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4.30 pm
I looked again at what was said by Mr. Freud, who, as a former investment banker, is obviously well experienced in poverty and welfare. He designed some of the proposals, but he did not specifically recommend a “work for your benefit” scheme; he recommended additional conditionality. Whatever happened to him? I believe he is about to be appointed to the House of Lords by the Opposition to lead this legislation through on their side and perhaps try to introduce yet more draconian proposals.
The other review on this aspect of the Bill was carried out by the Select Committee on Work and Pensions, which published its report on 25 February. It reiterated:
“We are not convinced that the current design of FND will discourage the creaming and parking of customers on the programme.”
That refers to the private sector. The Committee, too, referred to the DWP’s research and the finding that Workfare was the least effective means of getting people into work in weak labour markets; so it is difficult to see where the supporting evidence to justify this scheme has come from.
The one body that the Government appoint to advise them on social security is the Social Security Advisory Committee. Its chair, Sir Richard Tilt, submitted his views, saying:
“We have seen no evidence to suggest that any of the contemporary ‘workfare’ models are likely to be effective in Great Britain”.
In addition, he said that Workfare schemes would be
“creating an additional stigma for those who are long term unemployed”.
That finding was reinforced by the Child Poverty Action Group, whose concern is that the scheme is unlikely to achieve much more than the stigmatisation of a small group of very vulnerable people.
Jeremy Corbyn (Islington, North) (Lab): Does my hon. Friend have any evidence of what Workfare has achieved in the United States, where there are reports of severe destitution as a result of it and the stigmatisation of people who then find great difficulty in getting jobs, even when the economy turns upward later on?
John McDonnell: The one objective piece of evidence provided to the Department was its own research, which found that the Workfare scheme in the United States does not provide long-term, sustainable employment. That evidence was supplied to the Secretary of State and to the Work and Pensions Committee, and, on that basis, the Committee has expressed scepticism about the Government’s proposals.
My proposals try to restore the scheme to what the Government originally intended, namely to make it voluntary. My objective is to ensure that instead of having a scheme that stigmatises, the support and assistance provided to the long-term unemployed is provided as an offer—an opportunity of work experience, voluntarily entered into by the claimant. In that way, the support would be made much more effective and if people took up their offer, they would be properly rewarded. My
proposals would mean that as a result of their work such people would be paid at the minimum wage or through a job-related payment. Again, that would prevent the exploitation of the unemployed by unscrupulous employers, who may wish to substitute those on this work experience—if they are not being paid any wage and are being paid only jobseeker’s allowance—with temporary unemployed emplacements.
Sammy Wilson (East Antrim) (DUP): I listened carefully to the hon. Gentleman’s proposal about people volunteering to go on such schemes. Does he accept that those who are willing to volunteer to go on such schemes already have a plethora of schemes that they can go on? What the Government seek to achieve is to reach the core of people who are not prepared, for one reason or another, to join schemes. Such people therefore must be targeted in order to ensure that the opportunities for work and for preparation for such opportunities are taken up, so that they can have the dignity of eventually finding themselves in full-time employment, rather than being dependent on the state.
John McDonnell: We are all trying to ensure that we provide opportunities for people to gain the skills and support that they need to get into work. I am trying to explain that there is no evidence that compulsory schemes—the Workfare schemes that have been implemented around the world—have worked. In fact, the reverse is true. The introduction of compulsion has led to stigma, which has provided an even more depressing overlay on the experiences and anxieties of the long-term unemployed. The Government were unable to provide any evidence that justifies the introduction of compulsion in this way. There are already elements of compulsion in the system, and the Bill would overlay those in a completely counter-productive way. Eventually, that would waste the resources of staff in the Department and the sector.
Lynne Jones: We know that those who participate voluntarily in schemes are much more successful in getting into work. A leaked letter from the DWP confirmed that mandatory customers of pathways to work had a success rate of only 5.99 per cent., in the phases examined, whereas those who came forward voluntarily—who were actually further from the labour market than the mandatory customers—had a success rate of 27 per cent., or nearly five times more. If people know about voluntary programmes and are encouraged to engage in them, the outcome is far more successful than when they are compelled to do so.
John McDonnell: The evidence confirms what my hon. Friend says. It relates to new clause 2 as much as it does to the introduction of Workfare. New clause 2 would introduce the compulsory element in relation to work-related activity, and I looked at the evidence that was provided by the Social Security Advisory Committee to the Gregg review and the White Paper. It states:
“The focus on sanctions is, we believe, unhelpful and does not take proper account of the full findings of the Department’s own research or our own work. We are disappointed that more evidence has not been presented to prove that sanctions and compulsion are effective in generating long term sustainable employment.”
