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Sammy Wilson (East Antrim) (DUP): The hon. Gentleman’s point about corporation tax, which has been mentioned and which particularly affects companies in Northern Ireland because of the land boundary, has been resisted strongly by the Treasury. Does he agree that the experience of the Irish Republic, where a lot of
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inward investment has attracted a high percentage of EU inward investment as a result of the low corporation tax rate, proves his point? Corporation tax is an important incentive for firms, and we cannot understand why the Treasury has resisted the idea.

Chris Grayling: The hon. Gentleman makes an extremely fair point. We feel strongly about that issue, and that is why we have argued for the reforms and why it remains our aspiration, when economic circumstances permit and when we are able to share the proceeds of growth, to bring down the tax burden on business and on individuals in this country so that we do not lose major corporations to other countries. We cannot afford to do that.

Albert Owen (Ynys Môn) (Lab): Does not the hon. Gentleman find it ironic, as I do, that all those tax incentives are in the Republic of Ireland, yet the Republic of Ireland was the first European country to go into recession? That is very problematic for the future. Does not he agree that what we really need is stability so that we do not have a sharp downturn, as we have seen in the Republic of Ireland?

Chris Grayling: We clearly need to achieve economic stability in this country and in other parts of the world. There is no doubt about that. Economic stability is the only environment in which to do business and it is a tragedy that we have gone from a boom to a bust in this country despite being told by the Prime Minister that there would be no more boom and no more bust—that somehow we had got over that, as he had changed the laws of economics. However, it was not like that, and our businesses are paying the price today.

Paul Rowen (Rochdale) (LD): I have listened to the hon. Gentleman’s proposals with some interest. Will he tell the House what he envisages will be the cost of his welfare reform proposals and the other changes, such as the chapter 11 changes? What does he envisage will be the net saving in the number of jobs that he expects his proposals to save?

Chris Grayling: There are two key elements to my argument today, and the chapter 11 proposals would have no cost impact. On the subject of bringing forward the welfare reforms, since the Secretary of State has assured us regularly over the past few weeks that his proposals carry no extra cost, I assume that bringing them forward earlier would indeed carry no extra cost. It is merely a question of getting on with the job faster.

I sincerely hope that unemployment does not rise as far or as fast as some are predicting, but we need to be ready if it does. It will not help tackle the problem if the Government continue to bury their head in the sand about the true scale of worklessness in the UK. We need measures to protect small business and to help it grow. We need better support for those who do lose their jobs so that we can get them back into work as quickly as possible.

We have heard boast after boast about the Government’s record on employment in the past few months—boasts that do not pass muster under scrutiny. So, we have had enough of the complacency and enough of the empty
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rhetoric about a record on employment that just does not reflect the reality. Let us see some real action before things can get any worse.

7.45 pm

The Secretary of State for Work and Pensions (James Purnell): I beg to move, To leave out from ‘House’ to end and to add instead thereof:

I was rather sad to hear the partisan tone adopted by the hon. Member for Epsom and Ewell (Chris Grayling). This is an important issue for our constituents and I think that it would be better if we debated it in the spirit in which I thought that the hon. Gentleman’s leader said that he would approach this economic challenge. That spirit was that we should try to work together to address these issues. I shall try to address the points that the hon. Gentleman made and some of his rather eccentric use of facts. I shall then turn to his proposals and try to explain that all his main points are already Government policy. We are glad that he already agrees with what we are doing on employment and on the insolvency regime.

It is right that we should debate the subject tonight, and I am glad that the hon. Gentleman called the debate. Over the last two days, we have rightly discussed in this Chamber the financial situation and the global economy. All parties agree that there is no way that Britain could not be affected by the international situation. We could not stop the world, even if we wanted to get off. We need to maintain our open economy and to do everything we can to protect people through the current financial and economic situation and to prepare them for the upturn that will come thereafter. That is exactly what the Government are doing.

Our constituents tell us that they know about the drama on Wall street and Threadneedle street, but they want to know what the ripple effect will be on their high streets. The hon. Gentleman said that we should be living in the real world, but that is what we do. Last week, I spent two days in the high street in Kentish Town at the Jobcentre Plus, talking to advisers and to people who have just started to claim. The interesting thing was that there was a steady flow, as there always is, of people signing off benefits, because they have found work, and a flow of people coming in. People asked two questions: first, what is happening in the economy, and secondly, what are the Government doing? I want to talk about both those things and will try to address the points that the hon. Gentleman made.

Let us start with the facts. The latest analysis of the labour market makes it clear that unemployment is rising. The number of people claiming jobseeker’s allowance has been going up since the beginning of the year. In the last month, it went up by just over 32,000. Inflows on to
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jobseeker’s allowance are now at 250,000 people compared with 200,000 earlier in the year. The steady flow of people in and out that I mentioned seeing in Kentish Town is reflected in the wider economy. At the same time as 250,000 people were flowing on to the allowance, 216,000 people flowed off in August. That is because we have a strong, flexible labour market that is one of the best in the G7.

