“the Charter may not make provision about the methods by which the OBR is to perform its duty,”

which is an additional provision. That is important and crucial to the OBR’s independence. However, we pressed for the final version of the 2010 Act or the charter to guarantee complete discretion on what the OBR can consider, as well as how. Regrettably, as I shall set out later, that has not been included. Chapter 2 has not been changed substantially, although we welcome the inclusion of other Departments in the memorandum of understanding with Mr Robert Chote, on behalf of the OBR, and the Treasury, which recognises that the work of Her Majesty’s Revenue and Customs and the Department for Work and Pensions in particular is similarly pivotal to responsible fiscal policy and sustainable public finances.

Given the importance of the memorandum to the transparency, objectivity and impartiality of the OBR, it is only right that the House should consider it. We therefore welcome the Treasury’s publication of the memorandum. The document refers to the forecast liaison group. Given the Government’s professed commitment to guaranteeing the transparency and independence of the OBR, will the Minister confirm that the Treasury will publish the minutes of the group meetings? If a dispute is escalated to the chair of the OBR or the permanent secretaries, will a Minister report to the House on the cause of the dispute and how they intend to solve it? Finally on the memorandum, it states:

“Analysis of the direct impact of Government policies on the public finances will be provided to the OBR for independent scrutiny which will state whether the OBR agrees or disagrees with the Government’s costings”.

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Such analysis is one of the fundamental roles of the OBR, yet neither the memorandum nor the charter explains the consequences of the OBR’s assessment contradicting the Government’s own report. I will come later to the worrying implications if the Treasury were to disregard the OBR’s verdict.

We also discussed in the Public Bill Committee the possibility of duplication and inconsistencies in OBR and Bank of England forecasts. Neither the charter nor the memorandum addresses that, and the Minister has previously advised that it would be for the two organisations to formalise their relationship in this respect. Perhaps she could update us on any discussions that the Treasury has had with the two organisations on their roles, and indeed on how the Chancellor intends to proceed in the event of a disagreement between the two.

Mr Redwood: Perhaps it would be a good idea if there were such a disagreement, because the Bank of England has been so bad at forecasting inflation, and we hope that the OBR will be a bit better at it.

Kerry McCarthy: The Bank of England’s forecasts have not always been as accurate as one might have hoped, but that proves my point: there could well be conflict between the Bank’s forecasts and the OBR’s forecasts. It is therefore right to ask what the Government would do in such circumstances. Would such a disagreement discredit the Bank of England’s forecasts? Will the OBR be seen as the ultimate arbiter on such matters, or will the Government be able to pick and choose whichever forecast suits their purposes?

Chapter 3 of the charter and the Government’s objectives for fiscal policy are obviously at the core of the document. Some of the provisions in the charter might not be entirely necessary, however. For example, it places the Treasury under a duty to prepare a Budget report for each financial year, which one would hope would happen without it being told to do so. We acknowledge, however, that including the Government’s fiscal mandate in the charter and consequently requiring any modifications to be laid before the House is a welcome step. We hope that it will enhance Government accountability, although that should not be taken as an endorsement of the Government’s economic policy or of their fiscal policy objectives.

Regrettably, given that economic growth has flat-lined under this Government and that forecasts have repeatedly had to be downgraded, it remains to be seen whether the Government are meeting their stated objectives—particularly that of supporting confidence in the economy. Nevertheless, we approve of the idea of working towards maintaining confidence in the economy. The charter rightly acknowledges that achieving that must be the responsibility of the Government and not of the OBR.

The second objective, that of promoting inter-generational fairness, is much more contentious, and it has been challenged here and in the other place. It is not at all clear from the document what the Government mean by the term, although from the Minister’s comments tonight and on previous occasions, I assume that it refers to passing debt from one generation to another, rather than to passing on wealth, advantage and opportunity from one generation to another. If that is indeed the case, and the objective refers simply to inherited debt, it would appear that the Government

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under this Chancellor’s leadership have an exceptionally narrow conception of fairness which does not chime with most people’s understanding of the world.

We should not be surprised by that, however, given the Government’s record on fairness to date. A Government who choose to take £7 billion of much-needed support from children in their first Budget and comprehensive spending review—three times the amount that they thought appropriate for bankers to pay—who choose to target women for spending cuts, who choose to penalise people on lower incomes, and who choose the regressive measure of increasing VAT can hardly be considered fair.

Earlier today, many of us met constituents supporting the Hardest Hit campaign for people with severe disabilities and chronic illnesses, and I would ask the Government to explain to them how making people with disabilities and chronic illnesses pay the price for the financial crisis is fair. One of the constituents I met today is registered blind and has a guide dog, but she has been told that she is not eligible for the higher rate of disability living allowance. She used to work for a bank, and she wants to know why she is paying a bigger price for the financial crisis than her former bosses in that industry.

Steve Baker (Wycombe) (Con): I am surprised that the hon. Lady does not realise that the financial crisis is the product of deficit, debt and debasement—in other words, Government policy.

Kerry McCarthy: The financial crisis was global and it started in the US. Is the hon. Gentleman suggesting that the banks did not play a role in creating that financial crisis and that people such as my constituent, who are struggling to get by on disability living allowance and a modest income, were responsible for it?

