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Mr. Phil Woolas (Oldham, East and Saddleworth): I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

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Long-Term Unemployment (Glasgow)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Woolas.]

12.57 pm

Ann McKechin (Glasgow, Maryhill): I welcome the opportunity to speak on a subject of great importance to my home city and my constituency. Only this week my hon. Friend the Member for Glasgow, Anniesland (John Robertson) secured a debate on inner-city policy that considered the same problem. That is a measure of the depth of feeling and commitment of Glasgow Members on this matter, and their desire to find solutions to remove this scar from our communities.

Glasgow, like many other urban areas dependent on heavy industry in the United Kingdom, suffered dreadfully during the economic recession of the 1920s and the 1930s, and our older generation still live with memories of applying to the parish for money, going without meals and the threat of eviction.

Although the post-war years until the mid-1970s were tough for many, at least we enjoyed relatively full employment, and social progress was achieved for the vast majority. Undoubtedly the economic transition away from traditional industries that characterised the next 20 to 25 years would have been difficult in any circumstances—but it was the utter complacency of the Conservative Government in tackling its consequences, and their failure to provide new opportunities, that permanently marred the lives of so many in our communities and led directly to so many of the problems that Glasgow faces today.

Glasgow has the highest concentration of heroin injectors in Europe, and the Greater Glasgow health board estimates that we have 15,000 drug users—four times the national average. It also has rising suicide rates among the young, continuing alcohol misuse and chronic health statistics that are among the worst in Europe. According to the latest statistics, seven of Glasgow's constituencies are in the top 100 UK employment black spots.

Problems of that nature are not unique to my city, but the sheer scale and concentration of deprivation mark Glasgow out as a place that deserves special treatment. I commend the Government on the programme introduced in the past five years which has already made a significant contribution towards Glasgow's renewal. In the last year alone in my constituency the number of unemployed claimants fell by more than 17 per cent., and in the past five years the total unemployed count in Glasgow has fallen by more than 15,000.

Many of the measures introduced have been specifically targeted at the lowest income groups. Steps such as the introduction of the minimum wage, the tax credit system for working families and increases in child benefit, together with our success in providing a stable economy and increasing investment in public services, have obviously borne fruit, but I am sure that the Minister agrees that now is not a time for complacency. I trust that he shares my goal of achieving full employment throughout the UK for all our citizens. That is not an easy task, but we in Glasgow have a unique opportunity in the next few years to rid the city of the problem of long-term unemployment.

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Glasgow is enjoying substantial expansion in its commercial centre, and the Scottish financial services sector anticipates further growth with upwards of 10,000 jobs in the next few years. The consequent new build of office space in the city centre, together with substantial capital investment in our schools, housing and hospitals, has led to many additional jobs in the construction industry—although there are already skills shortages in that sector.

The proposed transfer of the city council's rented housing stock—the largest in western Europe—to the new Glasgow housing association will offer the basis for substantial new capital investment in rebuilding and repairs, which will create even further demand in the construction sector. In addition, our commitment to quality public services in schools, child care, community care and hospitals will inevitably lead to further job opportunities.

The challenge we face is to harness those opportunities for the benefit of Glasgow's own citizens and to tackle the social problems that afflict so many of them. In substantial areas of the city, the majority of the adult population is not in work: either they are on the unemployed register, or they are on some other form of benefit. In some areas, that group comprises as much as 70 per cent. of the total population. I warmly welcome the Government's proposals to merge the Employment Service and the Benefits Agency into Jobcentre Plus, to offer an increasingly personalised service and to target the hidden unemployed in such areas.

I am also pleased to note the Government's recent announcement of a new start-up initiative aimed at the hardest-to-help applicants. There is no such project yet in Glasgow, but perhaps the Minister might offer some help with that today. I am aware that Glasgow city council is considering applying for funding for a similar initiative based on specific geographical areas, but covering a longer, three-year period. We need to be imaginative and bold in our approach to the problems. I hope that if the models prove successful, they will be spread throughout the country.

