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14 Jan 2010 : Column 330WHcontinued
The Minister for Employment and Welfare Reform (Jim Knight): With the leave of the House, I shall respond to the debate.
We have had an interesting, if intimate, debate between three of us about an important subject. I enjoyed the other contributions, which were characteristic of both the hon. Members who made them. The hon. Member for Northavon (Steve Webb) gave an interesting speech containing many points with which I agree and I shall go into them in a little detail as there appears to be a bit of time to do so. The hon. Member for Hertsmere (Mr. Clappison) gave a coherent criticism of what was going on, without really offering any policies at all.
It is important that we intervene early. That is why in April we changed policy so that if there is evidence that young people who start claiming at 18 have been NEET for six months previously, they are fast-tracked to what would normally be the six-month point in the claim. There is a clear reason why we should take action much sooner when someone is at high risk of moving into long-term claimant unemployment. Six months is the point at which people go into the gateway for the new deal, which is even more relevant now that we have
moved, as both hon. Members said, from 10 months to six months for the young persons' guarantee.
The hon. Member for Northavon mentioned what in jargon terms people call segmentation: being able to do some analysis of individuals as they come through the door to work out the likelihood of them becoming longer-term unemployed, so that provision can be accelerated or so that the rewards to providers of getting them into sustained employment outcomes can be priced differently. There is a logic to that.
I will talk through some of the measures in the White Paper, because I held a few things back from my opening remarks on the new measures for young people that we have included in it. We talk in the White Paper about the importance of considering how we develop segmentation tools. I do not advocate going as far as Australia has: from day one it uses a segmentation analytical tool to send people straight into the private sector, externalising the provision and support so that there is no state-run equivalent to Jobcentre Plus. That is too early in a claim, when there is a lot of vulnerability, because that tool has some problems in dealing with individuals and their different needs. In the White Paper we discussed combining the use of that sort of tool with the learned experience of working with an individual through our personal advisers in Jobcentre Plus-seeing whether we can combine objective and subjective measures to come up with something more accurate. That would happen in the context of introducing more flexibility in Jobcentre Plus.
When I came into this job last summer, I was surprised by the disproportionate amount of debate about the use of providers. In terms of the work it does, and considering that it deals with 90 per cent. of jobseekers, Jobcentre Plus does not get anything like 90 per cent. of the attention compared with the provider sector, which deals with 10 per cent., although admittedly that 10 per cent. is harder to help.
I wanted to be able to introduce more flexibility in Jobcentre Plus and to learn not only from experience internationally, but from our private providers, and I want to give some of that to people. The hon. Member for Northavon knows that the Jobcentre Plus district that he represents in Gloucestershire will be one of the pilot areas for flexibility for Jobcentre Plus. Our managerial staff will be able to use much more flexibility to do what works on the ground to get people back in, as long as they do not veer away from the fortnightly sign-on. If that means bringing forward provision in the ways he has mentioned, that is what they will do if they are confident enough that they can get the outcomes in exchange.
In the family intervention projects that the Government are pursuing, we identify those who have the most chaotic lives in our communities-where family members might be responsible for much of the crime in a community, and unemployment and truancy might be significant problems. We focus on those families to provide much more intensive, holistic support to help them get back to doing some of the right things, thereby reducing the problems they cause our communities, but, importantly, giving them a much better opportunity to get on.
In the White Paper, "Building Britain's Recovery: Achieving Full Employment", which we published last month, not only did we set out in the final chapter the
vision for Jobcentre Plus and some of the changes that we want to make in the delivery, but we set out new provisions for young people. We shall bring forward the young person's guarantee for 18 to 24-year-olds to six months. There will be 100,000 Government-funded additional training, internships, work experience and job opportunities on top of the 300,000 we have already pledged for the next 18 months, to help us deliver that guarantee. There will be access to a dedicated, named personal adviser from day one of the jobseeker's allowance claim for young people, with the ability for them to fast-track to the support available from six months if they think that is appropriate, which is along the lines the hon. Member for Northavon set out.
