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18 July 2007 : Column 279

Full Employment

12.32 pm

The Secretary of State for Work and Pensions (Mr. Peter Hain): With permission, Mr. Speaker, I should like to make a statement on today’s Green Paper, “In work, better off: next steps to full employment”. Ten years of progress under this Government have transformed work and opportunity in Britain. We have seen the longest and most sustained period of economic growth for over 200 years, the fastest falling child poverty in Europe and the highest employment in our country’s history.

Today, the achievement of full employment and the eradication of child poverty are seen no longer as simply aspirational rallying calls, but as real targets that people expect to be delivered in our generation. But to achieve them, especially at a time when the global forces of economic and demographic change present new and ever greater challenges for our economy and labour market, will require a step change in our reforms.

We must reignite the jobs crusade that started in 1997 and renew the partnership between Government, employers and individuals by focusing now on those who remain furthest from the labour market and on those whose potential is untapped—on the 3 million people of working age who have been on benefit for over a year, many on incapacity benefits; on lone parents and ethnic minority groups still without the right support to work; on 16 and 17-year-olds not in education, employment or training; and on those remaining pockets of poverty and worklessness concentrated in some of our major cities, yet often close to thriving labour markets and great prosperity.

I said that we needed a step change to tackle these entrenched problems and today’s Green Paper delivers it, based as it is on values and principles that go back to Beveridge and Attlee, and on to our new deal. I refer to the belief in equality and opportunity and in rights and responsibilities; to the principle of work for those who can and support for those who cannot; to the idea of working in partnership with employers; and to the belief that an active, progressive welfare system should provide people with the skills that employers need to fill some of the 600,000 vacancies that come up in our labour market each month.

The reforms will build on our progress with the national roll-out of pathways to work. They will see the development of support that is ever more personalised and responsive to the needs of individuals. They will focus on job retention and progression, not just on job entry. They will devolve power to local areas by incentivising local solutions and making the best possible use of expertise across the public, private and voluntary sectors.

We propose, first and foremost, a renewed partnership with employers to ensure that those on welfare applying for jobs have both the skills and the work attitudes that employers need, underpinned by a new jobs pledge aimed at finding opportunities for 250,000 people currently on benefit. Building on the cutting-edge local employment partnerships announced by my right hon. Friend the Prime Minister in the Budget earlier this year, major employers—in both the public and private sectors—have
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given a commitment to offer guaranteed job interviews for people who have been on benefit and who are ready and prepared to work. Employers will ensure that such people can compete more effectively for vacancies and have the support then to progress within the workplace, adding to last month’s employer skills pledge in which 150 leading employers made a public and voluntary commitment to train all their staff to level 2 in the workplace. This will be a two-way process, however, and through the new local employment partnerships, individuals on benefit will be expected to do all that they can to help themselves prepare for work.

Our second area of reform will be to introduce a more personalised, flexible and responsive new deal, with a more integrated approach to skills and wider support for the family, but matched by new responsibilities for jobseekers to do all that they can to help themselves. Those facing particularly severe barriers to work will now get fast-tracked help, while others who have a history of long-term benefit dependency could face tougher responsibilities from the start of their claim. There will be an earlier and more focused assessment of the skills needs of those who are out of work, to inform the development of a back-to-work plan. Agreed activities will be mandatory, however, with clear sanctions for failure to comply.

Eradicating child poverty lies at the heart of the Green Paper. Following the recommendations of Lisa Harker’s report last year, we are already changing Jobcentre Plus systems and targets to ensure that the delivery of our employment programmes is more family-focused. We are introducing mandatory work-focused interviews every six months for partners of jobseeker’s allowance recipients with children. As with lone parents, work offers a powerful route out of poverty for many of those families.

For lone parents, we will introduce a new social contract which promotes the value of work as the best route to tackle child poverty. We know that the children of lone parents in work are more than five times more likely to be in poverty than the children of lone parents in full-time employment, and that they are three times more likely to be in poverty than the children of lone parents in part-time work. Given our record investment in improving the quality and supply of child care, together with measures to ensure that work pays, lone parents will be expected to make an eventual move into the labour market in return for new and more personalised support.

