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17 May 2007 : Column 355WH—continued


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I thank the Committee for its report on the Government’s employment strategy. Given today’s debate, it is clear that we largely share common aims and common concerns. The report was informed by visits to my home city of Glasgow—I am sure that that was of great benefit—and New Zealand. I understand that the Committee is also to visit California shortly. I can only quietly reflect that I am in the wrong job; unlike the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), I have not had the opportunity to go to New Zealand or Australia.

Generally, there has been warm acknowledgment of the success of the past 10 years; certainly all Labour Members who have spoken acknowledged that pretty freely. The hon. Member for Inverness, Nairn, Badenoch and Strathspey also did. To be fair to the hon. Member for South-West Bedfordshire (Andrew Selous), he also acknowledged the real progress in one half-sentence at the start of his contribution, although his comment was tinged with the dig that a proportion of the jobs will have gone to migrants. That was his half-sentence acknowledgment of the progress of the past 10 years.

I say relatively gently to the hon. Gentleman that it is sometimes instructive to reflect where we have come from in respect of the scale of the achievement. A decade ago, it would have been unthinkable for us to have had a sensible or legitimate conversation about an 80 per cent. employment rate. That was just not part of the political discussion or vocabulary, except perhaps among the frustrated fringes of part of the trade union movement in the Labour party. They may have asked why their ambition of full employment—the historic goal that the movement and the Labour party were founded to achieve—could not be achieved. However, here we are having a proper conversation about a proper Select Committee report and having a proper debate on how we can deliver on that historic demand for full employment. Ten years ago, more than 2 million were unemployed, the number on incapacity benefit had trebled over the previous 20 years and 6 million were dependent on out-of-work benefits. Of course, we still have a lot more to do.

The debate has shown that there are still clear dividing lines, but they no longer seem to be based on the accusation that the introduction of a national minimum wage would be ludicrous and would cost 1 million jobs or that mass unemployment is a price worth paying. The modern dividing line on the labour market that has come across in today’s discussion seems to be about rates versus ratios and numerators versus denominators. A consensus seems to have been created by the Government, employers, trade unions and society at large that an investment in full employment is a price worth paying.

My hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble), in particular, talked about the success of having 2.5 million more in work and an employment rate that is up in every region of the United Kingdom, as well as the fact that 900,000 fewer people are on out-of-work benefits today than a decade or so ago. A number of hon. Members from all parties, the hon. Member for Inverness, Nairn, Badenoch and Strathspey and my hon. Friends the Members for North-East Derbyshire (Natascha Engel) and for Blackpool, North and Fleetwood, Fleetwood
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being the most important, reflected on the pilots and how much effort, analysis and retrospective justification it will take before we can get them to fly nationally.

My hon. Friend the Member for Blackpool, North and Fleetwood asked specifically about the new deal plus for lone parents. I remind her, the Committee and the House that in the child poverty strategy that we published recently as part of the response to Lisa Harker’s report, we have said that we will extend the new deal plus for lone parents until March 2011 in the pilot areas. We will expand it to all lone parents in London, in part in acknowledgment of the specific challenges of the London labour market that were alluded to by my hon. Friend the Member for Bradford, North (Mr. Rooney). We will also extend key elements to couples on benefits in the pilot areas throughout London. We have learned from that example of best practice and extended it through our announcements on child poverty.

Phenomenal innovations are taking place across the country. This week, I have had the opportunity to combine one of my great passions, football, with my determination to go further with our welfare reform and employment agenda. I visited Middlesbrough football club and, earlier today, Millwall football club. They are two phenomenal examples of innovations whereby the voluntary, private or community sector has done things that would have been unimaginable for a Government to have achieved before, because of the power and pull of the brand of Middlesbrough football club, a community club, and, despite my preconceptions of Millwall based on its previous fan base, because of the remarkable things that Millwall is doing as part of its continued rehabilitation. Incidentally, when I lived in London before, I used to actively go and watch and support Millwall, until at a game against Portsmouth Millwall scored and, instead of celebrating, different factions of the Millwall supporters started to fight with one another. To me, that was symbolic of the problem that Millwall had, but it has worked remarkably hard to change its image. The work that I saw today that supports people from all backgrounds and ethnicities—migrants and others—in resolving the difficulties that they face in the labour market was pretty inspirational.

