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The Secretary of State has announced today a sticking-plaster solution to the biggest challenge that we face as a nation. Unemployment is set to rise sharply and the Government have no idea of how to deal with it. They have wasted 10 years of opportunity and are now out of money and out of ideas. Ten years ago, the Government inherited an unemployment rate that was falling fast. It looks as if they will do just the opposite for their successor.

James Purnell: That was absolute confirmation that the Tories are now the do-nothing party. We are offering real help to people in difficult times. Those on the Opposition Front Bench have absolutely nothing to offer people because they are setting themselves apart from the orthodoxy around the world that we need both monetary and fiscal action now to help the economy. The right thing to do is to ensure that the problems with the economy are as short and shallow as possible, to reduce the cost to people now and to the economy in the long run. That is exactly the opposite of what the Tories did in the ’80s and ’90s, when they said that unemployment was a price worth paying. They wanted us to believe that they had learned those lessons, but even this week the shadow Health Secretary said that a recession

We have the Conservative deputy chairman saying that the recession should take its course. The only thing that we need to know about the Conservative Front Bench is that its members have not learned the lessons of the 1980s and 1990s, when they massaged and fiddled the unemployment figures and put millions of people on to incapacity benefit rather than helping them. In the middle of the 1980s, there was no requirement that people look for work. The then Conservative Government did not provide support or reform the welfare state as they should have done, but those are exactly the things that we will continue to do.

I turn now to the points made by the hon. Member for Epsom and Ewell (Chris Grayling). He trotted out his list of figures but, as I mentioned when we last discussed these matters, they are rather esoteric interpretations of the facts. He said that more public sector than private sector jobs had been created, but that is simply wrong: three quarters of the jobs that have been created are in the private sector. He said that we had a lamentable record on employment, but we had the second-highest level of employment in the G7—second only to Canada.

The hon. Member for Epsom and Ewell said that we were not going to act on unemployment, but we are proposing a package today that his party would not have proposed in the past, and could not propose today, because it is ideologically against taking action now to help people through the downturn. The Government will act because we understand the scars that the Conservative party left on communities, and we are determined to make sure that that never happens again.

Mr. Terry Rooney (Bradford, North) (Lab): I welcome my right hon. Friend’s statement today, but does he agree that it is as important to keep people in work as it
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is to get them off benefits and back into work? In respect of the Government’s response to Dame Carol Black, 300,000 people a year move from work to incapacity benefit, so is it not time that we dealt with the anomalies and inefficiencies of statutory sick pay? Should we not address that as an issue in the first six months of sickness, rather than wait until 12 or 18 months down the line?

James Purnell: I am glad that my hon. Friend welcomes that report and the Government’s response to it, and he is right that we need to look at the incentives open to employers. He will have seen in our response that we want to work with employers, and we will be happy to work with his Committee on how we can change the incentives for people. We must make sure that every part of the system has the right incentives to keep people in work, because we know that being in work is, in the main, good for their well-being. It is not in the interests of individuals, employers or the Government for people to fall out of work if they can stay in work.

Our response today makes a significant advance in addressing Dame Carol Black’s points, but we are happy to look at whether an even more fundamental change to people’s incentives is possible. We would be happy to work with my hon. Friend’s Committee on that.

Paul Rowen (Rochdale) (LD): May I also thank the Secretary of State for giving notice of his statement? I also welcome the moratorium on jobcentre closures although, as the shadow Secretary of State said, few were planned for next year. In view of that, and of the rising unemployment in certain areas, does the right hon. Gentleman have any plans to reopen closed jobcentres, especially in rural areas or areas where there are unemployment hotspots? Since December, the number of jobseeker’s allowance claims has risen from 30,000 to 66,000. Is the Secretary of State planning to use the additional staff to ensure that the processing of claims is improved?

We were told earlier this year that there would be a review of the social fund. One consequence of people who become unemployed facing delays in processing and the two-week delay in payment is that they have to apply for a crisis loan. When will he announce the results of the review, and is he going to employ more staff to process those social fund loans?

I agree that engaging with employers is an important part of the job of Jobcentre Plus, but under the flexible new deal people have to wait 12 months before they get intensive support. They have to wait six months for basic support, yet the Freud report said that early intervention was essential, especially for vulnerable people. Does the Secretary of State have any plans to change the flexible new deal, so that intervention can take place much earlier, especially for vulnerable or young people?

Finally, one consequence of yesterday’s PBR was that some investment in public sector schemes will be brought forward. What discussions has the Secretary of State had with other Departments, such as the Department for Children, Schools and Families or the Department for Transport, to ensure that employers getting the contracts for those schemes are encouraged to take people off the unemployment register?