Steve Baker: I know that the crisis originated in the banks, but it did so because of currency debasement, which was a result of deficit spending—a Government policy.

Kerry McCarthy: We cannot get into a whole debate about macro-economic policy. Needless to say, I disagree with the hon. Gentleman’s analysis of how the financial crisis occurred. The point I was making—the intervention was not particularly relevant to it—was that this Government’s action in reducing the deficit too far and too fast is hitting people at the bottom end of the income scale far harder than it is hitting people such as bankers. If the Government were to adopt our suggestion of introducing a banking bonus tax again this year, as we did last year, they would not have to make cuts that hit people at the bottom so hard.

Justine Greening: I find the hon. Lady’s comments ironic in a debate welcoming a charter that sets out some guidelines on the operation of the Office for Budget Responsibility—an independent group of forecasters who have looked at and then provided input into distribution analysis showing that the richest people have borne the greatest burden of deficit reduction. I do not understand how we can have that debate on the one hand, yet hear the hon. Lady saying on the other hand

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that the burden has fallen on the most vulnerable. This Government have worked hard to protect the most vulnerable.

Kerry McCarthy: I shall come in a few moments to some of the Government’s measures that have done precisely the opposite of what the hon. Lady claims. Will the Minister explain why thousands of people with disabilities—people in wheelchairs, people with chronic illnesses and so forth—were protesting outside Parliament today under the banner of the Hardest Hit campaign, supported by reputable charities? Is she saying that being hit by what the Government are doing is a figment of their imagination?

Chris Ruane (Vale of Clwyd) (Lab): Does my hon. Friend think that those blind people and deaf people and the people in wheelchairs who were protesting today are ungrateful to the Tory Government for what they have done?

Kerry McCarthy: That certainly seems to be the suggestion. For some, it seems that they should be thankful as they do not realise how well off they are. The Minister has come close to saying that they have “never had it so good” under this coalition Government.

We talked in Committee about the Child Poverty Act 2010, and the Government have since published the child poverty strategy. We pressed for a wider remit for the Office for Budget Responsibility to include scrutinising the Government’s progress under the Act. Although the Government rejected our amendment in Committee, I hope that the Office for Budget Responsibility will consider the proposals again in due course, as tackling child poverty is a crucial element of inter-generational fairness. It is disappointing that the Government do not seem to recognise that. I hope that the OBR will be afforded the necessary discretion to include this aspect in defining its role.

It is highly disputable whether the Government have any mandate from the country for their fiscal policy, especially given that the Deputy Prime Minister led his party into the general election on an entirely different approach. Although setting out fiscal objectives has its advantages, it is clear that the Government are bringing in their targets far too early and cutting spending far too fast, as is demonstrated in the forecast that they will need to borrow £46 billion more than was planned last year because of their failure to promote economic growth successfully. That should prove to the Government that their fiscal mandate is not appropriate to the current economic climate and that a different approach is needed to secure the economy on a sustainable footing. That explains why it is key for the OBR to make wider reference to still fundamentally important economic determinants such as employment and growth.

Ensuring a responsible fiscal policy is clearly beyond the OBR’s remit; instead, it is this House’s responsibility to try to make the Government take heed of its advice. For that reason, the charter’s assertion that the Government

“retains the right to disagree with the OBR’s forecasts”

is a serious concern, especially when reliable forecasts will be so crucial to the forward-looking targets. The Government have made a great song and dance about how the OBR will enhance the credibility of fiscal forecasting because of its independence from the Treasury, and the charter itself states:

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“The OBR is designed to address past weaknesses in the credibility of economic and fiscal forecasting and, consequently, fiscal policy”.

However, enabling the Treasury to disregard independent official forecasts would make a mockery of the fundamental purpose of the OBR. It would also lead to dangerous uncertainty about which official forecasts we can and cannot believe, and which should inform fiscal policy. That is relevant to a point raised earlier by the right hon. Member for Wokingham (Mr Redwood). I urge the Minister to clarify the status of the OBR and its forecasts.

According to chapter 4 of the charter, the role of the OBR is to

“examine and report on the sustainability of the public finances.”

During the passage of the Budget Responsibility and National Audit Act, a number of attempts were made to secure a broad definition of sustainability, and to persuade the Government to acknowledge that it was not enough to focus on the deficit in an insular way while ignoring the impact on economic growth, employment, inflation, and other factors that are central to sustainable finances and responsible fiscal policy.

Although the Government rejected our amendment which sought to guarantee a multi-dimensional approach to sustainability, arguing that the OBR should be able to define the concept, the Minister reassured the Public Bill Committee that she intended

“to amend the charter to require the OBR to set out how it will approach sustainability in each of its reports.”––[Official Report, Budget Responsibility and National Audit Public Bill Committee, 1 March 2011; c. 48.]

We therefore welcome the addition of paragraph 4.7 in the final charter, which confirms that

“The OBR will consider a wide range of factors and dimensions relating to the sustainability of the public finances and will be transparent in its approach. More generally, in each report published under its main duty, the OBR will explain the factors taken into account when preparing the report, including the main assumptions and risks.”

That reflects many of the concerns raised in both Houses. The reference to risks is important, given that the Government appear to be blinkered when it comes to the risks that are inherent in their deficit reduction plan.

