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19 Oct 2009 : Column 738

Yvette Cooper: Will the right hon. Lady clarify whether she supports the £5 billion that we have put into helping the unemployed this year and next? Yes or no?

Mrs. May: The Secretary of State keeps coming up with this issue. The problem with her approach is that she thinks that one either supports everything that the Government are doing or one does not support doing anything at all. Of course, the answer is that we support doing something in a rather better way than the Government's proposals. We support giving people help in getting sustainable jobs. I can tell the hon. Member for Glasgow, East (John Mason) that that is a fundamental difference between us and the Government in relation to our welfare reform proposals.

There is a pattern to the way in which the Government provide so-called support for businesses and for unemployed people-they keep announcing schemes; they get the headlines; and they do not care whether the help works. We saw it with the new deal for young people, which was a revolving door for most young people back into benefits. Today, one in five young people cannot get a job. We have nearly 1 million unemployed young people and the highest level of youth unemployment in Europe. At least the new deal for young people intervened after the young person had been unemployed for six months. The flexible new deal leaves young people unemployed for a whole year before they are given that help, and even the much-heralded future jobs fund and young person's guarantee kick in only at 10 or 12 months.

We believe that a lengthy period of unemployment early in one's working life can have a devastating impact on that working life. We need to give young people help earlier, and that is why in our work programme we will refer young people to the specialist help provided by welfare-to-work providers in the private and voluntary sectors after they have been unemployed for six months.

Our work programme will give more help to young people and will also give help to a group of people who are out of work and who are being effectively ignored by the Government. Labour Members-we heard one or two of them tonight-are quick to complain about the number of people on incapacity benefit, but the Government have done nothing to get the many people on incapacity benefit who want to work into jobs. That is a damning indictment of the Government, who have abandoned too many people to a life dependent on benefits. Of course, some people on incapacity benefit cannot work and they should be supported, but under our work programme people on incapacity benefit who can work will be referred straight away to specialist help. We need to give them the support that will get them into jobs and help them to transform their lives and those of their families. We know that children brought up in a workless household-there are 1.9 million of them today-are more likely to become workless themselves. All too often, their performance at school is affected, too. Frankly, the Government should be ashamed of their failure to support to people on incapacity benefit.

Lots of schemes have been announced by the Government over the years-we have had new deal after new deal. There was even a new deal for musicians. Today, we have the flexible new deal, pathways to work, the invest to save pilots and the progression to work pilots-the list goes on. However, people do not want a
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complex multiplicity of schemes. They want a single integrated programme that will give them real help and that works. They do not want help into a short-term job; they want help into sustainable work.

Today, under the flexible new deal, a provider can get 40 per cent. of their money without getting anyone anywhere near a job, and they can get 70 per cent. of their money for getting someone into a job for 13 weeks. That is one of the problems with the Government's approach to welfare-they think that 13 weeks represents a sustainable job. For too many people, as we have seen under the new deals, all that happens is that at the end of those 13 weeks they come out of the job and go back on to benefit. The scheme has been a revolving door to benefits and there is every sign that that will happen again.

Under our get Britain working scheme, a sustainable job would last for a year and providers would be paid by results. Crucially, they would be paid more to help people who are harder to help into work. That is a real incentive to provide help to the long-term unemployed. When we provide incentives and pay people by results, there is a danger that they will help people who are easy to help into the workplace and will leave others to one side. The Minister for Employment and Welfare Reform is nodding, but if he agrees with me, why does the Government scheme signally fail to address the issue, as it pays the same for everyone with whom the welfare to work providers deal, so it is all too easy for them to give help to people who are easy to get into the workplace and, in the jargon, "park" those who are difficult to get into the workplace? That is another reason why, under the Government's proposals, we are unlikely to see any real help for people who are long-term unemployed.

Steve Webb: The right hon. Lady is discussing methods of prioritising different groups among the unemployed-helping people on incapacity benefit into work, and trying to help the long-term unemployed into work-but does she envisage that there is a larger pool of jobs for them to move into, or will they just take a different place in the queue for the same number of vacancies?

Mrs. May: In the present circumstances, there is not a large pool of jobs for people to move into. It is important that we start the work now with those people who are long-term unemployed to ensure that when the jobs become available as the economy recovers, people have the skills and have been given training and support, so that they can take the job opportunities that are on offer. It would be shameful if the country came out of recession, and if more jobs were available, but those of the 2.6 million people on incapacity benefit who were able to work were still denied the help and support to get them into the workplace that could be given to them by the sort of scheme that I am talking about and that a Conservative Government would introduce.

Frank Dobson: Will the differential aspect of the scheme mean that payment for getting someone into work in an area of high unemployment will be higher than for getting someone into work in an area of low unemployment?

