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28 Apr 2009 : Column 732
5.17 pm

Mrs. Theresa May (Maidenhead) (Con): Before I respond on this issue, I wish to declare to the House that my husband works for an asset management company, part of whose business is the management of pension funds.

We have just heard an extraordinary speech from the Secretary of State. This is supposed to be a debate about this Government’s Budget. Did we hear a detailed defence of the Budget? No. The Secretary of State started by saying that he did not want this debate to be about statistics. Well, we all know why he did not want it to be about statistics. The statistics in the Budget make very bad reading for Labour Members. He then created some fantasy statistics, which he claimed to be Conservative party policy. In fact, he spent virtually all his speech talking about what he claimed was Conservative party policy rather than defending the Budget.

Let us be clear: last week the Chancellor of the Exchequer delivered Britain’s bad news budget. We face the worst recession since the second world war. Unemployment is rising at the fastest rate ever and, thanks to Labour’s economic incompetence, our national debt will double again to £1.4 trillion, which means that every child born in Britain today will face a debt of £22,500. At the same time, that child’s parents will be struggling to cope with the hidden tax hikes that will cost every family more than £1,400 but were not even announced in the Budget.

In the next two years, this Labour Government will borrow more than all previous Governments in history put together. That is only according to the Chancellor’s own figures. Of course, as we know, within a matter of hours after the Chancellor’s Budget his forecasts were shown to be a fantasy. That means that the reality for families in this country could end up being far worse. Over-optimistic forecasts by the Treasury mean that Labour’s debt mountain could grow even higher.

The gross domestic product figures for the first quarter of 2009 have already proved the Chancellor wrong. The economy shrank by 1.9 per cent., which was worse than predicted by the Chancellor in his Budget. Instead of standing up and taking responsibility for the mess that Labour has put this country into, the Chancellor and the Secretary of State, today, have been giving us fantasy figures, refusing to recognise the Government’s responsibility for the state of the economy and failing to come up with any credible answers about what needs to be done to fix our broken economy.

We were in a similar position six months ago, last November, when the Chancellor gave his pre-Budget report. Back then, he said that the economy would shrink by 1.5 per cent. in 2009. The Budget prediction is now a 3.5 per cent. fall. Less than an hour after the Chancellor sat down from his Budget, the IMF forecast that growth would fall by 4.1 per cent. If the Government cannot face up to the true nature of the problems that we face, there is no way that they can draw up a credible plan for recovery.

Let us take as an example the handling of the unemployment crisis, about which the Secretary of State has boasted so much this afternoon. The pre-Budget report predicted that the unemployment claimant count would reach 1.41 million by the end of 2009. Last week’s unemployment figures showed that the claimant
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count had already passed the Chancellor’s prediction. It was higher in March than the Chancellor predicted that it would be in December.

The new predictions in last week’s Budget paint an even more worrying picture. Claimant unemployment will pass 2 million by the end of this year and reach 2.44 million by the end of 2010, 1 million higher than the Government predicted six months ago. On current figures, that means that the Government are now predicting that unemployment will rise to more than 3 million. Sadly, it is the unemployed who will pay the price for Labour’s failure to face up to reality.

I consider it welcome that extra support is being given for the unemployed in the Budget and the Red Book, but, unfortunately, because the Government could not be honest about the scale of the problem earlier, many people will have to wait until January to receive that extra help. The Government and the Secretary of State keep using the phrase “Real help now”, but “now” is many months away for most people. The help that comes next January will come two years after unemployment first began to rise.

James Purnell: Just to correct the right hon. Lady, it will actually start from the autumn. The guarantee starts from January. This is a massive improvement in policy and it clearly takes a bit of time to put in place. We need to get bids from local councils, but even doing that is quick. The help that we said in the pre-Budget report that we would provide is already here, as is the help that we announced in January. It all came in on time. The right hon. Lady can complain about it not coming in quickly enough—it would not come in at all under her party.

Mrs. May: The Secretary of State says that it is all right, because it will take six months, rather than nine months, for help to come in. That is still rather different from saying that there is real help now. Virtually every announcement that the Government have made about the help that they are giving to businesses, home owners and unemployed people has taken months to bring in.

The Secretary of State made some statements in his speech about our considering the impact that this situation has on people. He is absolutely right. When we are debating in this House, we must never forget that while we might talk about the figures, behind those figures lie shattered lives for many people. It is crueller, however, to say to people that they will get help now and then to delay that help. If the home owner mortgage support scheme had come into place when the Government announced it, 28,000 homes might not have been repossessed. That is the impact on people’s lives.

