| Previous Section | Index | Home Page |
Mr. Bruce: In that case, the situation is a great deal worse than I thought, as we would realise if we divided the guaranteed minimum income of £200 a week by 16, which would give an awfully high hourly rate. That provides an incentive for people to get jobs paid at £3.60 an hour or, if they are under 22, £3 an hour, and claim the rest of their income from the tax system. We can imagine the scams that people could set up because we know of the present scams in social security fraud, such as people having multiple identities.
Mrs. Louise Ellman (Liverpool, Riverside): Is the hon. Gentleman saying that he and his party are committed to repealing the working families tax credit? How would he explain that to the families who stand to gain by about £23 extra a week?
Mr. Bruce: The hon. Lady must be a little careful. We expect the Labour party to be in government for at least another year, probably two. That will give us the opportunity to find out how the working families tax credit works and whether it is better than income support and the other systems that we have had. We have always attempted to ensure that people are able to go back to work, and hon. Members are united in their desire to remove poverty traps from which people cannot escape.
I shall make a prediction to the hon. Lady. People in the Treasury, even under a Labour Government, are not stupid, and I suspect that the problems that I have warned the Government of will come back to haunt them. It may well be a Labour Government, rather than a Conservative Government, who will abolish the working families tax credit. We must remember that the Labour Government have just abolished student grants. Who could ever have predicted that? In the Bill, they are abolishing the widow's mite and means-testing widows' pensions, for which their husbands paid. I do not exonerate the Government from any of their actions. They will find out how the working families tax credit works, and I suspect that an awful lot of rules and regulations will be introduced to try to prevent it from being abused.
I decided that my speech would be about the utilities tax. There are a small number of measures in the Bill relating to the new deal. To keep in order, as the new deal
was in the previous Finance Bill, and is already in place, I ask the Government to consider seriously how the new deal is working. When a Government raise £5 billion by taxing the utilities and then announce a new deal, it would be a strange beast who would not try to make the best of the new deal figures. However, I started examining the new deal figures in my constituency. I meet regularly with the staff of the jobcentre in my area, with whom I have a very good working relationship. I was the only Member of Parliament in my area who turned up at a meeting to launch the new deal for the region--I wanted the new deal to work and be effective.
The Government's aim--to target the long-term unemployed--was a good one. Under the previous Government, long-term unemployment was coming down rapidly. It also declined under the first year of the Labour Government, before the new deal was introduced. Whenever one challenges the Government about the new deal figures, they repeatedly claim that they have slashed long-term unemployment among 18 to 24-year-olds. That was true until the new deal was introduced.
The new deal is due to cost £5.2 billion over four years. After three months of the new deal, it looked as though about 9,000 people had been put back to work. That figure refers to people coming off the long-term unemployment register--never mind the complex figures that the new deal people provide. After six months--the period for which the new deal was meant to help people--the number had gone back up by 9,000 or 10,000. After nine months, the number had gone up by another 22,000. The figures that are cited--I am sure that every hon. Member receives such a figure every month, showing how many people have "found a job" under the new deal--are the churn that always existed: if long-term unemployed people find a job, they come off the long-term unemployment register; and others who might have been unemployed for rather a long time go on the register.
What is interesting is that, in the three or four years before the previous Government lost power, and for the year that the present Government continued our policies, the number of the long-term unemployed was falling rapidly. Indeed, the number of the unemployed in general was going down rapidly. We have to be careful withthe statistics. If someone signs off from long-term unemployment, does a week's bar work and then signs on again, he is on ordinary unemployment as he has a fresh claim. In other words, there may be long-term unemployed people who are never included in the six-month unemployment figure.
The Government are spending £5.2 billion on the new deal, but the one group of people that has had the "advantage" of the new deal for virtually a year is the group that is growing faster than any other. I asked the Prime Minister a question about this after six months. One group--the long-term unemployed--had increased by 43 per cent. over a quarter, which is absolutely unbelievable. One could say that the statistics are wrong, but I tried to investigate what was really happening, as I could not understand how the group of people that we were trying to help could grow in number.
It seems that the Employment Service is concentrating all its efforts and resources--its resources have been cut by this Government--on people who have been unemployed for six months. Perhaps who have not been
unemployed for six months are left on their own. Also, more might be coming up to being unemployed for six months because less effort is being made to help them in that time. Effort is being made, not to find people subsidised jobs but to send them on a training course, a do-gooding course or a make-work course. There are people in every constituency who have signed contracts with the Department for Education and Employment to provide such schemes. These people are great advocates for the schemes. I am sure that they are very good, but they are not bringing people back into work.