The hon. Gentleman tried to make some points about that, but he could not detract from the fact that we have the second highest employment rate in the G7. He cannot detract from the fact that there are 600,000 vacancies in the economy or that 500,000 people start a new job every month. Every time someone loses their job it is a worry, and it is a tragedy if they cannot find the next one. We should all be focusing on exactly what we can do to ensure that people find their next job as fast as they can as well as protecting existing jobs.

Let me correct some of the things that the hon. Gentleman mentioned. He said, for example, that it is not true that employment has been at a record level this year—he quoted an example of that being said earlier this year. Over the past 11 years, the employment rate has been at 74.3 per cent., compared with 71.4 per cent. under the Conservative Government. There has been a significant rise in the employment rate in this country. It is the highest employment level that has ever been achieved in this country. We are coming from a high level and it is therefore wrong for him to say that the economy has not had a successful labour market over the past few years. It is wrong for him to say that 80 per cent. of those jobs have gone to migrants. That figure is simply wrong. The figure is 50 per cent. and 800,000 more UK-born people are in work than there were in 1997. It is wrong of him to say that the inactivity rate is at 20 per cent. That includes students, whose numbers have risen very significantly over the last 11 years, and I thought that that was something that those on the Conservative Front Bench supported. If the number of students is taken out, the inactivity rate has fallen significantly.

It is wrong to say that long-term unemployment has not fallen as, even under the ILO measure that the hon. Gentleman quoted, it has gone from 800,000 to 354,000. It has fallen by more than half, so the figures that he tried to quote were, I am afraid, wrong. In his motion, he states that 5 million people are inactive, but that figure includes carers, people who have been recently bereaved, and parents with children under five. Even he does not want to see them in work. Will he confirm that that 5 million figure includes all those people? Is he saying that all carers should go back into work, or that the 5 million figure is a completely inappropriate way of describing the inactivity rate?

Chris Grayling: The Secretary of State’s point about carers is right, but will he confirm that he is now proposing to move them on to jobseeker’s allowance rather than income support?

James Purnell: Yes. That is exactly what we are proposing. We want to simplify the benefits system, which is something that Front-Bench Members of all parties agree with. I hope that he will say in future that he does not recognise
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that 5 million figure, which is a totally inappropriate way of describing inactivity. If he wants to continue using it, he will have to make it clear to carers that he is expecting them to look for work.

Chris Grayling: What about conditionality?

James Purnell: We are not going to change the conditionality regime for carers. Is the hon. Gentleman saying that he wants carers to look for work? If not, he should he say that he will no longer use the 5 million figure because it is deeply—

Chris Grayling: It is true.

James Purnell: No, it is not true. I think that “eccentric” is the most parliamentary way that I can put it.

Chris Grayling: So can I take it that the Secretary of State does not believe that there are many people among those carers who would like to work if we provided the right care and support for their families, and the right job opportunities for them? Does he not agree that, if we develop a world-leading back-to-work system—and I trust that we will—it should be open and available to carers, to help them find the opportunities to do more than simply be full-time carers?

James Purnell: Basically, Mr. Deputy Speaker, I think that that shows that the hon. Gentleman agrees that the 5 million figure is not the right one for him to use. I hope that he will not use it in future.

I want to make it clear to the House that we have not been sitting on our hands. We have not been complacent. For the last six months, my Department has been preparing for a wide range of economic scenarios. I want to take the hon. Member for Epsom and Ewell through what we are planning to do. There are three lessons in particular that I want to share with him.

The first lesson is that we should maintain the active approach to getting people back to work. We have looked at the lessons of our labour market history, and the worst possible thing that we could do at this moment is to relax the activity and obligations required in our back-to-work system. How do we know that? We know it because it is exactly what the Conservative Government did in the 1980s, when they took all conditionality off unemployment benefits. That meant that unemployment rose further than it need have done, to 3 million.

We will not repeat that mistake, and we will maintain the conditionality in the system. Why will we do that? We will do it because conditionality means giving people support and requiring them to take it up. If it is more difficult for people to find work, it would be extraordinary at this stage to start relaxing that conditionality or to provide people with less support.

Mr. Tobias Ellwood (Bournemouth, East) (Con): May I take the Secretary of State back to his statement that only 50 per cent. rather than 80 per cent. of jobs went to UK people, and that that was where the Government were focusing their efforts? Does he think that 50 per cent. is still acceptable?