If the Secretary of State had not been so complacent earlier about rising unemployment, perhaps we would have seen that help coming through earlier. If he had been honest with himself about the level of worklessness, perhaps he would not have had to make plans last November to cut the new deal across half the country this summer. Indeed, if the Government had taken action when unemployment started to rise more than a year ago— [ Interruption. ] I will talk about jobcentres, as the Secretary of State did. The point that I am making, which I shall continue to make, is very simple. The Government continued to close jobcentres when unemployment started to rise. If the Secretary of State had taken action when unemployment started to rise,
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54 more jobcentres would be open to help deal with the increased number of benefit claimants who need support and help to get back into work.

James Purnell: The right hon. Lady always gets her facts wrong on this, and she is wrong again. The six-month offer means that people have almost exactly the same help as they have from the new deal for young people already—they are getting that from April. The flexible new deal will be a further improvement for people after one year. The fundamental thing is that the right hon. Lady says she supports that money. Does that mean she is changing her party’s position on the fiscal stimulus in the PBR, which the Conservatives opposed? She has a choice: she can either oppose the fiscal stimulus or not have the extra spending. Which is it?

Mrs. May: The Secretary of State really needs to stop running with that fantasy story, which cuts no ice with anybody. I notice that he did not actually respond to me on the issue of jobcentres—the point I was making when he intervened. In the House last November, he declared a moratorium on Jobcentre Plus closures, yet instead of that moratorium being effective from last November, three further jobcentres—in Brixton, Orpington and Feltham—have closed. The last of them closed only at the beginning of this month. Members may be interested to know how much unemployment has risen in the areas where those three jobcentres closed this year: 40 per cent. in Streatham in the last year, 70 per cent. in Feltham and 90 per cent. in Orpington.

In part of his speech, the Secretary of State made quite something of the help that was being given and how people were being helped more quickly by the Government’s decisions. In that case, why did more than 35,000 people wait for 17 days or more in December for their claim for jobseeker’s allowance—for some money to come through from the Government?

Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): In the event of the right hon. Lady’s party forming a Government, will she tell the House which of those jobcentres they will reopen?

Mrs. May: What I am happy to tell the right hon. Gentleman is that when we come into government, we shall ensure that there is extra money available to help the unemployed, because we shall put through the welfare reform proposals that the Secretary of State has tried to copy but has been extremely timid about. They would mean that money could be used to pay for programmes to get people into work at a rather quicker rate than he would do under his welfare reform proposals. [ Interruption. ] From a sedentary position, the Secretary of State says, “Oh, well you’re going to be spending more.” He is well aware that there is a fundamental difference between our welfare reform proposals and his proposals. He does not like to talk about it, which is why I said he was timid: the switch in the DWP budget that enables us to pay for programmes to help get people into work from the benefits that can be saved will be made across the whole country, whereas under his proposals it would be done merely across half the country, which would mean that half the country will not actually benefit from his welfare reform proposals. In one part of his speech, he said that our policies would abandon people to a lifetime on benefits. In that case why has he copied them?


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James Purnell: The right hon. Lady is all over the place on this. She knows perfectly well that those were Government proposals that the Conservatives decided to try to copy. She cannot say that she will spend more on welfare reform and more on unemployment and that, magically, the money will somehow come from the City. She may have noticed that it is quite hard to raise money from the City at the moment. It is absolutely impossible for her to say that she will raise welfare— [ Interruption. ] The point is that if we want to save money on the welfare bill, we have to spend more up front. There is no way the right hon. Lady can increase money for welfare reform and for unemployment—it is simply not possible for her to make that promise.

Mrs. May: I am beginning to think that I have been sitting through a different debate from the Secretary of State. I do not think the City was mentioned by anybody on the Conservative Benches. Let us get one thing absolutely straight. The Secretary of State said we were talking about his welfare reform proposals that we had copied. I suggest he looks at the 2001 Conservative party manifesto, where he will see that the “Britain Works” section includes precisely that sort of welfare reform proposal. I know the proposals were in that manifesto, because they were my proposals as shadow Secretary of State for Education and Employment at the time. I am only sorry that it has taken the Labour Government so long, despite the best efforts of the right hon. Member for Birkenhead (Mr. Field) in their early days, to accept the need for welfare reform.

Let me examine in detail the extra help announced in the Budget for the unemployed. There is an additional £1.7 billion to support Jobcentre Plus and the flexible new deal. The Secretary of State did not set this out in great detail in his speech, so when the Chief Secretary winds up the debate, I hope she will tell us how much of that money will go to Jobcentre Plus and how much will be spent on the flexible new deal. Given the figures in the Budget, we conclude that the money will support the increased number of unemployed people, rather than giving extra support to jobseekers.

There is also a need to look at long-term youth unemployment and those who find themselves unemployed in the early stages of their lives. I welcome the extra support that the Government have put in place, but I feel like I have heard it all before—about 12 years ago, in fact. Labour’s 1997 manifesto promised:

Last Wednesday, the Secretary of State pledged:

In the Prime Minister’s very first Budget as Chancellor he pledged that

That offer included the option of subsidised employment or training. Last week, the Chancellor announced:

The big announcement in the Budget actually cut help for the young long-term unemployed by making them wait 12 months for support instead of six.