Mrs. May: The differential will be determined by the nature of the individual, the difficulty of getting them
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into work and how much skills training and other training they need. We will be able to offer this sort of support to long-term unemployed people, but the Government have not been able to do so, because Ministers from the Department for Work and Pensions have not been able to carry the argument with their Treasury colleagues. Underlying such a scheme is the ability to pay for programmes to help to get people into work from the benefits saved by getting them into work-in the jargon, the so-called DEL-AME switch.

It is a great disappointment that DWP Ministers have failed to take that argument to the Treasury, because this is not just about accountancy but about helping people to have a better quality of life by helping them to get into work. We must make sure that when this country comes out of recession, we have people who are trained, skilled and able to take the jobs that are available. We must make sure that we do not come out of recession with an increase in long-term unemployment, but sadly, under the Government's proposals, I fear that that is exactly what will happen.

Paul Rowen (Rochdale) (LD): I have listened carefully to the right hon. Lady's argument. Will she confirm that employers who accept long-term unemployed will receive a proportion of the benefits as payment for taking them on under the Conservative proposals, and will she tell us at what level that will be set?

Mrs. May: The payment for results goes to the welfare to work provider, who is providing the training and support to get people into jobs. Part of their job is to make relationships and partnerships with employers to ensure that they have the jobs available for the people whom they are helping and skilling.

My hon. Friend the Member for Monmouth (David T.C. Davies) said that people want a Government who will support business. They want a Government who will be honest about the problems facing the economy. They want a Government who will face up to the tough choices ahead, and a Government who will give people real help. This Government are in denial: they are in denial about the depth of the debt crisis; denial about their role in bringing this country to the state it is in; denial about the state of the jobs crisis; denial about the failure of their welfare programme. It is time that they accepted-excuse my coughing.

The Minister for Pensions and the Ageing Society (Angela Eagle): Have a sip of water.

Mrs. May: I thank the Minister. I might just make it to the end without a sip of water, if she bears with me.

It is time that the Government accepted that the only Government who will give business the support that it needs and unemployed people the help that they need, the only Government who are willing to face up to the depth of crisis that the country is in and to make the tough choices to get the country out of the present crisis and give real help to people are the next Conservative Government.

9.40 pm

The Secretary of State for Work and Pensions (Yvette Cooper): We have debated this afternoon and this evening how we respond to the first world recession since the
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second world war, the fall-out from the biggest financial crisis for many generations. We had a range of contributions. The right hon. and learned Member for Rushcliffe (Mr. Clarke) gave us a meandering tour of several decades until he was floored by a question about which regulations he would remove. He has had plenty of time to think about that. He has promised us a review, so that is all right.

The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) said that he would vote for the Opposition motion, although he opposed most of the measures in it. He certainly opposed the early withdrawal of the fiscal stimulus, which was slightly confusing, but I guess that is the prerogative of the Liberal Democrats. Several hon. Members spoke about the difficulties still faced by companies in getting the finance that they need. The hon. Members for Northampton, South (Mr. Binley) and for South-West Norfolk (Christopher Fraser) spoke about difficulties-for example, for companies needing to get finance.

Christopher Fraser: Given that the right hon. Lady was not present throughout much of the debate, a point that I made earlier at the start of my speech, will she assure the House that she will write to all of us who made a contribution on all the issues that we raised, so that we can go back to our constituents and tell them that the Minister had listened, rather than being elsewhere this evening?

Yvette Cooper: I can tell the hon. Gentleman that I listened very carefully to the points that he was making, which I plan to address now, and to many other hon. Members, including those whom I was able to watch on the monitor, as well as those whom I was able to hear directly in the debate.

It is hard for companies across the country who are still being affected by the credit crunch. The enterprise finance guarantee scheme means that 5,800 businesses have been offered loans totalling more than £585 million. The banks that are getting support from the Government have signed legal agreements to increase their lending, but world markets are still suffering from credit constraints. That is why continuing the support for the economy from the Government and the Bank of England, and from Governments and banks across the world, is so important.

Now is not the time to withdraw that fiscal and monetary support. The right hon. and learned Member for Rushcliffe seemed to suggest that it was the right time to withdraw that support. I say to all Opposition Members who were concerned that people were not taking sufficiently seriously the plight of their companies or their families that they should direct those comments to those on their own Front Bench, who seem to be arguing that we should withdraw the support just at a time when I think support is needed to sustain recovery.

Mr. Kenneth Clarke rose-

Yvette Cooper: I give way to the right hon. and learned Gentleman, who I hope will clarify that point.