“We remain unconvinced that the evidence to support this view is either consistent or robust, or that evidence of improved compliance under threat of sanctions necessarily leads to improved engagement and activation.”
We have discussed with the various agencies and organisations at length—over nearly a two-year period— what their views are and what they think the reaction will be on the ground. Most of us have worked with the Child Poverty Action Group over the years and I have a great deal of respect for its expertise and the soundness of its advice. It says that claimants do not need compulsion to take up high quality training and employment services.
Evidence from citizens advice bureaux and the Government’s own research both showed clearly that, in most cases, threatening benefits cuts is neither necessary nor effective in moving people off benefits and into work, and they tend to hurt the most vulnerable. What happens to the other members of the family when every sanction has been applied? Most of us will have dealt with that situation, and the answer is that we then have to trawl around social service powers to assist them as best we can.
John Mason (Glasgow, East) (SNP): I take the hon. Gentleman’s point that we probably should not introduce more compulsion, but does he agree that if we did, it would be effective only if the benefit level were higher, so that the excess level could be taken away but people could still live on the rest?
John McDonnell: That relates to the point that my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) made when she moved new clause 1. We are already dealing with people on the margins and with families in the direst circumstances in our society. We are dealing with vulnerable people, who are often confused and chaotic. The offer of assistance, if it comes with sanctions, acts as a stigmatising deterrent. If we apply those sanctions, we push those people over the edge into absolute poverty the like of which I do not think that any Member of this House would want to support or experience.
Sammy Wilson: I take the hon. Gentleman’s point that we are already dealing with people who are on the margins. However, they are often on the margins because they have become dependent on inadequate state benefits. Surely the way to remove them from the margins is to get them into useful employment and to get them on the employment ladder. If they are not prepared to volunteer to take the first step on to that ladder, is it not the duty of the House to ensure that we put something in place that will enable them to take that first step?
John McDonnell: I understand what the hon. Gentleman is saying, and I accept that it is said with the best of intentions, but my argument is that such sanctions do not work. The only thing that we have found to work is support and incentives. Departments other than the Department for Work and Pensions are learning from experience. For example, a few weeks ago, on 27 February, the Ministry of Justice announced the withdrawal of its benefit sanction for breach of community order pilots. That announcement was made in a written statement, which some hon. Members might have missed—it was not the most scintillating statement. The Minister of State, the right hon. Member for Delyn (Mr. Hanson), said:
“Initial evaluation research showed a modest 1.8 per cent. improvement in compliance by sanctioned offenders”.
“once all costs had been factored in, the overall sum for continuing the scheme would be in the region of”
“or £5.60p for every £1 of savings made under the scheme.”—[ Official Report, 27 February 2009; Vol. 488, c. 37WS.]
Under the Government’s proposals we are to invest a large amount of money in a sanctions regime, but our argument is that we need to build that money into the support regime and an incentive package. Part of that incentive should be linked to enabling people to earn a decent wage when they get work. As we have seen from recent Government figures, a large number of children are living in families that are in poverty even when the parents are in work. I would rather invest the money positively in increasing such elements as the minimum wage and in other forms of support so that we could get people into work.
The attitude displayed towards the unemployed that seems to be retained in the psyche of the Government is that unemployment is about individual guilt and individual unwillingness to work. When we have 2 million unemployed—possibly 3 million by the end of the year—and when people are chasing every vacancy they can, I do not think that that reasoning should govern the thrust of policy. Let me quote what my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), who is currently the deputy leader of the Labour party, said in 1995:
“The vast majority of the unemployed are not out of work because they are work-shy. They are out of work for three reasons: jobs are not available; they cannot earn enough to make it worth moving from benefit into employment; or they lack the skills for existing vacancies.”—[ Official Report, 10 January 1995; Vol. 252, c. 58-59.]
The thrust of Government policy has, I hope, been to invest in those skills so that people can qualify for those vacancies as they appear. That thrust certainly should not include the sanctions that we are introducing through the Bill, which is why my amendments to clause 2 on work-related activities will make those activities voluntary.
Let me turn to the issue of lone parents. I tabled amendment 17 because I wanted to exempt lone parents with children aged seven and under from the sanctions. As I said, I shall not press the amendment to a Division on the basis that the Opposition will press their amendment 35, which would apply to parents of children under the age of five, to a Division. I tabled amendment 17 because I agree with some of the statements that have been made previously by Labour Members. I cherish one statement, which reads:
“The reality is that many mothers are forced out of the door and back to work before they want to because of financial constraints...The state should pay for this ‘family’ care in the same way it pays for the state pension of at least £150 a week”.
Would I even think of moving such an amendment? However, I fully support what the current deputy leader of the Labour party said in 2000. It is difficult to see why we are pressing ahead with penalising lone parents yet again. Why are we are introducing this element of stigmatisation, given what the current deputy leader of the Labour party has said about our knowing and cherishing the role that parents play in our society?