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The Chief Secretary to the Treasury (Yvette Cooper): I want to clarify the right hon. Lady’s position. She says that she welcomes the additional funding in the Budget to help the unemployed. Between the pre-Budget report and the Budget, we have been providing an additional £5 billion to support the unemployed, the majority of which comes from additional short-term borrowing to support the economy. Will she confirm that she supports that additional funding, with the additional borrowing, and that, unlike the rest of her Front-Bench colleagues, she therefore supports a fiscal stimulus?

Mrs. May: Once again the Government seem to have a fantasy idea of the official Opposition’s position on borrowing— [ Interruption. ] Ministers should be patient and wait for the answer. We made it absolutely clear from the beginning of the debate on the recession that automatic stabilisers exist when the economy goes into recession. Of course tax revenues go down and benefit bills go up, and we have never resiled from the fact that that has to be dealt with, so it is quite wrong for the Government to try to claim that we have ever done so.

Yvette Cooper: Let me make it clear that these are not automatic stabilisers. This is additional discretionary investment that is part of our fiscal stimulus to support the economy. Does the right hon. Lady support such additional discretionary funding to help the unemployed?

Mrs. May: In an earlier answer to the Secretary of State, I clarified how we will ensure that we can fund our welfare reform proposals. He suggested at one point that our welfare reform proposals were not about unemployed people, but of course they are. The whole point of developing a different welfare reform structure is to give extra help and support to those who are unemployed and to ensure that we do not come out of the recession with more people in long-term unemployment. As the Chief Secretary knows, the questions I was asked were answered by my earlier reference about how we would pay for that.

James Purnell: We are talking about money now. Does the right hon. Lady support the extra spending or the fiscal stimulus? Which one is it?

Mrs. May: The Secretary of State is trying to argue that one can have only one or the other. I suggest that he thinks very carefully about what he is saying about the fiscal stimulus and money that might be available for helping the unemployed.

Mr. Andrew Love (Edmonton) (Lab/Co-op): Will the right hon. Lady give way?

Mrs. May: I would like to make a little more progress. The hon. Gentleman may well get in later on, but I have been generous in giving way to Ministers.

I want in particular to discuss further the impact of the proposals in the so-called “Budget for jobs” on the young long-term unemployed. As I was saying before the exchanges across the Dispatch Boxes, under-25s who were long-term unemployed could previously be helped after six months; that period has now been extended to 12 months. That is not an improvement in the support given.


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There is another problem in the Budget figures. The Red Book makes it absolutely clear that the guaranteed jobs or training will be available to 18 to 24-year-olds who have been on jobseeker’s allowance for more than one year. Their number stands at 6,700, out of a claimant count of 1.46 million. In other words, the Government’s plans would help less than 1 per cent. of jobseekers. I notice that the Secretary of State is not rising to say that I am wrong about those figures.

James Purnell rose—

Mrs. May: Oh, the right hon. Gentleman wishes to intervene.

James Purnell: I must correct the right hon. Lady. She is completely wrong. We will guarantee the help no matter how much unemployment increases. She fails to understand our policy and is trying to use figures to create a smokescreen to hide the fact that she simply has no policy. [ Interruption. ]

Mrs. May: As my hon. Friend the Member for Forest of Dean (Mr. Harper) points out, the Government cannot make up their mind on whether we have no policies or lots of policies that they do not like. I remind the Secretary of State that one of our policies that he does like is our policy for welfare reform, which he has copied, albeit not to the extent that I would like.

As the right hon. Gentleman has challenged me on the figure of 6,700, let us look at the position on young long-term unemployed people. According to the Red Book definition, the help is for 18 to 24-year-olds who have been unemployed for a year or more and claiming jobseeker’s allowance, of whom there are 6,700. If the Secretary of State is saying that the money is not there to help 6,700, he must be predicting that the number of young long-term unemployed people will increase significantly in the next few months. That is a rather different position from the one taken by the Minister for Employment and Welfare Reform, who gave evidence to the Work and Pensions Committee last December saying that despite the most virulent stories of doom and gloom from some, there were no projections that the pool of longer-term unemployed would grow at the same rate as unemployment.

For young people, the blow is not just the fact that the help announced in the Budget is not as great as the Government have made it out to be. As was pointed out by my hon. Friends the Members for Broxbourne (Mr. Walker) and for Beckenham (Mrs. Lait), there are also problems with the funding available for further education colleges and sixth-form colleges. The Secretary of State for Innovation, Universities and Skills is doing his best to make the problems worse: as a result of the Government’s failure to meet their target on university places, up to an additional 30,000 young people could be turned down for a place.


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