Mr. Clarke: Apart from the automatic stabilisers, which we all accept and support, the only significant measure of fiscal support that I am aware the Government
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are giving is the VAT reduction, which they propose to withdraw at Christmas. Why is it right to withdraw the VAT reduction at Christmas, if any other reaction to the present fiscal deficit is a serious threat to our economy and the national future?

Yvette Cooper: As the right hon. and learned Gentleman will be aware if he has read the Budget documents, as well as the VAT cut there are the additional public sector capital projects, which are being brought forward to increase and accelerate public sector investment. In addition, there is the £5 billion support for the unemployed, which all the Opposition Members have refused to support. The right hon. Member for Maidenhead (Mrs. May) has made the same mistake before. She says that that is the automatic stabilisers, but that £5 billion is not in support of unemployment benefit. It is additional investment in services to help the unemployed. This is discretionary additional spending, which the Opposition have repeatedly opposed. If they want to change their policies and provide support for the action that we are taking to help businesses and to help the unemployed right across the country, we would welcome them doing so. It would be a pretty massive U-turn, but I am sure the right hon. and learned Member for Rushcliffe would be happy to do that.

Mr. Kenneth Clarke: So far as I am aware, the only classic Keynesian capital scheme that has been advanced in the entire country is the dualling of a road in my constituency, and for that I am exceedingly grateful. The Government could not find any other shovel-ready schemes to put money into. This country has taken hardly any measures to introduce a fiscal stimulus to the economy, because we cannot afford it owing to the state of the public finances. On the biggest measure that the Government found, the VAT cut, they are actually going to end it-quite rightly-at Christmas.

Yvette Cooper: I am afraid that the right hon. and learned Member continues to be wrong, because we are providing additional support throughout the country for primary schools that are having their repairs done. Furthermore, the £5 billion for the unemployed will include £2.9 billion next year to support the expansion of employment programmes and the expansion in job centres of the number of additional advisers who need to ensure that people continue to look for work.

There is additional support through the future jobs fund, too. Unfortunately, Opposition Members continue to oppose it. They continue to oppose every penny of that support, which is helping the economy. In fact, they go further: they do not simply oppose the fiscal support; they want to make cuts in the middle of the recession-something that would be so devastating for people, for families and for businesses right across this country, and something that economists, the CBI, business organisations, families and community groups oppose.

Frank Dobson: Will my right hon. Friend take this opportunity to remind the Tories that they need to be consistent?

Peter Luff: You were a Blairite once!

Mr. Speaker: Order. The hon. Member for Mid-Worcestershire (Peter Luff) is a very senior and celebrated Chairman of a distinguished Select Committee. He really must know how to behave a little bit better than that, and he can behave so much better when he tries.

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Frank Dobson: Will my right hon. Friend remind the Opposition that when the reduction in VAT was announced, they said that it would have no effect whatever? They cannot really claim that its reintroduction will be damaging.

Yvette Cooper: Interestingly, the right hon. and learned Member for Rushcliffe was one of the few people who did, at least temporarily, support the reduction in VAT.

The best way to help businesses and jobs right now is to ensure that we act to get the economy growing again as soon as possible. That is what we are doing; that is what we did last year when we stopped the banks going under; that is what the Bank of England is doing, backed by the Government through quantitative easing; and that is what we are doing by cutting taxes this year and increasing public capital projects and support for the unemployed. The International Monetary Fund says:

I disagree with the hon. Member for Glasgow, East (John Mason), who said that he saw no difference between the policies of the major parties. In fact, there are major differences between the two main parties. Opposition Members want to rewrite history and claim that they supported all the action on the banks, but, in fact, that is not true. They opposed the nationalisation of Northern Rock. They saw that as "big government". The powers that we used to stop Bradford & Bingley collapsing were actually powers that Conservative Members voted against last year. Presumably those powers were "big government", too.

On fiscal policy, as we have said already, the call for cuts in the middle of a recession would be devastating. The shadow Chancellor, the hon. Member for Tatton (Mr. Osborne), said that

Let us just think for a moment what that means: not just no VAT scheme, but no car scrappage scheme, which has helped boost car manufacturing; no help for 150,000 companies that have been able to delay their tax bills; no help for the housing market or for families worried about their mortgages; no boost for the struggling construction industry from accelerating public projects; and, no £5 billion investment for the unemployed. That is suicidal economics. Professor David Blanchflower called it an economic "death spiral". He said:

That is the testimony to the Conservatives' economic policies. [ Interruption. ] They do not like us quoting from Professor Blanchflower, but what about the former Conservative wise man and friend of the right hon. and learned Member for Rushcliffe, Roger Bootle, who is not known as a supporter of the Labour party? He said:

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