James Purnell: I am sure that the hon. Gentleman will welcome the fact that it is actually 25 Jobcentre Plus offices that will be affected. I was slightly perplexed by
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his reference to rising processing times because they are within target and have been falling. Thanks to Jobcentre Plus staff, who have been working overtime and opening at weekends, we have maintained the service to which we are committed. We could not do that without extra investment next year, which is why the money coming in now is so important. It is the same for budgeting loans and crisis loans. We process crisis loans within two days, which is again under our target. It is important that we maintain those processing times because it is clearly important for people to get their money as quickly as possible.

The hon. Gentleman is right to say that we are looking at the social fund. We commissioned a report from KPMG on it, and we will make proposals shortly. There is probably some agreement around the House that, if we can use that money to improve people’s financial skills and give them the help to bridge their way through difficulties and get back into work, that will be a very good thing.

We obviously want to make sure that the flexible new deal is effective. The proposals that we will make build very much on David Freud’s recommendations. He said that the new deal should work effectively, but having separate new deals for disabled, older and younger people meant that we were treating people according to their category rather than their personal circumstances. The flexible new deal frees providers to do what they do best, which is to innovate, and rewards them according to their achievements. The better they do, the more money they will get and, again, the money that we have announced today means that we can cope with the higher volumes and give providers confidence that we will be able to do that.

We keep under review whether we should fast-track people on to the flexible new deal. People in many of the categories that the hon. Gentleman mentioned can already volunteer to go to that stage and young people who have been out of education or training—NEETs—can and will be fast-tracked to the intensive stage of Jobcentre Plus help and then on to the flexible new deal. We will keep that under review.

It is important to say that the rapid response service and the £100 million allows that help to be provided to people even before they fall out of work, so the hon. Member for Epsom and Ewell was wrong to say that people have to wait to get trained; they do not even have to be unemployed to get training because they can get access to it before they fall out of work. The earlier we help people, the easier it is to ensure that they find their next job.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): As the Member of Parliament whose constituency under the Conservatives was No. 1 in Great Britain for long-term unemployment and No. 1 in England for youth unemployment, may I thank this Government for the new deal, which the Conservatives opposed and the funding of which the Liberal Democrats opposed? Employment in my constituency has been transformed by the new deal and the local employment partnership, which has just provided 130 jobs at the new Tesco in Gorton. The direct training centre is training men and women to be builders for the new increase in building that will result from the Government’s policies announced this week.

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James Purnell: My right hon. Friend is right that the new deal has had a fundamental effect on unemployment. It has reduced long-term unemployment by three quarters. As he says, unemployment was one of the scars left from the 1980s, which he remembers so well.

The problem that would occur under the Opposition’s policies is that they would have to cut programmes, slow welfare reform and reduce the help available to people, because they are against the extra money that the Government put in yesterday.

Mr. Hugo Swire (East Devon) (Con): Like so often, the headline announcements by the Government do not bear close examination. It is all very well announcing a moratorium on jobcentre closures due next year, but it is not much good to my constituency, which saw all three of its jobcentres close in January in Sidmouth, Exmouth and Axminster. Will the Secretary of State pledge today that he will re-examine whether there is a genuine case to reopen jobcentres, especially in deprived areas? Two of my wards in Exmouth—Town and Littleham—are in the upper quartile of deprivation on the national indices. Will he look at whether there is a genuine case for reopening jobcentres where they are needed—close to the people who need access to them?

James Purnell: I can give a guarantee that we will provide the service that people need. That is our commitment. We deliver services now through Jobcentre Plus, children’s centres, GP surgeries and other community settings. If there are ways in which the hon. Gentleman thinks that we should improve the service in his area, I shall be happy to listen to them.

Alan Simpson (Nottingham, South) (Lab): It seems perverse that at a time when there has been a severe contraction in the construction industry, Eaga, which is responsible for implementing the Government’s warm homes programme, just last week said that any household in fuel poverty which applies for assistance will not be able to get it until the end of this winter because it does not have enough qualified people to deliver the upgrading of properties and the replacement of heating systems. Will my right hon. Friend ask the Prime Minister, in the new partnership committee that he is considering, to seek ways of dovetailing local ownership of identifying where we have work that needs to be done this winter with the availability of the skills that need to be harnessed to deliver the upgrading work?

James Purnell: I can give that guarantee. Indeed, one of the things that we have discussed is how we can ensure that the UK can capitalise on the opportunity offered by the initiative that my hon. Friend mentions in particular, and green jobs in general. There are significant opportunities for jobs growth in that area, and I am working with many Departments, in particular the Department of Energy and Climate Change, to make sure that we achieve that.

John Penrose (Weston-super-Mare) (Con): The Secretary of State has announced a national employment partnership, a group to be chaired by the Prime Minister. Will that not be just another talking shop?