4.45 pm
I want to be very clear, so it is worth going through the history of the matter. The November 2008 changes to the lone parent entitlement that reduced from 16 to
12 the age of the youngest child for whom an income support claim could be made have already removed 135,000 people from that benefit. That age limit will fall to seven in 2010, by which time 315,000 fewer lone parents will be entitled to lone parent benefit. Under the Bill, the youngest age of child entitlement will effectively be reduced to three. After their youngest child reaches that age, lone parents will become subject to work-related activities as part of the progression to work regime. There are approximately 230,000 lone parents with children aged three to six, inclusive, so we are not talking about a large number of people.
To be frank, the Government’s record of getting lone parents back into work on a voluntary basis is superb, and is an achievement by this Administration that we ought to brag about. The voluntary new deal for lone parents began in October 1998 and is delivered by civil servants and others through Jobcentre Plus. It has found jobs for the 64.5 per cent. of the lone parents who have participated, and that compares with the 62.5 per cent. of members of the youth scheme who have been found work. The nearly 1 million lone parents on the new deal scheme are outperforming any other group, which highlights the value of the voluntary approach.
Again, that demonstrates that the voluntary approach that the Government have used in respect of lone parents has been incredibly successful. The Government have brought lone parents on, given them support and got them into work that the figures that we have seen suggest is sustainable.
What is stopping others in the lone parent category getting back into work? I am trying to look at evidence-based policy making, and the most detailed work has been done by Citizens Advice. Its report on the matter said that the main barriers for lone parents were inflexible jobs and employers, lack of access to affordable child care, inadequate support in making the transition to work, being financially worse off in work than on benefit, inflexibility in the benefits system, and money problems.
Those are the issues that we should address. It is not that lone parents do not want to work or support their families, because the truth is that they want what we all want—a proper balance between looking after their children and a job that is decent and properly paid and which at the same time enables them to afford child care.
Again, I looked for the evidence. Research by the Department for Work and Pensions published in 2008 found that the impact of sanctions on lone parents seeking employment would be “negligible”. Yet the Government are going to force lone parents through another stigmatising process: they are going to put pressure on them again and waste a large amount of resources for a negligible effect.
Why are we doing that? The Government are becoming almost obsessional. I looked at the evidence, and consulted the experts on the ground—in this case the organisations One Parent Families and Gingerbread. They advocate an approach that I thought was evolving into Government policy at one time. They say that, instead of threatening sanctions, we should be offering a premium for participating in work-related activities. That would allow us to demonstrate to people that engaging in work will gain additional income, which is the point that the hon. Member for Glasgow, East (John Mason) made earlier.
We need to incentivise participation, not use sanctions. As I said, our aim with amendment 17 was to prevent the change proposed in the Bill from applying to children aged seven or under, but I shall certainly support amendment 35, which would do the same for children up to five.
I turn now to the amendments dealing with privatisation. Again, I have been trying to clarify why the Government have moved further along the obsessional and dogmatic road towards privatisation of this section of our public services. It may be ideology, but the TUC briefing circulated to all hon. Members spoke about dogma, and I cannot disagree. What is the Government’s attitude to the performance of in-house jobcentre staff? The DWP website describes Jobcentre Plus as a
“world leading welfare to work organisation”.
When the PCS parliamentary group met the Secretary of State for Work and Pensions last week, he described the jobcentre service and the staff as “excellent” and commended them for their work.
What seems to have happened along the path in recent years and certainly in the development of the Bill is that Mr. Freud has come along. He is an expert banker—I think that that is the expression—and one of his key themes is the privatisation of the service. Again, we looked for evidence of why that should be so. I looked at the Select Committee on Work and Pensions report on the DWP’s commissioning strategy and the flexible new deal, which says that
“fundamental flaws exist in the design of the FND and the assumptions upon which it is based... the financial model for the FND is flawed and its targets unrealistic... there is less evidence from the UK to substantiate this approach... DWP needs to build its evidence base”.
That was the recommendation. We have yet to see any evidence base developed to promote the privatisation of the services.
What is even more dogmatic is that a section of the work to be privatised is set aside, without even allowing jobcentres to bid for it. Where is the “what works best” ethos in that approach? Again, I go back to the research undertaken to justify the privatisation. Let me quote the Cardiff university research report of 2008. On the contracting out of employment services to third and private sectors, it concluded:
“whenever Jobcentre Plus staff have been allowed the same flexibilities and funding as private sector companies or charitable organisations they have been able to compete with, if not surpass, the performance of contractors.”
QED, is it not? The research from Cardiff demonstrates the point, but it was not just that, was it?
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