Mr. Gardiner:
Does the hon. Gentleman agree that young people's capacity to achieve skills, at least at general national vocational qualification, level 2, is vital for their long-term employment prospects? Will he take on board the very real need to make sure that young people in the labour pool have those skills if they are to get jobs that they will retain in the long term? He was rather dismissive of the need to establish a skills base.
Mr. Bruce:
I follow the hon. Gentleman's argument. When the new deal was first suggested, I would have agreed that, by providing those skills, we would improve people's employability. We might have wonderful ideas in this place about what might happen if only we gave people additional skills, but I am reporting what has actually happened. Unfortunately, what the hon. Gentleman suggests has not happened.
Unless one finds a job for someone in the first place, it is like bringing an unemployed person and employee together and saying to the employer, "I know you don't want to take on this individual now, but, if I promise to give him a six-month course to do this, that and the other, will you promise to give him at least a chance of employment?" I am afraid that schemes set up by every Government have had that feature. A group of people goes off into education and, although the educational establishment does its best, the scheme never achieves what it was intended to achieve.
The Government admit that the original plan was that about 40 per cent.--perhaps 50 per cent.--of people entering a new deal scheme would enter subsidised employment. However, the subsidised employment is almost non-existent. In my constituency, supposedly, only 10 people have gone into a new deal subsidised employment option.
I was heavily criticised by Labour councillors in my constituency, whose message is, "These damn Tories do not care about the long-term unemployed," so I telephoned the local authority and asked, "How many people do you have working from the new deal?" The reply was, "We have not discussed it with those responsible." I have persuaded the council to get together with the jobcentre.
I want the council to take people on. I want the £5 billion to be sensibly spent. I am simply telling the Minister that the fiddly little things that the Government are trying to do in the Bill are not enough. We need to take a fundamental look at what is happening, because the money is running out and is not doing what we intended it to do.
On page 54, in box 4.1, although the "Financial Statement and Budget Report" says:
I suggest that the hon. Member for Brent, North and other Labour Members table questions to the Minister to find out what has happened in their constituencies. It is not enough to know the flow of people through the new deal scheme, because masses of people are moving from the gateway on to a scheme and so on, but they are falling off the other end and going nowhere. More people are disappearing off the books to who-knows-where than are being helped. We must find out what is happening.
I shall now discuss ISAs and PEPs. We should remember why the previous Government introduced tax-free savings schemes. At the time, a person might save long term for a pension by entering a pension scheme with all the tax benefits, allowing someone else to manage that money, but managing one's own money to a certain extent and putting an amount away for retirement was not allowed.
Appallingly, when the Labour Government decided to introduce ISAs, they intended to tell people with PEPs to cash them in. I am glad that, as a result of protests by the Conservatives, by the industry and by the people who held PEPs for their long-term retirement benefit--which would ensure that the state would not have to keep people--the Government very quickly abandoned that intention.
Now that the Government have introduced ISAs, a simple piece of arithmetic may explain why ISAs will not be right for people, even as a short-term savings method. At the moment, individuals receive only about 3 per cent. interest. When financial institutions tell the investor, "We shall charge you 1 per cent. to manage your money and then you can have a tax-free allowance," that 1 per cent. is, in effect, the 33.3 per cent. tax; so, although one may save 10, 23 or even 40 per cent. tax, one pays the guy--I am sorry, the person; the woman or the man--who sold the ISA more than one would pay the taxman. People must therefore consider the matter very carefully.
If we had interest rates of 15 per cent., and if one paid tax on that 15 per cent. and then paid someone 1 per cent. to manage the money, the individual would obviously do better. I did not mean to suggest that interest rates would reach 15 per cent. under the present Government. I cannot remember--was it 23 per cent. or 25 per cent. inflation that Labour got at one time?
If interest rates are very low, the management charges on a complicated product such as an ISA or a PEP may outweigh the benefits. The Conservative Government had problems after persuading people to take out personal pensions. I hate to think that, in a few years' time, the Chancellor may be pulled up and asked by individuals, "Please, will you pay back billions of pounds? We were persuaded to take our money out of the building society to put it into an ISA, and it is worth less than it would have been if we had left it in the building society."
"The New Deal for 18-24s has already secured 58,000 jobs for young people. Among them are",
that is untrue. The new deal did none of that. It has actually slowed down what was happening without the new deal. It has been a failure. Before the hon. Member for Brent, North (Mr. Gardiner) shakes his head, let me say that, tomorrow, we get the first year's full figures in relation to long-term unemployment, and I suspect that they will cause great concern.
| Next Section
| Index | Home Page |