James Purnell: Are the Opposition saying that they do not want any migrants to come to this country? Is that the policy of those on the Opposition Front Bench? We think that having a positive approach to migration’s
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contribution to our economy is important. We think that migration has to be managed, and we are bringing in the points-based system because we think that it will help us to do that. We think that it is right that migrants should contribute to our economy. If Opposition Front-Bench Members do not believe that, they should say so. I was merely pointing out that the figure used by the hon. Member for Epsom and Ewell was wrong.

Mr. Davidson: I want to make a point about conditionality. Does my right hon. Friend agree that simply asking people to turn up and participate in training is not sufficient and that, in some circumstances, we need something like the old community programme? People should be given the opportunity to go into meaningful work to get them into the habit of attendance. Something like that would be immensely constructive, especially at a time of declining economic circumstances. Will he introduce it tomorrow?

James Purnell: I cannot quite promise to do it tomorrow, but my hon. Friend will be glad to know that the flexible new deal will do exactly what he describes. It will require people to do mandatory work in return for their benefits. As he knows, we said in our welfare reform Green Paper that we would expect people gradually over two years to be looking to work for their benefits. I am sure that he will support us in that approach as well.

My hon. Friend is absolutely right to say that we need an active approach to getting people back to work, The hon. Member for Epsom and Ewell quoted at length from his recent document “Labour isn’t working...again”, in which he said that he wanted a network of back-to-work centres around the country that would make sure that there was an

Well, we do that now in jobcentres. The hon. Gentleman also says that he wants

with job search facilities, CV writing and interview training. We do that already. He says he wants to harness

but we do that already. We do not need to reinvent a network of back-to-work centres around the country. Those centres are called Jobcentre Plus, and they are in all our communities. If the hon. Gentleman wants to visit the one in his area, it is at 50, East street, Epsom, Surrey. I suggest that he goes and finds out what is really happening, rather than presenting our policy as his own.

Chris Grayling: Will the Secretary of State give way?

James Purnell: I have given way to the hon. Gentleman enough already. [Hon. Members: “Oh!”] Very well, I give way.

Chris Grayling: Does the right hon. Gentleman really believe that Jobcentre Plus offers the scale of back-to-work support that is needed, and that it replicates what is done in the back-to-work centres in north America? If he does believe that and that is the extent of his aspiration, it is profoundly depressing.

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James Purnell: Jobcentre Plus is better than what is offered in America. I visited back-to-work centres in New York, and people queue for hours. Often, they are sent back at the end of the day. They get no advice on getting back to work, and there is a total separation between claiming benefits and back-to-work services. From that Dispatch Box, the hon. Gentleman has just insulted the people who work for Jobcentre Plus in this country. That insult will be noted around my Department, and he should retract it.

Albert Owen: The Secretary of State is right to praise the role played for many years by Jobcentre Plus and the jobcentres in getting people back to work and tailoring support to their needs. However, even at a time when the economy is so precarious, there is a proposal to close some jobcentres in my constituency and in four other areas in Wales. Will he take that proposal on board? Will he meet me, or instruct the area managers to withhold or suspend the proposed closures at this important juncture? People need the extra support that the centres give, especially in areas of historically high unemployment

James Purnell: I should of course be very happy to meet my hon. Friend, but the closures have been proposed because my Department has met some very significant targets, with claimant count in those areas falling from 130,000 to 100,000 and there is another 12,000 headcount reduction. We have looked at a range of economic scenarios to see how the system would react to different levels of claimant count. We are confident that the system is robust, not least because an increasing amount of work is being done by telephone and over the internet. It is right that we do what needs to be done face to face in jobcentres, but the rest can be done by telephone and over the internet. However, I can reassure my hon. Friend that we have already decided to keep on some of the extra people whom we will recruit for the introduction of the employment and support allowance. They will be kept on to help deal with the very problem that he has identified, but I shall of course be happy to talk to him about the specific point that he raises.

The hon. Member for Epsom and Ewell, rather than demeaning the work of Jobcentre Plus, should recognise the world-class work that it does. It has been recognised by the National Audit Office very recently, and he should accept that 60 per cent. of people go back to work within three months, that 80 per cent. go back within six months, and that 90 per cent. do so within a year. That is a very good record, but we want to go further. We want to strengthen the regime further, so we are making sure that people sign on for skills when they sign on for work. We will modernise our new deals and bring them into a single, flexible new deal, so that they can respond to personal needs. As I said earlier, there will be a period of 12 months’ intensive support with four weeks of mandatory activity, and we will fast-track people with greater needs on to the new deal. They will include people who have not been in education, employment or training when they turn 18, or those who are ex-offenders.

The regime is world class. We have been planning for these economic contingencies, and we have been strengthening the system. The first lesson of the past 20 years in this country is that the activity of the system should not be relaxed. We need an active system, rather than the passive one that existed under the previous Conservative Government.

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