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9.5 pm
Mr. David Willetts (Havant): I welcome the Secretary of State for Education and Employment to the debate, and am grateful to him for changing his mind and attending it. I appreciate that he has done so at some personal inconvenience. Opposition Members will be very happy to hear his speech, not least because he has no education legislation in the Queen's Speech. Sadly, without substantial education legislation, we may not see quite so much of him in the House or have quite so many opportunities to debate with him.
Tomorrow, we are all, of course, speaking at Harrogate, at the conference of the Association of Colleges. I do not know how the Secretary of State will--
Mr. Willetts:
That is very kind, but I have already been offered a lift by the hon. Member for Bath (Mr. Foster). If the Secretary of State wants to join us, he will be very welcome. However, we are setting off at the end of the debate, as we are speaking rather earlier than he is.
As I said, I am grateful to the Secretary of State for speaking in our debate, which takes place against the background of a very sober economic climate--although one would not think so after hearing the speech, at the beginning of this debate, by the Secretary of State for Trade and Industry, or yesterday's speech by the Prime Minister. The Prime Minister seemed to be keener on waging class war against hereditary peers than he was on dealing with the economic difficulties facing the United Kingdom.
For six years, unemployment has been on a downward trend. Sadly, the trend seems to be coming to an end. We have just had the unprecedented experience of both unemployment measures--the survey measure and the claimant count measure--beginning to rise. But the Government do not seem to realise that we face a looming problem of rising unemployment. Ministers seem to deny that there is any problem. Instead, we hear what my right hon. Friend the shadow Chancellor describes as "fantasy forecasts".
Today, in a very fine speech, the former Prime Minister, my right hon. Friend the Member for Huntingdon (Mr. Major) very clearly made the point that the Treasury's growth forecasts are incredible. No serious outside forecaster believes the Treasury's predictions for economic growth. Months after the international financial crisis began, we have a Treasury economic forecast that,
by 2001-02, the British economy will be bigger and better than the Treasury predicted it would be before the international crisis.
No other advanced western country lives in the fantasy world of expecting that its growth rate will be even better than before the crisis. The Treasury seems to be doing so by accepting that there will be some slowdown in the next 18 months, and simply adding back into the second 18 months any output lost in the past 18 months. It is not responsible and reputable forecasting, it is no basis on which the Government should take decisions on management of the economy, and it is no basis on which a responsible Government should be deciding their fiscal policies.
The reasonable, responsible and realistic assessment came only a few days ago, in a report from the Organisation for Economic Co-operation and Development. The report stated that, on its definition, unemployment will increase from 6.5 per cent. to 8 per cent., which means that, in the next two years, unemployment will increase by 500,000 people. That is a serious challenge for the British economy, and something that Ministers should be taking seriously--but they are not.
Today, all we have heard in speeches and interventions by Labour Members was a type of night out for old Labour--celebrating fairness at work proposals and increased power for trade unions, but saying absolutely nothing about what they think should be done to deal with the looming jobs crisis. We know what Ministers claim is the solution--the new deal, but that is a monumental irrelevance. It targets a very large amount of money on a very small proportion of unemployed people. The Government are biased entirely in favour of the young unemployed, and are doing nothing to help the long-term unemployed. There are twice as many long-term unemployed, yet they receive one fifth of the new deal budget that goes to the young unemployed, so they receive one tenth of the spend.
Meanwhile, what do we know from the evaluations that are already coming through? The hon. Member for Bath referred to them briefly, but the evidence is pretty clear. Thirty per cent. of people who leave the new deal simply disappear; the Government have no knowledge what happens to them. Another 10 per cent. move on to another benefit, so 40 per cent. for a start do not seem to be gaining anything from the new deal.
I asked the Library to calculate what had happened to young people who had been unemployed for six months in April 1997, and young people who had been unemployed for six months in April 1998. Three months later, what did we find? A higher percentage were still unemployed in July 1998 than in July 1997. That is a warning that the new deal will not deal with the jobs crisis.
I hope that the Secretary of State, when he speaks about the new deal, as I hope he will, will agree that there is a simple and stark measure of success--one that might interest the Chancellor of the Exchequer, who has, after all, claimed that the new deal will save money overall. Let us have figures for the total number of subsidised jobs that new dealers enter, the total number
of unsubsidised jobs that new dealers enter and the total spending on the new deal. What we will find is that, with the new deal, the cost per job--
The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith):
We have the figures.
Mr. Willetts:
I am pleased that the Minister has the figures. We also have the figures at the Centre for Policy Studies. Tomorrow morning, my hon. Friend the Member for Ashford (Mr. Green) will publish something that has done the calculation. It shows that the new deal is infinitely more expensive than any other training scheme that has been introduced. Sadly, the returns for the young people that it is supposed help are very modest.
It is not just young people who are losing; employers are increasingly frustrated, as we saw in the letter to Sir Peter Davis, chairman of the new deal task force, from the director general of the British Chambers of Commerce, Chris Humphries. He said that its members'
What the Government should do is announce that they will suspend the implementation of the job-destroying regulations which will hit British businesses in the next 18 months. That would be a serious and considered response to the threat of rising unemployment, because those measures are extremely expensive.
The double tragedy is that the cost of the working time directive, the working families tax credit and the Government's other regulations is not translated into a benefit that flows through to people who earn low pay. The cost is largely accounted for by the administrative costs that employers have to take on board to comply with the record-keeping requirements of all the different regulations. That money does not help anyone.
Therefore, I hope that the Secretary of State will comment on the performance of the new deal, and perhaps explain to the vast majority of unemployed people who are not eligible for the new deal why, at the same time, his Department is closing job clubs and stripping training and enterprise councils of funds that they intended to use for projects to help, for example, with the retraining of people who have lost their jobs.
Ms Atherton:
May I issue an invitation to the hon. Gentleman to visit Employment Service offices in my constituency, in Penryn in Cornwall? There, he can see for himself the innovative and far-reaching implications of the new deal. Let him meet the young people who have got a job for the first time. Let him talk to the people and the companies who have told me that the new deal is the best thing that they have had from any Government in many years. Let him come to Curnow Shipping, which has taken on young people, trained them and given them permanent jobs within the company. I challenge him to come.
Mr. Willetts:
I am happy to visit all parts of the country to debate the new deal, but let me tell the hon.
From the unemployment crisis now facing this country, let me turn to the other aspect ofthe Secretary of State's responsibilities--the education system and our schools. When I visit schools around the country, the message from teachers and head teachers is the same. Only the other week, that message was vividly expressed to me by one head, who said, "The only way that I can possibly hope to meet the Secretary of State's agenda on standards is by ignoring most of the letters that I am sent by him and his Department. If I actually tried to comply with all the regulations, instructions and directives that I am sent by the Department for Education and Employment, it would be absolutely impossible to focus on raising standards in literacy and numeracy."
It is literacy and numeracy that the Secretary of State says he really cares about, and I believe him; but he is in the absurd position of distracting teachers with his flow of initiatives from the very things that he cares most about. That is the abiding complaint one hears from teachers and head teachers around the country.
"concerns now arise because very few, or in some cases, no young people have been referred to them. Many companies report that they have also had little or no contact from the Employment Service, and so a severe lack of information is magnifying their confusion and leading to significant disillusionment."
That is the experience that employers have of the new deal and it is dispiriting.
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