We are also pleased that chapter 4 refers to projections of GDP, inflation and the labour market. However, the absence of any complementary references in chapter 3 to the Government’s role, or indeed the Act, remains highly disconcerting. It suggests that the Government do not consider such fundamental considerations to be part of their role. I assure the Minister that promoting employment and growth are part of the Government’s responsibilities. Perhaps, in time, the OBR will help them to understand that. More positively, we welcome the inclusion of paragraph 4.13, which confirms the Office’s access to Government information, and the omission of the definitions of “objectively”, “transparently” and “impartiality”, which are terms that the OBR is best placed to define.

We are slightly concerned about the inclusion of paragraph 4.12, which is an additional provision and which states:

“The OBR should not provide normative commentary on the particular merits of Government policies.”

There is a fine line between giving an impartial and informed assessment of the effectiveness of Government policies in achieving the declared objectives, and being

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seen to pass judgment on their merits. How does the Minister think that such a provision will be policed, and who will be the arbiter of whether the OBR has overstepped the mark?

There is no reference in the charter or the memorandum to the funding of the OBR, which we argued in Committee was critical to its independence, but the charter does refer to the office’s discretion in regard to the timing of its publications, although that seems to be weakened by the requirement for

“a regular and predictable timetable”.

The fact that there have already been doubts about whether reports have been published in time for Prime Minister’s Question Time reinforces the need not only to ensure that the wording of the charter is sufficient but, more important, to ensure that it is followed in both the letter and the spirit.

Our key reservation is that neither the Act nor the charter includes any means of ensuring enforceability. I have already mentioned the get-out clause that allows the Chancellor to ignore the OBR’s reports, but there is also no indication of the consequences of the Chancellor’s failing to meet his obligations under the charter. Will the Minister commit the Chancellor to reporting to Parliament following OBR publications? Most important, will she commit the Treasury to listening and responding to OBR reports in its actions as well as its words?

It is not enough for the Office for Budget Responsibility to tell us whether the Chancellor is acting responsibly—we know that he is not—and it is certainly not responsible to disregard its advice or forecasts, but neither the OBR nor the charter can do anything about that. Only the Chancellor can, and he must realise that a charter that proclaims the credibility of economic forecasting does not remedy the damage caused by the Government’s policies, and does not automatically translate into credible policy.

9.14 pm

David Rutley (Macclesfield) (Con): It is an honour to speak in this debate. It may not be the best attended debate, but I believe that in future years we will look back at the charter and the creation of the Office for Budget Responsibility as a major step forward in the way we manage this country’s fiscal policy.

Mark Twain once said that prophecy—or, in this case, economic forecasting—is

“a good line of business, but it is full of risks”,

and in respect of certain Governments it is sometimes said that statistics, and even forecasts, can be used in the same way as

“a drunken man uses lamp posts—for support rather than illumination.”

I therefore welcome the creation of the OBR, as I believe it will bring far greater transparency to the forecasting process and the management of our public finances.

I want to refer back to what my hon. Friend the Economic Secretary said in her opening remarks, and to talk a little about why the charter and the OBR needed to be set up. The sheer scale of the recent economic crisis led many people to recognise the need to rethink how forecasting is conducted. It was also clear that Governments can be tempted to indulge in

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wishful thinking, and there was too much of that in the run-up to the credit crunch. Even Lord Turnbull in evidence to the Treasury Committee spoke about how it had existed during successive quarters of economic growth. Despite what has been claimed, it is the case that promises were made about an end to boom and bust, yet there was a boom and there certainly was a bust. As a result, we clearly need to improve our approach to forecasting.

In the current digital age, there is greater demand for transparency in many areas, and that must include in the development of forecasts for our economy and public finances. I therefore welcome the Chancellor’s bold and important move to transfer the power to create such forecasts to the OBR. That will bring greater objectivity to bear, and the forecasts will hold Governments of all shapes and sizes to account, which is definitely in the long-term interests of our economy.

The creation of the OBR has also strengthened the credibility of the Government’s efforts to tackle the current deficit and bring the UK economy back to sustainable economic growth, and I have been encouraged by the comments of some highly respected bodies in this field. The Institute for Fiscal Studies says:

“The decision to transfer responsibility for official economic and public finance forecasts from ministers to economic experts is a very welcome one. It does not guarantee that the forecasts will be accurate, but it will reassure people that they reflect professional judgement rather than politically motivated wishful thinking.”

That is important. The OECD says:

“The OBR will support the consolidation process, improve the quality and credibility of information and lay a sound basis for the forward-looking framework.”

Finally, the International Monetary Fund says:

“The OBR complements the government’s commitment to fiscal discipline by enhancing the transparency and credibility of the budget process and helping inform policy decisions.”

The “credibility” that is mentioned in just about each of these quotes is a vital commodity. It will build confidence in the debt markets and help to address the costs of funding our enormous burden of debt, and it will build confidence in businesses, and in their investment decisions. It will be vital in helping to bring about significant and sustained growth.

As a former member of the Treasury Committee, I was fortunate enough to have been able to participate in the appointment of Robert Chote as chairman of the OBR and the other members of the budget responsibility committee. Giving the Treasury Committee the power of consent over appointments and dismissals was another welcome move by the Chancellor, and has given Parliament a far greater say in these all-important matters.

