the number now sits at 53,000 16 to 17 year-olds. I know that the noble Lord, Lord Brooke, wanted to get hold of that figure, produced by the ONS from the Labour Force Survey, and I am quoting the fourth quarter of 2013, which is the latest figure. There is a big change coming in that area. That young area has been a weakness as we raise the participation age. That is, in the spirit of new bipartisanship of the noble Lord, Lord McAvoy, something that both sides have agreed on. Participation age goes to the end of the academic year in which people turn 17, and from summer 2015 this will be until their 18th birthday.

We are giving young people support when they need it most, referring 18 to 24 year-olds to the Work Programme early to keep them from becoming long-term unemployed. We have talked a lot tonight about apprenticeships, which already stand at 1.7 million with a goal of 2 million. I am not being complacent but we are not in the same situation as much of Europe. Our youth unemployment rate is well below the EU average and, for those who have left education, the UK has the second highest youth employment rate of the major EU economies, behind only Germany.

I should point out that Germany does not have a Youth Guarantee but has developed its own approach. While we learn about good practice, a point made by several Peers, we know that member states of the EU with the lowest youth unemployment, such as Germany and the Netherlands, have good vocational training systems. We know from their experience that our reforms to apprenticeships and broader vocational training are the key to our reducing our youth unemployment in the longer term. That is why we are putting so much emphasis on that.

Let us look at the EU Commission’s proposed Youth Guarantee. Our view is that this is a response with its eyes too much on the past, dealing with the immediate consequences of the recession and not addressing the structural problems that it is vital we tackle now. That is why we do not believe that this is the way forward. The Youth Guarantee is the type of rigid approach that we have tried and has failed us in the past. It has not been fully implemented elsewhere—except, recently, in Finland—and it has not worked here when we have looked at schemes such as the Future Jobs Fund, which have performed no better than the work experience schemes but at much higher cost. Therefore, we are not clear that the guarantee represents good practice.

It is vital that we help young people to experiment in the labour market and try out different jobs. All our policies, from universal credit to the Youth Contract, embody this approach; the Youth Guarantee does not. It is not flexible and does not meet the test we set ourselves of offering the right help to the right people at the right time.

I assure noble Lords that the Government do not intend EU funds to subsidise existing national measures but to complement them by addressing local needs. In England we are allocating the majority of relevant EU funding to local enterprise partnerships—so the funding will be used locally—which we think are best placed to offer that tailored support to young people. I think there is common ground there between us and the committee’s report. We believe that this decentralised and flexible approach is the best way to target young people who are most at risk. Indeed, noble Lords will have heard me talk about our local support services framework, in which the DWP is working with local authorities to build the partnerships that will provide holistic support for people who need help before they can enter the workforce, particularly as regards their underlying problems. We are expending enormous effort in doing that and using funds from a variety of places, including the ESF.

The noble Baroness, Lady Uddin, referred to Untapped Talent, our autism initiative introduced a couple of years ago, which she remembers so well. Our Disability Confident campaign, which she may remember, embraces a wider context and seeks to ensure that employers are aware of this valuable labour resource, which they may not have concentrated on enough in the past. We are ramping up support for the disabled within Jobcentre Plus and the Work Programme. One of the things that I am most keen to get right is our support for people with mental health issues, and we have introduced a series of mental health pilots.

I should like to take a moment to reflect on the EU Commission’s views of our programme. The Council of the European Union agreed to the Youth Guarantee recommendation in April 2013, one year after we had implemented the Youth Contract. We responded to this recommendation, setting out in detail how the Youth Contract and other policies address the important aim of reducing youth unemployment.

The European Commission recognises the success of our programme. In its annual draft country-specific recommendations this month, the Commission noted:

The United Kingdom continues to address the challenges of unemployment and underemployment as well as the specific issues related to youth unemployment”,

and urged us to,

“maintain commitment to the Youth Contract”.

While I am not in the habit of looking first to Brussels for inspiration, I am happy to receive such an acknowledgement of the path we are taking.

I again thank noble Lords for their excellent contributions. I think that I have covered all the issues that were raised. I hope noble Lords agree with me that it is clear that we need to stay the course with our programmes to tackle youth unemployment. We have a long-term economic plan and it is working.

Photo of Baroness O'Cathain Baroness O'Cathain Chair, EU Sub Committee B - Internal Market, Infrastructure and Employment 10:04 pm, 17th June 2014

My Lords, I thank everybody who has taken part in the debate. I particularly thank my noble friend the Minister. I gave him a slightly hard time—only slightly. I can be much more ferocious than that. His response was very good but, in listening to it, I reflected how confusing this whole issue is. We have so many different ways of looking at it. If I were 17 years of age with not much educational background, I just wonder how I would react having listened to this debate. Perhaps I would say, “There are the people in suits and dresses saying they are going to do this and that”. The Minister mentioned about 20 different and confusing areas that could solve the problem. Is it not just all too confusing? The final point that my noble friend made about the Youth Guarantee and the Youth Contract did not reflect the letter that I saw, which was much more along the lines of, “Oh well, okay, the Youth Contract is all right”, but people in Brussels were still saying that they really wanted the Youth Guarantee. Perhaps we should have another discussion about that.

In the mean time, I thank everyone who has taken part in the debate. I certainly want to say to my noble friend Lord Shipley that I am sorry he thought that the report was depressing. The fact is that it is a depressing situation.

Photo of Lord Shipley Lord Shipley Liberal Democrat

I am sorry but I said that it was an impressive report, not depressing.

Photo of Baroness O'Cathain Baroness O'Cathain Chair, EU Sub Committee B - Internal Market, Infrastructure and Employment

I am sorry. That is the second time “sorry” has been mentioned in this House tonight. It is nice to be able to say sorry.

The situation is actually depressing throughout the EU but there are shafts of light coming in. One of the great things about the report is that it is not political.

We did not mention parties and tried to work for the good of the youth of the whole European Union. We should, in particular, use the experience that can be observed in the member states and test it out to try to solve our own horrific problem—because it is a horrific problem. I go back to the right reverend Prelate the Bishop of Durham’s analysis in his maiden speech the other day. We have to remember that.

The Minister neatly glided over the situation regarding local enterprise partnerships and did not say whether he was prepared to consider whether they should consult young people, in groups or individually. We received most of our really good evidence from talking to those young people. After all, it is the young people who count. That is why we are doing this and why I hope we have made a difference to the future of these young people by exposing a lot of the stuff in this report.

I thank again all our staff. There are so many thanks going around this Chamber but I could not have done any of this without the terrific support that we received, and the members of the committee have been ideal. If noble Lords want them as chairmen of other committees, look at all of them. They do an excellent job, and I thank them.

Motion agreed.

House adjourned at 10.08 pm.