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14 Jan 2010 : Column 323WH—continued

Jim Knight: The hon. Gentleman is right that such a provision is not currently a feature of the flexible new deal contracting process, but it is a feature of the personalised employment programme, which we will start piloting shortly-we are going through the procurement process at the moment. We completely accept the argument, but as with most things we do, we
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want to ensure that the model is right, because of the risk that we will take things to the market that may not work, or have to pay a premium for the provider to manage the risk themselves.

Steve Webb: I am encouraged to hear that the Government are piloting that programme. I hesitate to describe my remarks in the House as eternal truths, but what I have just said must always be true: in any given pool of unemployed people, some will get a job anyway, some will be hard to help, some will be cheap and some will be expensive, but if we structure the payment to match the cost, we will get the incentives right. That must have been true 10 years ago, and although I can see that there are a few practical things that one might need to pilot, I am not sure why we need to tiptoe around quite so much in year 13 of a Government. The flexible new deal contracts could, for example, have been structured as I described. None the less, what the Minister has outlined is probably a step in the right direction, and I welcome it.

It is easy for me to look at these things through a financial, fiscal and economic lens-it is the "My name's Steve, and I'm an economist" thing-but it is easy to lose sight of the non-financial aspects of helping young unemployed people. We have had a helpful briefing from the charity Catch22, which was principally focused on yesterday's debate. It talked about the needs of young people in terms not only of identifying jobs, but of providing financial support with the cost of training, books, course materials and transport, which we all know can be real barriers. It also talked about emotional and practical support, which the voluntary sector is often very good at providing. The charity talks about its Skills For Working Life course, which

and gives them

The course has a high success rate, with people getting qualifications and going on to further education, training or jobs.

One of my questions to the Minister is whether he is happy that the flexible new deal process is tapping sufficiently into the skills of the voluntary and charitable sectors. When the idea of contracting out services was first mooted, I was instinctively wary of it, but one reason why I thought it was worth giving a go was that the niche charity and voluntary providers, which really know specific client groups, would be brought in and would use their talents and their knowledge of client groups to help in a way that bog-standard Departments could not. However, the contracts have tended to go to big corporations-I do not know whether we would call them multinationals, but they are certainly big national corporations. Almost all the contracts have gone to for-profit providers.

The question is how the small, niche and specialist voluntary and charitable sectors fit in. Ministers tend to answer that it is through subcontracting. The big contractors will get the charities and the voluntary sector on board. However, I wonder what assessment the Minister has made of how that is working. How much hard cash of the money that the Government are spending on the new deal is filtering through to the voluntary and charitable sector? Often those sectors have the motivated
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volunteers and the expertise with a client group and area that a commercial provider might not have, to such an extent. Yet one always worries that what to a small charity is a vast contract is a relatively small part of the contract of the big provider that hands it out. The big flexible new deal provider and the little local or specialist charity will have unequal bargaining power.

The Minister might say that that information is commercially sensitive, or that the flexible new deal providers do not have to tell the Department, but has he asked how much of the big sums earmarked for flexible new deal providers will end up in the income stream of the charities and voluntary sector bodies on which, at least in part, the programme was founded? If the Minister does not know the answer, I hope that his Department will monitor the matter to ensure that we get best value for money. Charities such as Catch22, which I have mentioned, are particularly good with young people and understand the complexity of their needs, which a large private sector provider might not. I hope that they get their share of the cake and can build on their experience.

My key emphasis has been on early intervention in education-pre-school education and so on-and at the point of entry into the job market or unemployment, instead of waiting until young people become long-term unemployed. I have talked about incentivising scheme providers, so that they assist not just the easiest to help, but the hardest. I have also talked about youth unemployment being a matter not just of lack of jobs. I have discussed how Government can help on the demand side, but also the need to deal with the complex issues that lead to long-term unemployment, and the need for the expertise of the charitable and voluntary sector. I sense that some of those questions are present in Government thinking, or thereabouts, but I would like them to be given greater prominence.