James Purnell: There was a similar scepticism when the then Chancellor, who is now the Prime Minister, announced local employment partnerships, yet they
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have helped 70,000 of the hardest to reach people into work. We are now saying that we want to ensure that that initiative is available to people who have recently been made redundant as well. We think that it is right to work with many of the larger organisations, such as Whitbread, Asda and Tesco, which have been very supportive of that, and have ensured that they offer people work trials and guaranteed training. If we can make our system as flexible as possible so that people are ready to go into work, and employers can play their part in saying that they will take people on as quickly as possible, we can help to fill those half million vacancies and reduce the effect of the downturn on our economy.

Mr. David Winnick (Walsall, North) (Lab): In the 1980s the west midlands was devastated by unemployment. Does not today’s statement demonstrate that, in contrast to what happened then, those who lose their jobs now will not be treated with indifference and contempt? If politicians do not want to lose their jobs, neither do our constituents.

James Purnell: My hon. Friend is right, of course. What he will see from this Government is real action, as I said. What we saw from the Conservative Front Bench was a scheme, to which the hon. Member for Epsom and Ewell referred, which fell apart within a day of being announced. The Institute for Employment Studies said that the scheme was almost 100 per cent. dead-weight, and the Federation of Small Businesses said that it would be a disincentive to hiring people who have recently become unemployed. It is because the Conservatives were not prepared to spend money in the downturn that they had to squeeze the scheme to the point of pretending that it did not cost any money. That is the difference between us. We are prepared to take action. They are not prepared to do anything to help people.

Adam Price (Carmarthen, East and Dinefwr) (PC): On the brink of the biggest economic downturn the world has seen since the 1930s, does it make sense either morally or economically to compel single parents to chase non-existent jobs in a deteriorating labour market, and threaten to reduce their benefits by up to 40 per cent. if they do not? Cutting automatic stabilisers in the midst of a recession is the mistake that the National Government made in 1935 when they introduced the means test. The Labour party then opposed Conservative policies. Why are they implementing them now?

James Purnell: That is the opposite of what we are doing. We are making the automatic stabilisers work even better. That is why we have announced an extra £60 in the Christmas bonus for pensioners. That is why there is a significant uprating of the pension—the biggest that we have had under this Government. That is why we are bringing forward child benefit increases. That is exactly why we have a £145 tax cut for people. Those things are making the automatic stabilisers work.

Surely if we can get even one extra lone parent into work because of that support, that is a good thing. If, as we believe, we can get more than 70,000 more lone parents into work, that is families helped and lives transformed. We do not penalise people for not finding a job. We know that our support works, and we want people to take it up. That is why the system was created
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as it was. Ever since 1911 there has been conditionality in the system, and that is exactly what we will continue to have.

Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): May I inform the Secretary of State that I was a marcher on the people’s march for jobs in 1983, when more than 3 million people were unemployed and the Tories did absolutely nothing about it? They were the do-nothing party then, and they are the do-nothing party now. I welcome the Government’s proactive stance, but people who are employed in a company with fewer than 20 people may become unemployed and have no real experience of the benefits system. How will the extra resources be used to make them familiar with, and less fearful of, the process?

James Purnell: The rapid response service will be available to any company, making whatever level of redundancy, if they want to contact us. We guarantee that we will contact any company with more than 20 redundancies, and what my hon. Friend suggests is exactly what we will do: we will go in there and help people understand the benefits system and what they are entitled to. We will also, I hope, try to get them back into work before they have to sign on, by helping them look for work and with retraining, and by doing exactly as she suggests.

Sir Nicholas Winterton (Macclesfield) (Con): Aearo Technologies, a subsidiary of 3M, based in Poynton in my constituency, is taking 90 jobs to Poland. AstraZeneca, the largest employer in my constituency and essential to this country’s economy, is shedding more than 1,250 jobs over three years. The reason that it gives is uncompetitiveness in this country and the importance of the competitive global market. How will the increase in national insurance improve the situation?

James Purnell: How would cutting back public spending now, in the middle of a downturn, improve the economic situation? That is the folly of the Opposition’s policy: they would introduce fiscal tightening in the middle of an economic downturn. We propose to help the economy in the short term, and to make the downturn shallower and shorter, so that when the economy starts to grow, we can credibly say that we will live within our means and return the budget to stability. That is absolutely the right thing to do.

Judy Mallaber (Amber Valley) (Lab): I am pleased that Belper jobcentre is staying open, because although it is the constituency of West Derbyshire, it helps a number of my constituents. I also welcome the extra resources for the rapid response service to help those facing redundancy. But, to clear up any confusion, will my right hon. Friend confirm that the service is available not just to the private sector, where it has proved invaluable in the past, but to public sector organisations, such as Tory-controlled Amber Valley borough council, which is planning a large number of redundancies because of its complete financial incompetence?

James Purnell: Yes.

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