The good news is that there has been very encouraging initial progress. The OBR has created thorough forecasts and supporting analysis, which has been welcomed on both sides of the House. It has become an important reference point in a very short period of time. It is vital that it builds on that reputation. I am pleased to see that more forecasts and reports are planned, including, as the Economic Secretary mentioned, the fiscal sustainability report that will be published later this year to give a truly long-term view of the future of our public finances. That is most welcome.

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In conclusion, I hope that these short remarks have conveyed my strong support for this charter, and for the creation and clear processes of the OBR. It is a vital achievement which will bring about greater transparency, credibility and confidence in the forecasting process, and it represents a structural change in the management of our fiscal policy. The OBR will play a vital role in helping to bring the deficit back under control and to move this economy to sustainable growth. I wish the OBR every success in its endeavours, and I trust that the Treasury Committee will ensure that it gets the support it needs to carry out its important tasks and hold future Governments to account for many decades to follow. I fully support the motion.

9.20 pm

Mr John Redwood (Wokingham) (Con): Like all those who have participated in this debate, I welcome the four principal aims identified in chapter 3 of this document. It is exactly right when it says that we need to

“ensure sustainable public finances that support confidence in the economy”.

We see all too many examples within Europe of what happens to countries that lose the confidence of world markets and the world’s bank managers. We see that far from being able to sustain high and rising public spending, such countries end up with far worse cuts, which can be deeply damaging to their public services and social fabric. The Greeks seem to be getting into ever bigger difficulties the more money that is lent to the country on soft terms and the more that their Government fight to contain the deficit. We want to avoid getting into that vicious circle in which a Government raise taxes and cut spending, and the deficit grows because the economy plunges again and the revenues dry up even more. I think that hon. Members on both sides of the House now agree that it is most important that we undertake the work to ensure sustainable public finances.

When I listen to the debate in this House, I sometimes feel that very few people have read the numbers in the Red Book. The Government’s pathway is to borrow more than £480 billion extra over the five years for which they are planning. That is more than the total state debt 10 years ago; it is a massive sum. Some people think that we are going to be paying off the debt or paying off the deficit, but we are not.

This Government have, for understandable reasons, decided that they need to increase public spending in each of the five years of this Parliament so that the impact of their decisions on public services can be gentle—I hope that in many cases it will not be felt in any bad way. As a result of that understandable decision, this massive borrowing has to be undertaken and the public debt will be so much greater at the end of the period. That makes it very important that we stick to the pathway of getting the deficit down, so that each year we borrow a bit less extra than the year before. That is the aim of the strategy. Some people seem to describe it in rather different and more draconian or alarmist ways, but the Government are simply trying to cut the rate of increase in the debt. If all goes well over five years, we will still end up making a far bigger increase in the debt than the total state debt just 10 years ago.

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I am delighted that the second aim given in this document is to

“support and improve the effectiveness of monetary policy in stabilising economic fluctuations.”

It is my view that the boom and bust were primarily created by a very badly managed monetary policy over the previous seven to eight years. We had the boom phase, when money was too easy, interest rates were too low and credit expanded too rapidly. Even worse, we had the bust phase, when the market was cleared of liquid funds, when interest rates were too high, and when the then Government were far too tight and jeopardised the financial system itself by pursuing a ridiculously tight money policy at the very point when it was obvious that banks were at risk and the system was in danger of collapse.

Chris Ruane: Will the right hon. Gentleman refresh the House’s memory on his advice to the previous Government on the regulation of the banks?

Mr Redwood: I can indeed and I am glad that the hon. Gentleman did not dare to repeat the normal falsehood that has often been put about. The advice we gave was that they did not have enough regulatory control over the cash and capital of the banks, that they needed tougher regulation of cash and capital and that their mortgage regulation of process and customer was worthless and would not prevent disasters in the mortgage market. I rest my case: that is exactly what happened. The mortgage banks were not protected by their regulation—it probably made things even worse—and the then Government failed to regulate the things that did matter that could have prevented the crisis. I hope that the hon. Gentleman is put right on that now and will no longer read out the stupid spin lines from the Labour party created by people who clearly had not read the economic report to which he is referring. I was trying to keep this non-partisan, but he has decided to spoil the tone—

Chris Ruane: So was I. I was giving the right hon. Gentleman an opportunity.

Mr Redwood: I am grateful then. I did not realise that the hon. Gentleman was being so generous.

If we are going to support and improve the effectiveness of monetary policy, I hope the Government will think through how that will work. It is one thing to have a charter to say that we will do this, which is something about which I am very relaxed—it is a laudable aim—but it is another to ask how it will occur. The problem with the conduct of monetary policy—this applied to the previous Government as well as to this Government—is that it is not entirely in the hands of the Treasury. I happen to believe that it is ultimately the responsibility of the Chancellor and the Treasury to conduct an honest money policy that avoids undue booms as well as bankruptcies and busts. That requires judgment.

The main elements of that policy, however, are conducted at the moment by the Financial Services Authority, which determines how much banks can lend and admits it got it wrong in the boom period. I think that the FSA also got it wrong in the bust period and managed to go with the cycle, thereby reinforcing it, rather than leaning against it as it should have done. We also have the Bank of England setting interest rates and having some

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involvement, but not sole control, over how much money is printed. The Chancellor and the Treasury do not run the whole policy and that could become a problem again in the future if the independent bodies make a mess again, as they clearly did in the boom and bust phases we have recently lived through.