3.20 pm

Mr. James Clappison (Hertsmere) (Con): I welcome the opportunity to speak in the debate, which is of great importance and will interest many of our constituents. I find that I am summing up for the Opposition a single speech-that of the hon. Member for Northavon (Steve Webb), who speaks for the Liberal Democrats. He made a wide-ranging and interesting speech, in which I found some common ground with him, on generalities if not on specific prescriptions. His points were mainly general ones, but there were worthwhile points among them.

In some respects I agree with the hon. Gentleman about the value of early intervention. We have stressed it in our criticism of the Government's plans, to which I shall come in a moment. However, it is also part of the thinking set out in our plans: in particular, we have emphasised early intervention when specific needs are identified.

The hon. Gentleman was also right to mention helping those who are hardest to help, and providing incentives to ensure that they get help. That may in some cases go wider than a discussion of young people in the recession: we recognise that large numbers of people are languishing, if not on jobseeker's allowance then on other benefits, and are out of work and economically inactive, and that
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many of them wanted to work and did not receive the necessary help. Those people-the hardest to help-were in that situation before the recession, and we can all think of such people. They have the greatest barriers to working: they might have health conditions, or their past might have been difficult, perhaps because of housing problems or conflicts with the criminal justice system. In trying to design a system, it is reasonable to adopt the objective of ensuring that those people, too, receive help, and that they are not parked to one side while those who are easiest to help get all the attention and resources.

In response to the points made by the hon. Member for Northavon about the demand side of the economy, which were perhaps even more general, it is important that, whatever the level of demand in the economy, whether from the public or private sector, there should be people with the skills and training to meet it. Our recent economic history raises issues about that, particularly about how demand has been met in some circumstances. I can find common ground with much of what the hon. Gentleman said about those points, and about setting out objectives that we need to keep in mind.

I think I can also find common ground with the Minister on his remarks early in his speech: before dealing with the topic of young people's difficulties in the recession, it is right to say that young people today have great value, and we should commend their value to society. There is great potential there and we share the objective of getting those young people into work and realising their potential, for their benefit and that of the wider economy-and older people as well.

Jim Knight: I am encouraged by the move to consensus on the importance of the matter, although such consensus should not be surprising. I should be delighted, in the light of that consensus, if the hon. Gentleman would endorse and sign up to the Backing Young Britain campaign to encourage employers to do their bit to give young people a chance in the recession, through apprenticeships, the future jobs fund, work experience, internships and so on.

Mr. Clappison: We have set out our plans and our intentions for doing that, and we stick by them. We would tell people in this country that young people here have great potential. The question is how we help them, through the education and training that they receive, to meet the demands in the economy.

At this point I must diverge from the Minister's views, because I was a little perplexed about the philosophical approach behind his response to the issue-and it is a big issue for young people. It is not clear to me whether the Minister was saying that there is a great problem for young people, who have been hit very hard by the recession, or that things are not that bad, and they have not been too badly hit: that if we look at statistics in a certain way the problem is not that great. I am not sure whether he is saying that there is a great problem, to which the Government have answers, or that there is not a problem at all. We need to be a bit clearer about that, and to recognise that young people have been hit hard by the recession.

That fact has been evidenced by the steep rise in the number of young people aged 16 to 24-that is our definition of young people for the relevant purposes-who
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are unemployed, whether we use the International Labour Organisation's definition or the claimant count. Whatever measure is used, there has been a very steep rise. The issue is not just that there are young people who are unable to find work: behind that there are other young people who are struggling in the recession and who may have found work but have had to compromise their ambitions. They may be in employment but waiting to fulfil their chosen career path.

It is widely known that many firms froze recruitment last summer. Even those who have had the good fortune to obtain a job in their chosen field have sometimes found their entry to that work deferred. There are many reports of companies and professional bodies deferring graduate level entry of young people to whom jobs have been offered. We must recognise that there are young people who are unemployed and in need of help, and others who have been hit by the recession. We need to help all of them, but of course our particular focus is on those who have been unable to find any employment at all. The Minister needs to recognise the scale of the challenge.