From October next year, lone parents with a youngest child aged 12 and over will no longer be entitled to income support simply because they are a lone parent. Instead, supported by the new job opportunities made available by the local employment partnerships, they will be eligible to claim jobseeker’s allowance, on which they would be expected to look for suitable work in return for personalised help and support. Because we are serious about tackling child poverty, we intend that the relevant age be reduced further to seven from October 2010, backed up by the local availability of high-quality wrap-around child care.

Finally, building on the Freud report, this Green Paper makes greater use of expertise across the private, public and voluntary sectors at both national and local level. Private and voluntary sector providers already play a crucial role in delivering programmes, such as
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employment zones and the new deal, and we intend to build on that. After 12 months on jobseeker’s allowance, or in some cases probably even sooner, we will move customers to a specialist return-to-work provider, who will offer an intensive outcome-focused service, funded on the basis of results; we will push forward with a City strategy, offering local consortiums of providers new funding and flexibilities in return for outcome-based payments; and we will pilot an approach where providers who are successful in moving people into sustained employment are rewarded with increased funds to invest in further activity.

The publication of our proposals today will start a 15-week consultation process. We encourage contributions from both sides of the House and from all those who share our commitment to delivering full employment in Britain. The contrast with 1997 could not be greater: then, record unemployment and the worst child poverty in Europe; today, 2.6 million more people in jobs, more women, more lone parents and more disabled people in work than ever before, and already 600,000 children lifted out of poverty. We must now rise further to the challenge of going further.

The Green Paper lays the foundation for the eradication of child poverty; it builds on the progress that we have made in extending the right to work to all; and in reaching out to the hardest to help, it aims to offer true social mobility and social justice for every individual. I commend it to the House.

Chris Grayling (Epsom and Ewell) (Con): I am grateful to the Secretary of State for observing the usual courtesies in providing me with an advance copy of the statement. What a shame it is, though, that he did not observe the courtesies that were promised to the House when the new Prime Minister took over less than three weeks ago. We were told then that major policy announcements would be made in the House and not the media, as you have so often demanded, Mr. Speaker, so let me start by asking the Secretary of State why details of the statement were on BBC breakfast television this morning. Is this just a one-man rebellion by the Secretary of State against his new leader, or is it just that the promises made by our new Prime Minister have a shelf-life of only a fortnight?

The statement contains much that all of us can agree on. That is hardly surprising, as parts of it, such as the changed approach for lone parents, are things that we have already argued for—but with this Government, nothing is ever quite what it seems. For a start, there is a distinct feeling of déj vu in all of this. This is the Government’s 11th announcement in 10 years about getting people off benefits and back into work. The last Green Paper was published less than 18 months ago. At that time, the then Minister, the right hon. Member for Barking (Margaret Hodge), was scathing about the Government’s record. She said:

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Well, it is now a little over a year later, and what has happened? I think that the House would agree, to judge from today’s employment statistics, that the answer is still sweet nothing.

The number of single parents stuck on benefits is barely changed on a year ago. According to the Secretary of State’s own figures, 7.93 million people of working age in this country are economically inactive, and that figure is rising, as is youth unemployment. The Government’s response is to publish yet another Green Paper—another set of headlines to try to reassure people that Ministers are actually trying to do something, while in the real world too many people are being left behind in our society.

Last year, the Government asked David Freud, chief executive of the Portland Trust, to make recommendations about how to tackle the blight of economic inactivity in this country. His report sets out a radical agenda for change in the way that we help people off benefits and into work. The last Secretary of State said of the report, back in March:

We agree with him, but the new Prime Minister clearly does not. He gave David Freud short shrift when they met. In April, a leaked letter from the then Chief Secretary said:

So much for the Government making real use of external advice, or the former Chancellor’s big tent. It is obvious that while the Prime Minister is perfectly happy to get in external advice to help him with public relations, he clearly has absolutely no intention of actually using that advice. Let me ask the Secretary of State why the Prime Minister has ordered so much of the Freud report to be watered down. How much extra funding does he really have to implement these changes?