I hope a little more thought will go into how the charter can be implemented. I am sure that my hon. Friend the Minister will agree that whatever the theory about independence might be, as far as the electorate is concerned the people responsible for the state of the economy and therefore the conduct of monetary policy are the elected officials—the Ministers. If Ministers wish to delegate that responsibility to an independent body, they are entitled to do so and the public will be happy with that all the time it works but extremely unhappy if the independent body gets it wrong.

That brings me to my third point. Although I am happy with the aims and principles of the charter, I would caution the Minister that we should not place too much confidence in independence as the only virtue that is needed to get these things right. We have had an experiment with a so-called independent Bank of England for more than a decade now and that has been our worst decade for boom and bust since the 1930s. That is not entirely the responsibility of the Bank of England but it was part of the team that managed to preside over too much boom, too much credit and too much inflation and then over too little credit, too little liquidity and bankruptcies on a scale that none of us in this House had ever seen before. That shows that independence is no guarantee of success.

We also see from the Bank of England that its inflation forecasts have been way out for quite some time—

Chris Ruane: What about the growth forecasts?

Mr Redwood: I am coming to the growth forecasts, if the hon. Gentleman will be patient. The Bank’s inflation forecasts might perhaps have helped to mislead the previous Government as well as the present one. Those forecasts assumed that we would be somewhere around 2% when of course we have reached 5% or more on the retail prices index and 4.4% on the consumer prices index. Today, we have had another revision to the inflation forecasts from the Bank of England saying that there might be more inflationary pain to come over the summer of this year before we start to see progress back to somewhere near the 2% target.

I wish the Office for Budget Responsibility every success and hope that it will be more successful in its forecasts than the Bank of England has been in recent years. Today, the Bank had to announce not only an upward revision to this year’s inflation but a downward revision to this year’s growth. The OBR has already had to revise down its near-term year’s growth forecast in March of this year compared with its autumn forecast last year.

My worry about the current forecasts is that the assumption that we are going to have three years of above-trend growth over the balance of this Parliament after next year could be optimistic if the world economic slow-down, which is likely next year, continues for any length of time. If the euro crisis gets worse and creates more financial and economic turmoil among our major

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industrial trading partners on the continent or if there are unforeseen problems with the rate of slow-down in the emerging market economies, which are currently applying tough monetary medicine to try to curb their inflation, it could be that much more difficult to hit those Budget targets. That is all important, because we have as a third aim the laudable idea of a forward-looking target to get the current balance or deficit down and to get a better balance between revenues and expenditure.

I have explained that the five-year strategy assumes a very substantial cash increase in total public spending—around £94 billion from memory—and higher public spending on current account in the last year, compared with Labour’s last year, over this five-year Parliament. The way in which the deficit comes down in the official forecasts is mainly through a big increase in tax revenue. That big increase partly reflects the higher VAT rate and other higher tax rates that have already been imposed, but it mainly reflects the very good growth prospect in which we have three years of well-above-trend growth in the last three years of the period, accelerating from now onwards to that good performance. If there is any disappointment or need for downward revision by the OBR, that is going to throw out the tax revenues and we will therefore be faced with a bigger deficit that will require handling. We hear much debate in the House and in the media about whether the Government are trying to reduce the deficit too quickly, but the House should understand that there are risks the other way as well. If growth and tax revenue do not come through at the scale anticipated, we will be faced with rather more invidious issues to resolve about how to get the deficit down without that great super-boost from the revenue.

The objective for debt management is to minimise over the long term the cost of meeting the Government’s financing needs, taking into account risk. This is exactly the point I am trying to stress in this short debate. So far, the markets like the Government’s strong stance. They are pleased that the Government have regarded deficit reduction as the No. 1 thing they have to do and they are pleased with the OBR’s independent forecast showing that the rate of increase in debt drops off quite nicely over the five-year period. However, they will not be pleased if there is major slippage or if the OBR has been too optimistic, so it is most important that we have the right people in the OBR, that it has good fortune with its forecasts and that it has taken into account the possibility, for example, of a deterioration in the international background, which could have an impact.

In conclusion, I welcome the aims but I hope that the Treasury will consider the following important points. First, we must understand that just because a body is independent, that does not mean it gets things right. The Treasury will have to operate its own scepticism about the forecasts. If the OBR were too optimistic, it would be wise of the Treasury, at least privately, to have done some work on what might happen if the forecasts were too optimistic. One should not always assume that the OBR forecast is the worst case and that life is likely to be better. The Treasury should be very careful about that.

Secondly, the Treasury should do some contingency planning in case the world economy is worse than anticipated and has an impact on growth rates. Thirdly,

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it should take the opportunity that will be presented by the new regime for controlling the banks, which will be introduced when many powers are passed to the Bank of England, to say that the Treasury and the Chancellor must have a role in all that because it was definitely the regulation of banks and the bad conduct in monetary policy that gave us the huge pain of the past six or seven years. We probably need more intervention from the Treasury and more accountability to the Treasury to try to get the system to work in the future.