I heard what the Minister said about the ILO measures of unemployment. He knows that its figure for 16 to 24-year-old unemployment in this country is about 1 million, and even if one takes out young people in education the number is still substantial. He can contradict me on this if he wishes, but, for the sake of his argument, even if one subtracts from the figure young people who are in education looking for work, a significant number are still unemployed, and certainly a much higher number of 16 and 17-year-olds and 18 to 24-year-olds than in 1997. That was the situation in 2008, and I believe that it is still the case. If the Minister has different figures, I would be grateful if he produced them, but we must stop looking at statistics as a way of getting around the problem. Instead of trying to find some explanation for them or trying to put a gloss on them, we should just face up to the scale of the problem.

Another thing that is evident, even in some of the material produced by the Government on youth unemployment-the hon. Member for Northavon touched on this point-is that there was a problem with youth unemployment in this country before the recession took hold. We need to face up to that fact. It is serious and needs to be reflected on when we come to choose policies and the means by which we try to get young people back to work.

It is worrying that youth unemployment seems to have been creeping up, certainly on the ILO's statistics, since about 2003, which was obviously long before the recession took hold. I am looking at the figures that the Government chose to put in their White Paper, "Building Britain's Recovery: Achieving Full Employment". Their statistic on youth claimant unemployment, as opposed to the ILO's measurement, would appear to tell the same story of declining effectiveness of Government interventions to try to get young people back into work, and of youth claimant unemployment starting to creep up after about 2003. There will be interesting issues for economic historians in explaining how that came about, but it is important that we learn lessons from it, and from the policies that were put in place to help young people but which manifestly failed to do so. That includes learning lessons from what has happened with the new deal, because with unemployment affecting about one
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in five young people, we cannot afford to continue with approaches that have failed in the past.

I heard what the Minister said about his chosen historical perspective. He mentioned the last two recessions. The White Paper selected the worst periods of the last two recessions, in 1985 and 1993. I heard at one point in his address the suggestion that the problems we face today are somehow the responsibility of the previous Conservative Government. I shall pass over that, but I think that we have to be careful about how far we go back on such matters.

I remember-you may as well, Mr. Betts-that we used to have a programme on independent television called "All Our Yesterdays", which selected things that had happened 25 years earlier. In the 1960s, my age group watched things about the second world war. I am afraid that the Government's policies and thinking seem to be about all our yesterdays. It would be better if they looked at what has happened in the immediate past, and the failures that there have been, and learned lessons from that.

Jim Knight: The reason why it is relevant to make comparisons with previous recessions is that we have just gone through a year in which we saw output fall dramatically, and everyone knows that there is a strong relationship between falls in output and falls in employment. A reasonable measure of how successful we have been in tackling recessionary effects on unemployment is to look back at other periods when employment fell sharply. It did not fall as sharply last year as it did during the 1990s recession-it fell by only 2.5 per cent., compared with 6 per cent.-but the effect of the global recession in the past year has been profound, and we need to look at how we have managed unemployment through recession, compared with previous Governments.

Mr. Clappison: That is helpful. The Minister needs to look at the statistics that his Government produced in their White Paper about the change in the level of unemployment following the early 1990s, which he has been pleased to choose as the peak for the last recession. If he studies that, and looks at what happened after that period, he will see that from about 1992-93 onwards, there was a steep fall in unemployment among young people. That continued throughout the later part of the 1990s but began to level out relatively shortly after the present Government took office. It levelled out altogether by January 2000, which was not a period of recession. After that, youth unemployment stuck at a certain level and then began to rise again in 2003.

If the Minister looks at those periods of history, he will see that youth unemployment was declining much faster before the present Government took office and introduced the new deal, which we have heard so much about, and that it then began to level out. That is hardly a picture of a policy working tremendously satisfactorily. It would seem to indicate that under the policies that have been pursued, in particular the new deal, there was a stubborn problem with the persistent level of youth unemployment, which the Government were unable to get down, and which started to rise again.