There will be Jobcentre Plus support for 16 to 17-year-olds to help them access apprenticeships or jobs with training in addition to the normal support from Connexions, thereby giving a much closer relationship with the Connexions service, which some criticise for signposting people into education more readily than into employment-there will be more of an employment focus in its work. There will be a graduate guarantee so that all those who graduated last year and are still unemployed after six months will have access to one of the internship, training or self-employment places. There will also be a new subsidy of £2,500 for up to 5,000 employers to offer new apprenticeship places for 16 to 17-year-olds, which shows that we are listening to what the CBI has asked us to do in respect of encouraging apprenticeships for younger people.
I have much sympathy with what the hon. Member for Northavon says about early intervention, and we are coming forward with the appropriate policies. Self-employment will be a way out of the recession for people. Bringing the self-employment credit to three months will work for all people, not just young people, and will be another part of that help. The individual skills accounts and the skills pot will also help to further the integration of employment and skills, as set out in the White Paper.
The hon. Gentleman mentioned education. The link between poverty and education outcomes could be the subject of a three-hour debate. Clearly there is a link, and as all Members would expect, I looked at it in some detail as Schools Minister. I also looked at the effect of the funding arrangements that we introduced. Since 1997, we have substantially increased the revenue funding for schools-by well over 50 per cent. When comparing local authorities that have higher levels of deprivation and disadvantage with those that have lower levels, it is interesting to see that the gap in educational outcomes has narrowed significantly. Funding went disproportionately to local authorities with higher levels of deprivation, and that measure has worked well.
At school level, the gap has also narrowed significantly, according to the various quartiles. At pupil level, however, the gap has not shifted so much-although it has shifted a little-so it might be tempting to rush to the "pupil premium" or a funding formula that focuses simply on the individual pupil. As the House knows, we have gone through a process. The consultation period is closed, and consideration is now being given to the new funding formula that will kick in for a three-year period starting in April 2011. That formula is being considered, and the intention is to find ways of measuring deprivation at a more fine-grained level. If the gap has narrowed at
school level but not at pupil level, we must ask whether the measures that the hon. Gentleman mentioned regarding school level would be the whole answer.
During my period as Schools Minister, I concluded that the biggest single determinant of a child's success in school is the involvement of their parents in their education. That is why there is such a strong link between poverty and educational outcomes. How do we raise the aspirations of parents and make them confident to help their children with their homework? If parents had a poor experience in school, how do we break that cycle of low educational achievement? That is one of the reasons why I introduced measures to improve parental engagement in schools through better reporting to parents, extended school activities that include more engagement with parents, and opportunities for parents to improve their learning through schools. There were also area-level aspiration-raising measures such as the Black Country challenge and the Manchester challenge, which built on the success of the London challenge. From the woeful state they were in some time ago, London schools-and London pupils-now outperform the national average.
Last year, or the year before, more than 70 Education Ministers were in London. It was the equivalent of this week, when Education Ministers are in London for the BETT fair in education technology, in which this country takes a global lead. A couple of years ago we took those Ministers on study visits to schools in Tower Hamlets. In 1997, no Government would have taken visiting Ministers anywhere near schools in Tower Hamlets. It is a demonstration of the success of the London challenge that schools are doing so well in Tower Hamlets, the most deprived education authority anywhere in the country.
We agree that one-to-one tuition is one of the ways we can get at individual pupils and their aspirations, and try to help them achieve their full potential. When the GCSE figures were announced yesterday, I was pleased to see that the number of young people getting five A* to C grades at GCSE, had moved from around a third, to just shy of half-49.5 per cent. That is considerable progress, but clearly there is more to be done.