The truth is that after 10 years of broken promises on welfare reform, we still have more than 750,000 lone parents on benefits. We have far more—16 per cent. more—young people who are not in education, employment or training than in 1997, despite all the billions of pounds that the Government have spent on the new deal. Today’s figures show that youth unemployment is getting worse. Despite years of promises, we still have more people on incapacity benefit than in 1997. The Secretary of State talked about falling child poverty, but I put it to him that his Department’s statistics show that the figures for child poverty in the UK have been rising over the past year.

Neither this Government nor this Prime Minister have shown any sign of being able to get to grips with these problems. Their solution is always to launch yet another consultation, yet another Green Paper, yet more legislation and yet more initiatives, but they never actually get the job done. The truth is that we face a massive social challenge in Britain today. After 10 years in office, there is no real sign that the Government have any idea of what to do about it.

Mr. Hain: I could not disagree more strongly with the rhetorical end to the hon. Gentleman’s response. First, let me say that I gave no interviews before making this statement to the House. The details about
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the publication of the Green Paper have been given to the House before anyone else—certainly the media—has received them. Many of the details that appeared in bits and pieces in the media this morning were wrong.

I am glad that the hon. Gentleman has given me the opportunity to trumpet today’s fantastic employment figures, which show record employment, unemployment down, and the number of people on benefits falling. Since he probed me, let me remind him of the figures. Employment is now at more than 29 million, which is 93,000 up on the quarter and 180,000 up on the year. International Labour Organisation-measured unemployment is down. The jobseeker’s allowance numbers are down by 91,000, and the number of people on incapacity benefits is down by 38,000, which can be compared with the miserable record under the Tories when it kept rising. The number is now at its lowest level for more than seven years. The number for lone parents is down by 3,000 on the previous year. There are now 317,000 more lone parents in work than there were when we came to power in 1997. I will happily talk about our record any time that the hon. Gentleman likes, including in relation to today’s very good employment figures.

The hon. Gentleman made some points about youth unemployment, although they were not specific. Actually, youth unemployment has been all but eradicated —[ Interruption. ] However, as I identified in my statement—this is also identified in the Green Paper—there is an issue in relation to 16 and 17-year-olds who are not necessarily in training, education or work. They need more intensive support, and that is precisely what we are offering them in co-operation with my right hon. Friend the Secretary of State for Innovation, Universities and Skills so that they are given the opportunity of gaining skills and jobs in the future.

The hon. Gentleman asked about our response to the Freud report. I would have thought that he would welcome our response—I would not be surprised if the report’s author welcomed our response as well. Let us look at the detail. The report recommended a change to the way in which we encourage lone parents into work. We have agreed and taken that change forward. A change was recommended on using the more specialist expertise that is available in the private and voluntary sectors, as well as the public sector. After 12 months, we have adopted that approach. In some cases, we did so before 12 months, as I said in my statement —[ Interruption. ] The hon. Gentleman is heckling me, but if he had listened carefully, he would know that in some cases that can take place before the 12-month period.

We have not gone for the big, regional private monopoly provider, because there was a strong response from stakeholders participating in the Freud report consultation that suggested that that was not necessarily the preferred model. Many private sector providers objected to a single regional monopoly provider, because if it failed the whole region would fail with it, so they said that we ought to look at provision in a more flexible way. This is a consultation document: we want to deliver the programmes and to get the best possible support for those who need and want to come off benefit and into work. That is available in the private sector—we want to take advantage of that—but it is available, too, in other ways.

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The statement and the Green Paper are a response, too, to the important report by Lisa Harker on child poverty, to the Leitch report on skills, and to the important report by the Select Committee on Work and Pensions. We are not just responding to the Freud report, although it is important and will inform our work in future.