I would be happy to give way to the Minister at any time if he would like to intervene and tell me at what point since 1997, and on what measure, the Government have achieved their stated objective of getting 250,000
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young people off benefits and into work. That was one of the key pledges made in 1997, which was said to be funded by a windfall levy on privatised industries. The case is that at no point since 1997 has there been a fall of anything like 250,000 in youth unemployment. Today, it is several hundred thousand higher than it was in 1997, whether one uses the ILO measurement, the claimant count or any other measurement.

We need to learn lessons from the fact that the new deal has failed in those respects. I believe that the Government have recognised the failure of the original new deal for young people because they have, in effect, abolished it and replaced it with the flexible new deal, which retains the name but employs a different set of policies for helping young people. We need to learn lessons from the long-term failure of the policy to reach its stated objectives.

My party has set out in detail proposals on how we wish to help young people. First, we believe that help that is made available should make a real difference to a young person's life prospects, not lead to a revolving door between temporary work and new benefits claims on a repeated basis. The hon. Member for Northavon made that point as well. We need to drop claims about abolishing long-term youth unemployment or youth unemployment on the basis of changes to someone's status as a claimant. What should change is getting the young person in question into a job.

We also want to ensure that there is timely help for young people. At six months from the point of a claim, we want specialist help to be provided by dedicated case managers and mentors who will offer help on an individual basis. We have set out proposals for how we wish such help to be provided for young people.

We want to see longer-term success coming from policy interventions. For young people in particular, we feel that it is important to provide support after an individual has found work, to help them cope with some of the problems that they encounter once they have found work. We have set out proposals for a more rigorous approach to what constitutes sustained employment in the first place, and we have set out plans for ensuring that young people get personalised mentoring and help after that period. They need help to stay in work, not just to find work in the first place.

As I said, we want to eliminate the revolving door between welfare-to-work help and the jobcentre. To help young people through the recession, a key priority must be to provide them with the skills that they need for the future. We have set out proposals on that. We have said that we want to take a great deal of action on the skills and training front-the Minister will have heard this yesterday-to help young people into apprenticeships, for example, and also to help them acquire functional numeracy and literacy skills and social skills that will enable them to undertake apprenticeship level training. Again, we have brought forward proposals on those matters.

Many young people have high ambitions and aspirations, and there is much evidence that the present system of education and training has failed to equip all of them with the skills they will need to succeed. We are clear that far more needs to be done in future. On apprenticeships, particularly, we need to shift the focus towards a higher
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level of achievement, towards level 3 rather than level 2 qualifications, and we want to make it more appealing to small and medium-sized enterprises to take on apprentices. We also want there to be support for pre-apprenticeship training. In the present circumstances, we want to focus pre-apprenticeship funding on young people who have been on jobseeker's allowance for six months or more.

We welcome such changes as have been made by the Government as fit in with our plans, but we feel that far more needs to be done and that they have failed to provide young people with the help they need. It was we Conservatives-the hon. Member for Northavon, the Liberal Democrat spokesman, will remember this-who argued that help should be made available for young people at the six-month point of their claim, rather than leaving them until 10 months. We noticed that in the White Paper, the Government have come to accept six months as the right point and have changed their plans, but they need to go far further than that. Far more needs to be done.

There was evidence that we were not doing well enough before the recession struck. Certainly now, in our present straitened circumstances, with youth unemployment on the scale it is and with young people facing the challenges and stresses that they do today, we need to do far more than is being done under the present Government. We went into this recession without being sufficiently well prepared for it and we have to see the Government's future promises in that light.

We are clear that if young people are to fulfil their potential-we agree that they have tremendous potential-far more needs to be done. We cannot afford the individual and collective waste that would result from failure to properly and effectively help young people who are trying to start their working lives in the present difficult circumstances. The present Government's policies are tied to the failures of the past and have not worked sufficiently well. We need much more new thinking if we are to help our young people realise their potential in future.


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