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4.44 pm

The Secretary of State for Work and Pensions (James Purnell): This debate should not be about statistics; it should be about people. I am sure that statistics will be bandied around, but we are talking about real people who are worried if they have lost their job and worried about how to support their children, and workers worrying if they might be next. The welfare state is here precisely to support people at times such as this. We have strengthened the safety net so that we pay people’s mortgages if they cannot get back into work, we pay their pensions if their company goes bust and—thanks to tax credits, which the Conservatives have said they want to dismantle—we are paying more than 300,000 people an extra £35 a week to soften the blow of losing overtime or work.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): For the record, perhaps the Secretary of State will acknowledge that we have said no such thing: we have said that we would like to make the tax credits system work more effectively.

James Purnell: The hon. Gentleman’s leader told GMTV that he wanted to dismantle it, and the hon. Gentleman has made it absolutely clear that his party wants to look at cutting tax credits. The fact that 300,000 people are getting an extra £35 a week is softening the blow, and that would not happen under the Conservatives.

At times like this, the overriding role of the welfare state is to help people to find a job. The choice before us is between a Government who are investing £5 billion extra to get people back in to work and an Opposition who cannot say that they support that help, because they are committed to cutting spending now. I predict that they will want to run away from that during the debate, but that is the consequence of their policy, and they cannot run away from it.

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Mr. Tobias Ellwood (Bournemouth, East) (Con): I wonder if I could quote my hon. Friend the Member for New Forest, West (Mr. Swayne), who intervened early in yesterday’s debate to say:

I repeat that today: why do we not stick to the Government’s plans? In the interests of scrutiny, let us hear them.

James Purnell: There is someone else who wants to run away from the consequences of his party’s policy. [ Interruption ] The Opposition do not want to listen to the debate. They do not want to have the consequences of their policy spelled out to them, because they want to pretend that it is possible to cut spending now and increase spending at the same time. During this debate we will expose why that is simply not possible.

These are extraordinary times.

Steve Webb (Northavon) (LD): Will the Secretary of State give way?

James Purnell: I will make a little progress and then give way.

Unemployment has been rising across the industrialised world—in the United States, France, Canada, Japan and Italy. In Spain, it is over 15 per cent. Everyone in this House will be worried about the rise in unemployment to 6.7 per cent. in this country. Yes, of course, we started from the lowest claimant count since 1975; yes, there are still nearly 3 million more people in work than in 1997. However, that is no comfort to people who have lost their jobs—they want to know what Government will do to help them now.

Mr. Frank Field (Birkenhead) (Lab): Will the Secretary of State give way?

James Purnell: I give way first to the hon. Member for Northavon (Steve Webb).

Steve Webb: When the Chancellor said that there would be an extra £20 on tax credits, some people might have thought that he meant £20 a week. Will the Secretary of State confirm that he meant £20 a year, which is about 40p a week—barely a pint of milk? He looks confused, but that is the figure that the Chancellor cited in the Budget statement. Does he think that that is sufficient for the Government to hit their child poverty target for 2010?

James Purnell: I am not even sure that the hon. Gentleman’s party is committed to that target. We are committed to abolishing child poverty. Clearly, these are extraordinary times. However, we took decisions in the 2007 Budget that will take another 500,000 children out of poverty, and we have already taken 600,000 children out of poverty on top of that. If we had just continued the Conservative party’s policies, 2 million more children would be in poverty. We continue to be committed to this policy, which would never have existed if the Conservatives had been in power.

Mr. Field rose—

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James Purnell: I will make some progress with my argument and then give way to my right hon. Friend.

Labour’s policy is to invest now to protect jobs now and to get people back into work as quickly as possible. We estimate that because of our actions half a million jobs will be protected. People who would otherwise be out of work are still in work because of our actions. In contrast, the answer of the right hon. Member for Maidenhead (Mrs. May) would be to cut spending now, and that would mean helping the unemployed less. That is the choice—a Labour Government who believe that we are in this together and will only come out of it together, or Opposition Members, who believe that someone who loses their job is on their own and should not be helped by the Government of the day.