More public funding will be required if we are to assist applicants back into the world of work. Many suffer from chaotic lifestyles and drugs or alcohol abuse. Many have no direct family experience of a work routine. Most suffer from low competence, poor communication skills and low education standards. There is no easy fix, but the alternative of continuing with a permanent underclass living outwith normal society is much more expensive to our communities. We have to ensure that all appropriate agencies, whether private, public or voluntary sector, work together and effectively to focus on the issues. There are still too many gaps into which people can disappear.

Glasgow's black economy must be tackled if legitimate work is to be rewarded. There has been too little quality training—especially in the construction sector, which has for too long relied on "the lump", artificial self-employment and shoddy standards—and too little support for small and medium-sized enterprises, which provide the vast majority of employment opportunities for our work force. Both should be integral to all our development plans.

People need to see work going on around them if our city is to beat the spectre of depressed, soulless housing schemes. Even in my own constituency, which suffers

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from the eighth highest unemployment total in Scotland, there is a shortage of small industrial units for private firms or traders, and of space for community-run industries. We need to focus on spreading job opportunities throughout every part of the city and not just in the centre. It does not suit every worker to travel to work, especially those who have dependants, either young or old, who require the convenience of living near their place of work.

We also need to ensure that our public transport system supports our workers. There need to be more services across the city rather than routes revolving around the city centre. I am aware that the local authority has little control over bus routes following the deregulation of services—I certainly appreciate the services offered on London buses in comparison—and I have every sympathy with the council's frustration over that, but surely we need the Government to consider every hindrance to the opportunity of work and to take appropriate action where possible.

I should also like to take this opportunity to raise the problem with making work pay in Glasgow, which specifically afflicts those in the city, particularly our lowest earners. A study carried out by the development and regeneration services department at Glasgow city council in January 2000 demonstrated the steep withdrawal of housing and council tax benefit that occurs when households move from unemployment to work, and how that acts as a significant barrier to residents in the city who have historically paid higher rents and council tax than those elsewhere in the country. I should like to give the Minister a specific example of that.

When one partner in a couple with two children under the age of 16 takes a job at £170 a week, total weekly income, taking into account the working families tax credit and child benefit, is about £276. In comparison with benefits received while out of work, the family appears to be about £115 better off. However, when revised rent and council tax are taken into account, the net benefit per week of working is less than £14—about £2 a day. The situation is even worse for a couple with no children. In addition, the example disregards any additional costs for travel or food that might be incurred while working.

Obviously, the figures will change to some extent once the new tax credit system is introduced next year, but the so-called work-poverty trap will largely remain and hit hardest those very people in our city who need the most help and support. In particular, as the rules stand, such a low net benefit is further reduced if there is any increase in rent or council tax, as that needs to be met in full by the individual households.

I am aware that the Government rejected the council's original proposals in 2000 to carry out a pilot scheme that would have allowed the working families tax credit to be disregarded as income for the purposes of assessing entitlement to housing and council tax benefit. I appreciate the Government's concerns about marginal deduction rates that may act as a disincentive to work. I also realise that the issue raises a number of technical problems for the Department. But I urge it to initiate dialogue with the council and other public bodies in order to identify mechanisms to remove that barrier to employment as far as possible.

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In July last year, the council proposed to increase the earnings disregard to £92.90, which is in line with the working families tax credit income threshold, and to reduce the tapers of 65 per cent. for housing benefit and 20 per cent. for council tax benefit to 55 per cent. and 10 per cent. respectively. That would result in households being on average £75 better off, as opposed to about £12 to £14 better off under the current system. Although that appears to involve an initial loss to the Exchequer, all our statistics point to the fact that people obtain better paid work if they are already in a job. The change would also act as an incentive, to encourage people back into work, which in turn provides significant savings in benefits paid out by the Department. I appreciate that the Minister may have different solutions to the problem, but dialogue is essential if we are to make progress.

I urge the Government to give Glasgow the resources that it needs to tackle this running sore and to engage in a constructive dialogue with the city council and the Scottish Executive. The opportunities have never been better and the rewards to our society for overcoming long-term unemployment are enormous. I ask the Department to be bold and have the courage to take risks. The people of Glasgow have put their faith in this Government and they are entitled to social justice. They deserve nothing less.

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