The Opposition love to say that the crisis was a global crisis and that therefore one should not blame any particular part of the UK governing establishment. I do not take that view. It was a largely western crisis and there were some advanced economies that were not affected by it. Australia had a particularly good period, China had a pretty good period, and India sailed right through without any problems. There were small and big economies that were not affected by the world crisis, even though global activity was hit, because American, British, Spanish and Irish activity was hit in a very predictable way.

It was a rather limited number of countries that had gross mismanagement of their money supply and their banking systems. As the election is well behind us, we should, in a non-partisan spirit, analyse what went wrong, admit that things went wrong in Britain, and make sure that the new architecture, of which the charter is just part, functions much better than the old architecture. That means questioning the assumption that independent people always get it right. It means understanding the ultimate accountability of the senior elected officials, and it means understanding that sometimes we need to be more pessimistic, at least in our private forecasts, so that we do not discover that our plans do not work.

9.36 pm

Justine Greening: With the leave of the House, I shall sum up the debate and respond to some of the points that have been made. I thank hon. Members for their contributions. As I said at the start of this evening’s proceedings, it is essential that we restore the sustainability of the public finances. My right hon. Friend the Member for Wokingham (Mr Redwood) set out clearly the challenges that we face in doing that, the steps that we are taking and why they are so important.

The hon. Member for Bristol East (Kerry McCarthy) asked about the relationship between the OBR and the Bank of England and their ongoing discussions. Ultimately, it is for the OBR to decide how it wants to work with the Bank of England. It must make those decisions on its own and carry them out independently. The OBR’s forecast will be used as an official forecast for the Government. As the hon. Lady knows, that is provided for in the Budget Responsibility and National Audit Act 2011 and in the charter. She asked what would happen if the Chancellor of the day did not agree with the OBR forecast. He would have to come to the House and explain why not, and he would be accountable. That is one of the safeguards that we put into the Act, and it will strengthen the OBR’s role.

The hon. Lady raised concerns about paragraph 4.12, about the OBR not providing “normative commentary”. We had the debate in Committee and as the Budget Responsibility and National Audit Bill passed through

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Parliament. It is critical that we preserve the OBR’s impartiality by ensuring that it never gets dragged into political debate on specific policy measures. Paragraph 4.12 puts that beyond doubt.

I take this opportunity to reassure my right hon. Friend the Member for Wokingham. He spoke about ensuring that the OBR does its job, not just in terms of what it is meant to be doing, but in terms of the quality. As he knows, the Act—the relevant schedule—provides for the OBR to have non-executive members. It will periodically have an external review of its effectiveness. Aside from the normal scrutiny mechanism, the House can ask the Treasury Committee to examine the effectiveness of the OBR. So those safeguards will be in place to make sure not only that the OBR operates as intended and operates independently, but that there will be scrutiny of the quality of its work. One of the reports that it must publish periodically is its own assessment of how effective it is at forecasting.

With those safeguards in place, the charter, along with the Act, restores confidence and credibility to the public finances. It sets a reformed fiscal framework before Parliament and the public and complements the Act by providing extra detail on the OBR’s duties within the scope of it.

My hon. Friend the Member for Macclesfield (David Rutley) talked about his role on the Treasury Select Committee. I think that he was wise to point out that the Committee has a unique role, in relation to other Select Committees, because it will have a role in appointing members to the budget responsibility committee. That is an important role that will also strengthen the OBR’s organisation and its evolution over time.

The OBR has complete discretion over how it performs its statutory duties. It will make its own judgments on the economy and public finances and will use its own methodology to produce forecasts. It will make its own assessment of the Government’s performance against

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the mandate. The charter reinforces that independence and, by providing greater clarity on the interaction between the Treasury and the OBR, sets out the OBR’s key relationships and how it will work with the Treasury and other Government Departments. The charter reiterates our intention to adopt the OBR’s economic and fiscal forecasts as the official forecasts, as we have done since last May.

The hon. Member for Bristol East asked whether the Chancellor will respond to those forecasts as they come out. He has in fact responded with an oral statement to every forecast the OBR has published to date. Compared with the code for fiscal stability introduced by the previous Government, the charter provides a greater degree of accountability before Parliament for the fiscal framework. It requires us to set out formally our fiscal objectives and mandate before Parliament and specifies the contents of the Budget report. The hon. Lady said that it is obvious that there will need to be a Budget report, but I still think that it is important to have that clearly set out. Many people expected the previous Government to get on with the ordinary course of business by having a comprehensive spending review, but of course that was cancelled. Therefore, I think that it is important to put what seem to be normal assumptions about how a Government should approach things into the charter, which is precisely what we have done in relation to the Budget report.

In conclusion, the charter reflects our commitment to restore order to the public finances. It sets out our fiscal objectives and mandate for parliamentary approval. It strengthens governance arrangements and institutions and reinforces the independence of the OBR.

Question put and agreed to.


That the Charter for Budget Responsibility, a copy of which was laid before this House on 4 April, be approved.

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Back to Work Agenda

Motion made, and Question proposed, That this House do now adjourn.—(Miss Chloe Smith.)

9.42 pm

Chris Ruane (Vale of Clwyd) (Lab): Great changes have been introduced in the back to work agenda over the past year and many more will shortly follow. I believe that many of this Government’s decisions have been taken in haste and without a proper assessment of what does and does not work in the back to work agenda.