The hon. Gentleman talked about the power of the Government as an employer through their procurement policies. I strongly agree. One of the reasons why we brought forward the fiscal stimulus in response to the recession was so that we could use Government investment to help save jobs and, where possible, to create them. Building Schools for the Future, for example, as managed by Partnership for Schools, insists that contractors agree to new apprenticeships as part of the deal. We are extending that approach across Government, because one of our three priorities in procurement policies is to protect skills and jobs, as well as creating new jobs.
As the hon. Gentleman knows, schemes such as Warm Front, managed by the Department for Environment, Food and Rural Affairs, helped insulate the homes of vulnerable people on lower incomes. There is the new boiler scrappage scheme, Building Schools for the Future, and new hospitals and roads. All those things benefit from the investment that we are putting in, which would be cut under Conservative plans, and have all been important in creating jobs. The building of the wonderful
new Weymouth relief road has created 300 jobs, and I am pleased that at least 100 of them are local jobs. In my constituency of South Dorset, we have five new schools and four new children's centres. Recently, there have been three major lottery bids, two new roads and, of course, the Olympics will be coming to Portland. All those things have brought significant new jobs for my constituents.
The hon. Gentleman mentioned the structure of the programmes, and in an intervention I pointed out the importance of the personalised employment programme as our way of testing the accelerator funding model. We are also piloting invest to save, so that we can proceed on the basis of an understanding of risk that is shared between us and our contractors, and gets the best possible price and outcomes. There are reasons for piloting the accelerator funding model. If we are to use segmentation, for example, we must understand how well segmentation tools will work. If we price according to the distance that someone is from the labour market-to use the jargon-we must understand how accurately we will be able to predict that distance.
Steve Webb: I am grateful to the Minister and appreciate his going though the arguments carefully and responding thoughtfully. In a sense, the accelerator model that I described does not require us to segment, because the providers will do it for us. They know that they will not get much money for the first person they get back, so they have an incentive to work their way through. In a way, we do not have to guess; the incentives are right and will have the outcome we want.
Jim Knight: I accept that, and the accelerator model we would use would do the same. However, it remains the case that one must understand enough to work out how to price the various volumes as they mount up. One needs to understand the state of the labour market at the time and how to anticipate changes, which would affect how the pricing was varied. All sorts of variables and risk are attached, and we would need to test them carefully. As I said earlier, the market will not do that, or if it does, it will be at great cost.
I am concerned about the Conservative proposals to rush to implement invest to save because there is a risk to the taxpayer. Our invest to save pilot will start in, I think, four areas. We shall consider those who are on incapacity benefit and how we use the invest to save model for contractors in those four areas initially. If we were to go national, the challenge of correctly predicting how many would come in would put at risk £20 billion-worth of benefit. Ultimately, invest to save takes something that is demand led-benefit payments-and transfers that money to something in which we try to predict the effect. A lot of risk is attached to that, and it would be irresponsible to go ahead without testing it properly first, because ultimately we might have to pay out twice, which would break the bank of the Department, the provider, or both.
The hon. Member for Northavon talked about supply chain management in the flexible new deal. I was talking about that just today to the British Trust for Conservation Volunteers, as one of the medium-scale providers. I meet voluntary sector representatives regularly, both individually and at times collectively, to discuss how they are doing with the flexible new deal as part of the
supply chain, because the hon. Gentleman is right to identify the niche capability and the importance of the niche capability in some of those smaller providers.
We have a pre-procurement dialogue with our prime contractors about how their supply chain will work. We have a code of practice for that part of the contract, about how that supply chain operates. We are introducing something called the Merlin standard, which we are agreeing with both the prime providers and the smaller providers and which they are collectively agreeing among themselves as a form of voluntary regulation, further to improve that relationship. I think that is regarded by the third sector as probably the best example across Whitehall of trying to get the supply chain relationship right for the smaller providers. I reassure the hon. Gentleman that we are mindful of the need to continue to work to get that right.