The hon. Member for South-West Bedfordshire asked about the new deal. I can sense in some Conservative spokespeople a continuing, decade-long retrospective justification for their opposition to the new deal in principle. The new deal has helped 730,000 young people into work and 85 per cent. of those job entries have been sustained. The new deal has helped us to have fewer than 10,000 long-term unemployed 18 to 24-year-olds in the United Kingdom. There is a strong case for a more flexible new deal, for additional discretionary powers for advisers and for all sorts of measures to refresh it, and we remain committed to the principles of BoND. We are actively discussing how to put proper shape to those principles so that we can refresh the success of the new deal.

Andrew Selous: Is it not the case that unemployment among 18 to 24-year-olds now stands at 518,000, a rise of 15,000 over the last quarter, and that 157,000 of
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those have been unemployed for more than six months? I hope that the Minister is not complacent about that fact.

Mr. Murphy: There is no complacency on the Labour Benches about what more needs to be done on welfare reform in the labour market. We brought forward the Welfare Reform Act 2007 to support the 2.7 million who are on benefit and others who flow on to it, so that they can be supported in getting off the benefit. The hon. Gentleman is wrong; the long-term youth unemployment claimant count is less than 10,000. That is a remarkable transformation from when his party was in power for those 18 years.

I agree with the hon. Gentleman that we need a family-friendly policy on employment and welfare. For me, that is not about the moralising of the right, nor a sense of tub-thumping and lecturing from some sort of bully pulpit, but an acknowledgment that two parents supporting a child, all other things being equal, have better outcomes. However, the vast majority of lone parents do an exceptional job—in what is probably the most difficult job imaginable—of bringing up children with phenomenal educations and with the love and support that enables them to get on in the labour market and, perhaps more importantly, to develop their character.

The family-friendly approach to the politics of welfare is why we extended maternity and paternity leave and why we introduced adoption leave. I rue the fact that that was opposed by the hon. Member for South-West Bedfordshire and his party, but such extensions in flexibility and the chance to work are part of a continuing family-friendly labour market.

The Select Committee is underpinned by the acknowledgment that if we are to achieve our ambition of supporting those who have multiple barriers to work and are furthest from the labour market, we need to extend the boundaries of welfare much further than we have before so that we can help those whom we have not been as successful in helping as the Labour party might traditionally have had the ambition to be. My hon. Friends talked about those who might suffer from an experience of drug addiction, disability and family pressures, such as those that might come from having a disabled child. As we continue to reform the welfare state, not only through the new deal but with other employment programmes, we need to design systems in the public sector and the private and voluntary sector that acknowledge that a person is an individual rather than someone on a specific benefit. My hon. Friend the Member for Bradford, North and I have spoken about the specifics of how to achieve that on numerous occasions.

My hon. Friend also talked about the employment gap among ethnic minorities, as did other hon. Members. My hon. Friend is more than informed enough publicly to acknowledge that the employment disadvantage is not uniform among all ethnic minorities. Part of it is to do with language. I would like to confirm that my announcement in February was not about migrants but about those who wish to have access to the system and are legally entitled to claim benefits, and about the fact that in future the jobseekers’ agreement would take account of language barriers. It was not about migrants because, as the hon. Member for South-West Bedfordshire knows—and as
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the Daily Mail knows, although we do not always read it—migrants do not have automatic access to benefits in the United Kingdom in the way that some of the tabloid press, and that newspaper in particular, like to suggest that they do.

On the subject of the disadvantage for ethnic minorities in the labour market, my hon. Friends know that the Business Commission report commissioned by the Treasury will report shortly about what more employers can do to break down barriers and drive out whatever racism exists in their practices, and about what changes can be made to recruitment practices. But it is absolutely the case that the disadvantage of ethnic minorities in the UK’s labour market is partly down to discrimination. There are other contributory factors, of course, but discrimination is a substantial part of it.

One way to look at it is that, as we all know, there are two bulges in ethnic minority performance in education. There is a disproportionate tendency for ethnic minorities to underperform in education and the academic world, but there is another bulge at the top. A disproportionate number of those from ethnic minorities are likely to outperform the UK average in academic performance. So there are two bulges—one at the top that we celebrate and one at the bottom that we bemoan.