I have been involved in the back to work agenda in my constituency for the past nine years. In 2002, I noticed that 50% of the unemployed people in my county, Denbighshire, lived in just two of the 34 wards: the west ward of Rhyl, a traditional seaside ward with many houses in multiple occupation, and Rhyl South West, a ward with a large council estate. Indeed, that is the council estate on which I grew up and spent 26 years of my life.

In 2007, after I had convened a back to work agenda in my constituency, we heard that the Labour Government were introducing a national pilot scheme to get people back to work. It was called the city strategy. Along with Gareth Matthews of Working Links, I lobbied Work and Pensions Ministers to include Rhyl in the pilot. Rhyl was not a city—only 27,000 people lived in it—but it did have city-type unemployment problems on a small scale, as thousands of unemployed people had fled the inner cities of Manchester, Liverpool and Birmingham and come to such seaside towns. We have concentrated areas of deprivation and unemployment. I asked whether Rhyl could be the pilot for the unemployment initiatives in seaside towns, and my wishes were granted, with Rhyl becoming one of just 15 areas accepted into the city strategy.

Since 2009 Rhyl City Strategy has gone from strength to strength. It administered one of the most successful future jobs funds in Wales, putting 450 long-term unemployed people back to work, and it won a bid to become a national pilot for the fit for work scheme.

Rhyl City Strategy is supported by a consortium of more than 180 people from 70 different organisations in the public, private and voluntary sectors, and there is a management board of 25 organisations that deals with the nitty-gritty of putting people back to work. Those two parts of the organisation meet four times a year, and the consortium now meets to deal with different themes relating to the back to work agenda. Best practice is swapped, initiatives are shared and support is given. Co-operation is maximised and duplication and ignorance are minimised. It is one of the most successful organisations that I have been involved with in the past 25 years of my public life.

There are a number of reasons for that success. The board is headed by the private sector: the chair is Barry Mellor, the north Wales manager of Arriva buses. The organisation views the issues from the perspective of the employer as well as the employee. Rhyl City Strategy is a community interest company, which gives it tremendous flexibility, and decisions do not have to be referred back for months of county council committee meetings.

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There is a good blend of the public, private and voluntary sectors. As the work has been going on for almost 10 years, there are bonds of trust and co-operation between and within all three sectors, each reinforcing the other and often coming together informally, outside set meetings, to help in developing initiatives. There is good feedback from the overseeing bodies at the Department for Work and Pensions and the Welsh Assembly Government, and from within our own organisation. Success is celebrated and failure is fixed.

The strategy has used a number of novel schemes to connect with the unemployed. It is not simply about sending a man or a woman in a grey suit with a big stick from the Government to tell the unemployed that they have to get back to work. In my constituency, the strategy has dealt with those furthest away from the jobs market—unemployed people who may never have succeeded in school, who have lost confidence in themselves and faith in society, who have many problems with drugs and alcohol, and who lead chaotic lives and change address regularly.

In order truly to connect with people who face such multiple barriers, we have developed a number of novel projects in conjunction and co-operation with many diverse local groups. I wish to mention a few of them. Rhyl football club operates football in the community, using unemployed people’s interest in football to sign them up for skills training and job placements in the local sports sector.

Coastal Hawks is a project to train local young people in the art of falconry. They use those skills to keep seagulls and pigeons, which blight town centres and cause damage, away from Rhyl town centre. They dress up in medieval costume while doing this, engage with the public, and are in effect a tourist attraction. They were the subject of a TV programme—but now, because of cuts, they may be disbanded.

The Hub, a youth project in Rhyl with 1,000 young people on its books, is located in the heart of the poorest community not only in Wales but, probably, in the whole country. It is self-financing, and in the past three years it has had two extensions that have been built by the local unemployed youngsters who use the centre. It has been part-financed by the 10 back to work organisations that want to gain access to those 1,000 young people. They rent office space from the Hub, and the money is then reinvested in the Hub.

A local market has been established in Rhyl town centre, and the organisers are training 10 local unemployed people to take stalls on it. The organisers provide professional training through North Wales Training and give the trainees a stall to turn that theory into practice. Some of the people on the training scheme have multiple problems and are making a valiant attempt to recover from alcoholism. A separate TV programme is being made about that project.

The Government say that they want to encourage enterprise, and I share their goal. We are doing it, and doing it successfully in Rhyl, the home of Albert Gubay’s Kwik Save and also of Iceland—two supermarket chains that changed the face of UK and world trading. We wish to rediscover that spirit of enterprise.

Jim Shannon (Strangford) (DUP): It is important that young people have the opportunity of a job at the end of the day, and the hon. Gentleman says that that is

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happening. It is also important to instil confidence and to provide opportunities. Is it also important to have a Government who are committed to the public sector, so that the job opportunities in that are there, too, for the young people?

Chris Ruane: I entirely agree with the hon. Gentleman, and I shall come to that point shortly.

The Dewi Sant centre in Rhyl works with dozens of people who have massive drug and alcohol problems, some of whom have literally been taken off the streets. Its clients are then given training away from the urban centre on a 7 acre farm donated by a local business man. They are being trained in the art of bee-keeping and other rural skills. They are organising a community harvest collecting unwanted apples, pears and berries from local people and turning the fruit into preserves.