Mr. Field: Some of my constituents have asked me to put this question to the Secretary of State this afternoon. They do not doubt that the Government’s measures are about helping people to get back to work, but those measures do not wash with them, because work is part of their DNA. They are scrambling for any job that they can get, but there are now simply not enough jobs for those who genuinely want to work. Their wives work a small amount, and they are now faced with their national insurance-based jobseeker’s allowance running out. Should they tell their wives not to work, so that they can claim benefits, or should they tell their wives to continue working while they scramble for work, and lose their homes because they simply do not have enough money to pay the mortgage? What advice would the Secretary of State give my constituents?

James Purnell: Clearly, we want to help people get back into work as quickly as possible, and the tax credits policy is intended precisely to help women in that situation so that they can have extra work. [Interruption.] The hon. Member for Runnymede and Weybridge (Mr. Hammond) mutters from the Opposition Front Bench, but these are exactly the JSA rules that his party introduced in 1996. The difference between now and then is that, on top of that, there are tax credits to help people who want to work more, so I have answered my right hon. Friend’s question precisely.

Mr. Field: Will the Secretary of State give way again on that point?

James Purnell: I shall make some further progress, as I am going to come to my right hon. Friend’s point about real jobs.

The Opposition’s policy would increase the human costs of this recession, but it is also economically illiterate. In a banking crisis, we have to get lending going again, support the banks and strengthen confidence. The Tories, of course, would do the opposite. They would take money out of the economy at precisely the time when it needs to be in the economy. They would cut borrowing and would therefore be unable to stand behind the banks, savers, businesses and homeowners in the way we are. Their policy would risk the vicious spiral that the Japanese economy entered in the 1990s. That would be the consequence of their policy, and they cannot run away from it.

Judy Mallaber (Amber Valley) (Lab): Unfortunately we have lost some jobs in my constituency, including in one business that we were able to help with the banking
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problems. Does my right hon. Friend agree with what was said in the discussion that I had with my local jobcentre manager last week—that, unlike in the previous recession, we now have an active labour market intervention strategy? Will he accept my thanks that there is now a much broader suite of measures that can be used to try to help people who do not have a job to get back into employment? For example, they can be helped to go into business for themselves, look for other employment or enhance their skills. Does he accept that that strategy is very different from what happened in the previous recession?

James Purnell: That is absolutely right. I am sure that my hon. Friend will accept that that costs money, and it was precisely because the Conservative party did not put in extra money in the ’80s that the active labour market was relaxed. The link between claiming and looking for work was eventually completely abandoned, and studies suggest that that meant that unemployment was 4 per cent. higher than it needed to be. That is the consequence of the Opposition’s policy, and they cannot run away from it. They are ideologically against the extra spending, so unemployment and the recession would last longer and cost more, precisely as they did in the past.

Several hon. Members rose

James Purnell: I will make some progress, then I will give way to hon. Members.

What is really extraordinary about the Opposition’s policy is that they want to spend less on helping the unemployed. They must be the first Opposition to say at a time of rising unemployment that the Government should be spending less, not more. Of course, it is reasonable for the Opposition to say, as they did at the weekend, that they want to spend less. That is a reasonable policy, but they cannot in the next breath say that they want to spend more. They cannot say in the run-up to the Budget that we should be cutting spending, and then when the Government announce extra money for the unemployed say, “Oh, well, we’d have done that too.” It simply does not add up.

We have set out our position on spending clearly in this Budget, and we have been clear about the consequences of our decisions and of asking those who earn more to pay more. The Opposition have made their overall position clear. They would not support the £5 billion that we have invested in unemployed people, and they have said that they want spending restraint now. But they have yet to admit the consequences of that choice, so I shall spell it out for them. We are investing around £3 billion extra in Jobcentre Plus and our private and voluntary providers. That was our choice. The right hon. Lady’s choice to oppose that would mean people getting less help to find a job, less time with job advisers and less help with job search.

Mrs. Theresa May (Maidenhead) (Con) rose—

James Purnell: The right hon. Lady is about to tell us where the cuts would fall under her leadership.

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Mrs. May: The right hon. Gentleman seems to pursue the argument that, when people say that they want public sector spending to be restrained, it means cuts. The Government will restrain public sector spending by billions of pounds next year. Where will the Government’s cuts fall?