Mr. Terry Rooney (Bradford, North) (Lab): Earlier, the Prime Minister and the Secretary of State referred to the social contract for 250,000 jobs, but as I understand it, a large slice of those jobs is in the retail sector, which has an employee turnover rate of about 25 per cent., rising to 34 per cent. at Sainsbury. That programme needs to be revisited if it is to be sustainable. As for child poverty, more than 300,000 children are not living with their parents for whatever reason, but with other family members. The system does not cater for them at all, and very little assistance is offered to their supporting families, but it is a serious child poverty problem.

Mr. Hain: As ever, my hon. Friend, who has authority and expertise in this area and who chairs the Work and Pensions Committee, has raised some important issues. The issue of the 300,000 children is important, and we should like to work with him and his colleagues to try to make sure that we can get that right, because there is an important problem to overcome and a challenge to meet.

On the question of the retail sector in local employment partnerships, the Prime Minister and I, along with my right hon. Friend the Secretary of State for Innovation, Universities and Skills and the Minister for Employment and Welfare Reform, met a number of employers this morning at No. 10 Downing street who represent more than 30 companies that have signed up to our local employment partnerships so far—the number is increasing all the time. They included important national retailers such as Debenhams, Marks and Spencer and Sainsbury’s, as well as Network Rail, security companies and other organisations that have signed up to the partnership with Government.

It is true—this was one of the points made by the retailers’ representatives this morning—that retailers tend to have a high turnover, partly because they attract many students at certain times, such as the pre-Christmas period. However, they find that when they can get someone through Jobcentre Plus—off benefits, in many cases—such people tend to stay. Working with us is therefore attractive, as it will help to make sure that many of those individuals have the opportunity and dignity that comes with work, and receive the support, including child care in the case of parents, that enables them to work, which they have not been able to do in the past.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I am grateful to the Secretary of State for advance notice of his statement. Does he agree that, despite suggestions that all parties are interested in this agenda, it is astonishing that the official Opposition refused the opportunity to repeat the statement in the other place?

We share the Secretary of State’s objective of ending child poverty, but is he not aware that child poverty has gone up in the past year, not down? Is he not aware that
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the employment rate has gone down in the past year, not up, and that it is no higher now than it was at the peak of the last economic cycle? Is he not aware that inequality is rising, not falling?

We welcome David Freud’s proposals to move the benefit rules for lone parents closer to those in the rest of the European Union, but does the Secretary of State agree that he must address, too, the huge problem of child care availability which is the major barrier to work for that group? Is it not very hasty indeed to go further to the age of seven without addressing those child care issues and without allowing time for a proper evaluation of the reduction to the age of 12?

The Government must tackle the shameful fact that after 10 years in office 2.7 million people on incapacity benefit have still not received the help that they need. We welcome the long-overdue focus on building relationships with employers, but David Freud’s most significant contribution was on the funding of welfare support to the hardest-to-help groups through three-year contracts. Does the Secretary of State agree that such long-term funding is essential to enable the private and voluntary sectors, which he rightly praised, to deliver for those groups? Will he confirm that the Treasury objected to the long-term funding model proposed by Freud, and that without that funding it will be much harder to provide the personal support into work for those people who need and want that help most?

Freud made it clear in his review that the byzantine complexity of our benefits system is a major disincentive to work. He is right. Why will the Government not move faster towards his recommendation of a single system of working-age benefits? What steps has the Secretary of State taken to implement Freud’s proposals that Jobcentre Plus should become a one-stop shop for all benefits and tax credits? Britain today is disfigured by inequality and by concentrations of worklessness. By watering down Freud’s key recommendations in a Green Paper that took longer to write than Freud took to write his own report, today’s statement misses a huge opportunity to deliver extra help to those people who need it most.

Mr. Hain: To pick up the hon. Gentleman’s last point on the simplification of the benefits system, we are still considering the best way forward, as it is an important issue. However, there are many difficult problems. David Freud explored the notion of a single benefit system, and found that none of the options was straightforward—something that the hon. Gentleman did not mention. A recent paper by the Institute of Public Policy Research highlighted the costs of a single benefit system. We are still looking at the proposal, but we must proceed with a great deal of care.

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