In the labour market there is only one bulge of over-representation among ethnic minorities, and it is at the bottom. The above-average performance in the academic world is in no way translated to an equivalent bulge in the labour market. That has to be partly down to discrimination. The Business Commission will come forward with proposals about what more business can do.

Andrew Selous: I am grateful to the Minister for drawing the attention of the House to that point. He said that ethnic minorities are under-represented in employment, but some people from ethnic minorities have their own businesses. Do his figures take that into account? There is tremendous entrepreneurial flair in some of the ethnic minority groups that do well educationally, for which we are extremely grateful.

Mr. Murphy: I think that the analysis takes account of all the trends in the labour market. The fact is that it is not just down to employer discrimination, although that is there. There are cultural issues, family structure issues and the poverty of place—the concentration of poverty and a lack of aspiration. That is all a complicated interplay, but the Business Commission will make recommendations on it.

My hon. Friends the Members for Bradford, North, for Blackpool, North and Fleetwood and for North-East Derbyshire spoke about lone parents and what more we can do to support them. That question is clear in the report. I would point out that in London the lone parent employment rate has increased in the past decade, I think by 8.5 per cent. Although the rate of improvement has not been as fast as in the rest of the United Kingdom, there has nevertheless been improvement. We do need to recognise the specific challenges in London referred to by my hon. Friend the Member for Bradford, North, which is why, as part of the new strategy in response to Lisa Harker’s review,
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there is an in-work credit in London. It takes account for the first time of the additional pressures that lone parents face in London.

In response to the Committee’s comments we must do more work on how to structure the in-work credit to reward sustained employment. It is currently a regular payment, which is a great help, but we need to do more work on analysing where the drop-off points and pressure points are for lone parents—whether three months, six, nine or whenever is the point at which there is the greatest propensity for lone parents to fall back out of the labour market. We should restructure the in-work credit to incentivise retention at those points of friction.

My hon. Friend also asked about the processing of benefits. There have been improvements in recent years in the processing of housing benefit in particular. In the most recent years for which records are available, between 2002-03 and 2005-06, there was a 19-day improvement in the average clearance time for housing and council tax benefits. There is more that we can and should do, particularly to address continuing underperformance below the average. We are trying to drive that down. We anticipate that the introduction of the local housing allowance in the Welfare Reform Act 2007 should speed up the claims process by an average of a further seven days, which will be welcome.

My hon. Friend the Member for North-East Derbyshire raised the issue of skills, to which Lisa Harker’s report also referred. The question is what we do to assess the skills needs of people—particularly but not exclusively lone parents—at the point when they become unemployed and report the need of a benefit application, so that they can compete in the labour market. In response to Lisa’s report and as part of the evolving work on the new deal, we must be much smarter at the first point of contact so that we refer lone parents not to just any job but to one that fits around their life patterns, child care needs and the pressures of family life. We have committed to that as a consequence of the part of Lisa’s report about trying to mark jobs that are suitable for lone parents. Probably more important is that we do not just wish people luck as they enter the labour market but provide sustained support through their first few weeks of employment to reduce drop-off and the recycling of people coming on to benefit.

Points were made about sustained employment. The definition of sustained employment is currently 13 weeks. The Committee has suggested 26 weeks and David Freud three years. We have given David Freud’s report a warm initial response and we shall respond to it in more detail in the summer. I do not think that I am giving too much away by saying that we are not instinctively attracted to a definition of sustained employment as unbroken employment for three years. David has set us a phenomenal challenge and, based on the challenges that we now know of in the labour market, we can no longer defend the idea that 13 weeks is sustained employment. In considering the detail of the Select Committee’s report and David Freud’s report, we will move away from that. I shall not announce today what we shall move to. We joked at the seminar earlier in the week that no one considers 13 weeks to be sustained employment with the exception of current Ministers. No one would plan on
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the basis of 13 weeks’ employment, as the hon. Member for South-West Bedfordshire fairly said.

An additional point on sustained employment is that we have made important announcements about permitted work rules and introduced more sensitive linking rules on benefits. We need to go further in publicising some of the rules, not just to customers but to those with whom we work. If we were all to pop into our local citizens advice bureaux—mine, like many others, does a phenomenal job—we could ensure that the advocates there were aware of some of the changes that we have implemented.