James Purnell: The problem with the right hon. Lady’s argument is that she opposes even the efficiency savings that we have made in the past few years. We have saved £2 billion a year through extra efficiency savings. [Interruption.] The hon. Member for New Forest, West (Mr. Swayne), who is the Leader of the Opposition’s helper, may be interested to know that the right hon. Lady goes from television centre to television centre, opposing our changes. She cannot say that she opposes the efficiency savings that we have made in the past few years and criticise us for that, while claiming that she will find more efficiency savings in future. The shadow Chief Secretary may be interested to know, for the right hon. Lady’s job prospects, that she has got herself into a position whereby she was against efficiency savings in the past, saying that she would not preside over any in the future, but she still believes that she can spend more money than us. She may have noticed that the leader of her party said at the weekend that he wanted people who would find less money and achieve more. She proposes to spend more money and do less.

The right hon. Lady asked where our cuts were. We set out in our three-year plan last year exactly how we achieved the £2 billion of efficiency savings and we will set out in our three-year plan in the next couple of weeks exactly how we will continue to do that. We will continue to save on IT, telephony and estates. We have reduced jobs in back offices and put them in the front line, where they are most needed. The right hon. Lady opposed all those changes, which shows that the Conservatives want to talk generally about saving but have no idea about how to achieve it. [Interruption.] I think that the hon. Member for Runnymede and Weybridge is twitching.

Mr. Philip Hammond: Let me get this straight to make sure that I have understood the Secretary of State’s argument. When the Labour party makes cuts, they are efficiency savings; when the Conservative party proposes the same reductions, they are front-line service cuts. Is that his argument?

James Purnell: That is exactly what has happened in my Department—we have reduced back-office jobs by 30,000 to 100,000. The right hon. Member for Maidenhead opposed that because she wants to present easy arguments about— [Interruption.] She says no. She goes around talking about 750 jobcentre closures. That was a result of putting together the Employment Service and the Benefits Agency, thereby improving the service, reducing the time that we take to process benefits and improving the advice that we give people to get them back into work. They now get back into work far quicker than in the past, yet the right hon. Lady opposed that. Conservative Members have no idea how to make the system more efficient—they are simply ideologically committed to cutting spending.

Mr. William Cash (Stone) (Con) rose—

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James Purnell: Right on cue. I will give way to the hon. Gentleman.

Mr. Cash: The Secretary of State speaks continuously about cuts and confidence, but I want to ask him about his responsibilities for employment. The figures for public sector debt, on which the Government rely, are not, in every respect, those that the Office for National Statistics presented. Does he agree that, according to ONS figures, including the banking sector and public sector pensions, the actual amount of net debt is more than £3 trillion, not the amount of around £1 trillion that the Government presented? On ONS figures, that is between 175 and 205 per cent. of gross domestic product. Does he agree that the ONS says that—yes or no?

James Purnell: Not at all. If the hon. Gentleman wants to discuss debt, the International Monetary Fund says that we are the second lowest for debt in the G7. We will remain in that position even at the top of the amount that we will borrow. No one denies that borrowing needs to rise so that we can invest more now. That is precisely to ensure that we return to growth and reduce debt as quickly as possible. The problem with Conservative Members is that, because they would not take action now, unemployment would last longer and the debt would be higher. They made that mistake in the 1980s and the 1990s, and they still have not learned the lesson. Clearly, they do not want to hear about the consequences of their policies, so I will continue to make them clear.

Our policy is to recruit an extra 6,000 people. We announced that in the pre-Budget report, and we have done it. Those people would be fired under the right hon. Lady’s policy. She could not hire the thousands of additional staff that we will recruit as a consequence of the Budget. Fewer workers threatened with redundancy would get help through the rapid response service. There would be no pre-redundancy service for small and medium-sized companies.

Christopher Fraser (South-West Norfolk) (Con) rose—

James Purnell: I will make some progress because Front-Bench Members want me to elucidate our policy.

In January, we announced £500 million for people who are unemployed for six months to provide recruitment subsidies and help with starting a company or with training. The new help started this month, on time, exactly as promised. Again, the right hon. Lady could never promise to do that, because she was against the fiscal stimulus in the Budget. More than 6,000 people have already been referred to that help. She criticises us for not doing that quickly enough; under her it would not happen at all.

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