I was disappointed that the hon. Member for Hertsmere did not instantly want to sign up to the Backing Young Britain campaign. Perhaps he will want to have a look at the website and see whether he can do that. He wanted me to be more consistent in answering the question about how bad the situation is for young people. Clearly, this recession and the increase in unemployment during it are bad for young people. I am in no way complacent about the scale of the challenge that they face and that we need to address in government to protect them from the worst effects of recession.
However, what I have been saying is that the situation is considerably better than it was in previous recessions and considerably better than the predictions that independent forecasters made at the time of the Budget in April or at the turn of the year. All the signs are that active government works; the Government working on the side of people, alongside people, is effective. I reiterate that the percentage of young people who are unemployed-excluding those who are in full-time education and are therefore active, but in a different way-is currently 10 per cent. In the recession of the 1990s it was 12 per cent. and in the recession of the '80s it was 13 per cent. We can also look internationally. I reiterate that we are below the EU average in respect of unemployment.
People may want to consider the statistics for long-term claimant unemployment among 18 to 24-year-olds-those unemployed for more than six months. Currently, the figure is 108,800, in 1997 it was 169,000, in 1993 it was 415,000-nearly four times higher-and in 1985 it was 600,000, which was more than five times higher. We can consider that in percentage terms. Currently, 21.9 per cent. of 18 to 24-year-old claimants are unemployed for six months plus. In 1997, it was 42 per cent., in 1993 it was 51 per cent. and in 1985 it was 57 per cent. We have a good record. I have just been referring to unemployment of six months. Often, we consider long-term unemployment to be unemployment of 12 months, but I do not have those statistics before me. Those are all signs of the effectiveness of the Government interventions during this recession, which many independent commentators and academics acknowledge are working.
Mr. Clappison:
The Minister went through those last statistics at rather a gallop. Do the statistics that he has
cited about long-term unemployment include those who have come off the new deal-who are at the end of the new deal-and who have then been classified as a new claim? Is that being taken into account? Are those people being removed from the long-term unemployment figures?
Jim Knight: I have said that I will drop the hon. Gentleman a line on the new deal and those coming into and around it. I discussed it with officials just a few weeks ago, so I am happy to drop him a line about it, as I said earlier.
The hon. Gentleman talked about six-month support, and he is right to say that we have brought forward our support for young people and our young persons guarantee to six months. I compare that with the Opposition's support at six months, which is to refer them into a Government programme in effect-to providers. He does not support the real jobs that are a live part of the young person's guarantee. He does not support the funding for the future jobs fund, creating at least 120,000 new jobs for young people. That is probably for the reasons discussed by the hon. Member for Northavon: ideologically, the Conservatives are against that kind of thing. I do not know whether the hon. Member for Hertsmere supports the routes into work to create tens of thousands of jobs through a pre-employment training route into sectors such as care, hospitality and retail.
I was surprised that there was no mention of or response to the charge from independent economists and forecasters such as Professor Blanchflower that unemployment would double if the policies of the hon. Member for Tatton (Mr. Osborne) were allowed to have their way. The hon. Member for Northavon talked about the Conservatives being ideologically opposed to thinking about the role of Government in any of this, in terms of being positive about creating jobs, but the hon. Member for Tatton is not addressing the consequences of rushing to tackle Government debt and Government deficit and wanting to do that much faster than we are seeking to do it. If he does it in such a way that all the investment that we have been talking about today is turned off, there would be a significant unemployment effect, as predicted by economists. It simply makes no sense. We cannot turn off the tap on public sector employment without private sector employment growing. There is no sense in that in economic terms whatever.
In our own way, we have had a good debate this afternoon. It has shown some of the consensus and some of the difference between us as parties. There was also some good technical discussion, thanks to the hon. Member for Northavon. I look forward to continuing the debate at least for the next few months, in the run-up to any general election-well, the general election that will inevitably be called sooner or later. I am sure that the issue of young people in the recession, because it is so crucial, will play an important part in that debate.
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