I was asked what events we have planned as part of the continuing conversation on Freud. We had an event earlier this week organised by the Smith Institute, which was attended by my hon. Friends the Members for Bradford, North and for North-East Derbyshire, who spoke at the event. Lord Kirkwood of Kirkhope was there and spoke from the audience, and the hon. Member for Bury St. Edmunds (Mr. Ruffley) also spoke. We have an event tomorrow in Manchester, organised by ippr north, involving stakeholders and others, and one has been organised for 22 May by the Social Market Foundation as part of the discussion prior to the Government’s formal response to Freud. Once we have that response we will enter a formal Government process of listening and consulting. Even before that we are trying to give people an opportunity to feed into the process.

On benefit simplification, which is referred to in the Select Committee’s report and was mentioned by hon. Members this afternoon, when I arrived at the Department I thought, “Well, let’s just do that, then.” But if it were so easy to do—I am not being political about this—the previous Government and every Government would have done it. I have reflected on it, and although every new benefit rule is introduced for a correct and proper reason, they have cumulatively led to a benefits system that is bamboozling for our customers, some of our advisers and many of our advocates.

There is the issue of how simplification should be done, but there is also the question whether if there were a single benefit there should be a single benefit rate. That is a reflection on the comments in the Select Committee report and elsewhere, but it is easier said than done. It will rightly be acknowledged that there are additional pressures such as the financial pressures of disability.

We have to reflect on whether we bring low benefits up to the level of the disability benefit or whether we level the disability benefit down to the jobseeker’s allowance rate. That would probably be a lot less popular, and it is something that we would never do. If we want to simplify benefits and have a single working-age benefit, we will have to deal with all sorts of often complicated issues.

Andrew Selous: I am sure the Minister is aware that we have another 25 minutes. I would not want him to rush his remarks because of the two Divisions.

On benefit simplification, I note that the Select Committee’s report states on page 94 that


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If New Zealand can do it, I hope that it will not be too great a challenge for the United Kingdom.

I may have missed what the Minister said, but I hope that he will respond on the point about flexibility of the personal adviser, which has been raised by many Members.

Mr. Murphy: I know that Members would thank me if we were to finish before five minutes to 6, Mrs. Anderson, but I shall not test their patience by inviting you to put it to a Division, as I know that that is not allowed.

The hon. Member for South-West Bedfordshire almost incites me to visit New Zealand. My understanding of what is happening there is that they have been planning to introduce this sort of reform for some time. Wishing is easy, planning is difficult, and doing is even more difficult. I believe that that has been the experience of New Zealand.

On the point about flexibility, I believe that I alluded to it quite early in my remarks. In terms of refreshing the new deal, there is, of course, a strong case for greater flexibility for our advisers but also for our customers, so that we acknowledge the nature of the barriers that individual customers face.

If Members will allow me, the last thing that I want to concentrate on is the city strategy. However, if they wish to ask additional questions, I would be happy to respond to them. [Interruption.]

Janet Anderson (in the Chair): Order. I shall suspend the sitting for 15 minutes for a Division in the main Chamber.

Mr. Murphy: Mrs. Anderson, would it be possible for me to take one minute to conclude my remarks? That way, we would not have to come back.

Janet Anderson (in the Chair): Does the Chairman of the Committee wish to speak after the Minister?

Mr. Rooney: I am happy to leave it on this occasion.

Janet Anderson (in the Chair): Go ahead, Minister.

Mr. Murphy: I thank you, Mrs. Anderson, and my hon. Friend the Member for Bradford, North.

The city strategy is an important opportunity to drive out economic inactivity in our big cities. It was launched in April, and we are working through the detail of the targets this month. It will play an important part in our determination to achieve the 80 per cent. employment target across the UK, because our cities underperform on that target in a much more significant way.

With that, Mrs. Anderson, I wish to thank you, all the hon. Members who participated in the debate and, more importantly, the members of the Select Committee who every week work on this agenda in a way that is constructive but also challenging. In particular, I would like to thank my hon. Friend the Member for Bradford, North, who is acknowledged across the political divide as playing a phenomenal role in keeping unity by challenging unity within the dynamic of the Select Committee.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes to Six o’clock.


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