A week on Monday, I will be the master of ceremonies at the opening of a Jamie Oliver-type training restaurant called Taste. The building was empty for five years and has now been refitted to the highest standards by a top-class designer called Jamie Alcock. It will train young people how to cook, wait on tables, and generally run a restaurant. Those young people will then gain work in our local hospitality sector.

Three weeks ago I was at the first presentation night for a back to work scheme aimed at 70 unemployed young men and women to improve their child care skills. This has a double benefit in that those skills will be used by them in bringing up their own children, but will also help to increase the quality and quantity of the child care work force. The presentation evening was highly emotional, as each young person got up to give a brief personal history and then went on to say how the scheme had rebuilt their confidence, returned their pride and helped them to gain employment. Of the first 10 who had been through the scheme, eight had gained employment and two had gone back to college.

The training for many of the initiatives is supplied by a range of private sector trainers and also by Rhyl college, which was established by Labour 10 years ago. This £10 million college has had two extensions in four years—a further £7 million investment—and has won a UK beacon award for widening participation. It is located in the heart of the fifth poorest ward in Wales, and its outreach work, through many of the organisations I have mentioned, has helped virtually to eliminate the category of NEETS—those not in education, employment or training.

Our local schools have also turned themselves round under the political leadership of an independent, Councillor Hugh Evans—I give credit to him—and a new chief executive, Mohammed Mehmet. The private sector, too, has played its full part. Tesco has said that it will take 50% of its new employees from the dole register. Serco, whose Welsh chief executive, Gareth Matthews, has driven our local back to work agenda for nearly 10 years, has located a regional office not in a leafy business park, but in the middle of the street with the greatest social need in the whole of Wales, creating 35 jobs. I am proud of our local back to work agenda.

I now turn to my concerns about the Government’s back to work agenda. I am concerned that their new proposals will not recognise the good practice and progress that has gone before. They want to start from

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year zero and do away with all that Labour implemented—as much out of political spite as any desire to help the unemployed—and believe that any “lefty-sounding” package, such as the new deal, must be disparaged. The future jobs fund was viewed by seasoned practitioners as the best back to work scheme that has been created, because it recognised the dignity of the individual and dealt with people as individuals. It raised their confidence, gave them meaningful employment and, most of all, gave them a wage at the end of the week. The FJF was not like the skivvy schemes introduced by the Tories in their 18-year reign—but it was ended within weeks of the Government gaining power, without any independent assessment of its contribution to the back to work agenda.

I am worried by the language, tone and philosophy of the Government. They look on unemployed people as feckless scroungers who should be chased back to work with a big stick even when no work is available—even when it is the Government themselves who are laying off those people. They are putting 500,000 workers on the dole and then stigmatising them. The voluntary sector and the public sector will walk away from Government initiatives that stigmatise people. The voluntary sector has no interest in that approach.

I am worried about the directives coming from the DWP instructing local benefit advisers to trick people out of their benefits. They give advisers targets of two to three clients a week to punish by taking away their benefits. The Minister described those allegations made in The Guardian as claptrap—until he was shown the e-mail evidence that it was happening.

I am worried that the Government have no policy for dealing with areas such as mine, with nearly 50% of its workers—13,000—in the public sector. The Government want to sack between 10% and 27% of these workers, pushing them on to the dole queue. Seaside towns such as mine, with many public sector workers, could end up like the coal and steel towns of the 1980s—the towns the Tories decimated. The Government say they want private enterprise to take on those workers. But when I tabled a parliamentary question on the budgets that the Government have allocated for enterprise clubs, the answer came back that £3 million had been allocated—£3 million for 3 million workers, or £1 each.

My biggest worry is that nationally there is no growth strategy and no jobs strategy. Recent emergency meetings have been held in government to try, belatedly, to correct that, but the comprehensive spending review and the Budget did nothing to help create jobs and growth. As a result the economy, which was recovering under Labour, has flatlined for the past six months.

It is not just me, a Labour Back Bencher, who is making these points; this is also what the experts are saying. The director of the National Institute of Economic and Social Research said that we should be seeing quite a sharp recovery, but that looking back over the past six months we have had no growth in output at all, and it is very disappointing. The chief economist at the Office for National Statistics said:

“we have an economy on a plateau”.

The Office for Budget Responsibility has revised down its growth forecast for 2011 from 2.6% to just 1.7%. That will have a devastating impact on jobs and growth.

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The gains in the private sector proclaimed by the Government were achieved largely as a result of what was done in the dying days of the Labour Government. The Government boast of an extra 350,000 jobs in the private sector, but most of those were created in the first quarter of their Administration.

Unemployment in my constituency was 4.7% in December 2009. It fell dramatically, to 3.9%, in the six months to June 2010 under Labour. Under the Tories it has gone back up to 4.4%—and that is before the Government sack thousands of public sector workers in my constituency. I fear particularly for the unemployed young people in my constituency. There were 735 in December 2009, and that went down by nearly 30% in the six months to June 2010, to just 530, under Labour. Under the Tories, youth unemployment in my constituency has shot back up to 730. That happened as my local FJF took 450 young people off the dole. If those people were added on, the figure would be nearly 1,200 young people on the dole. Political spite has its price.

“Panorama” is making a programme on the back to work agenda in seaside towns. It came to my town and presented me with a stick of rock, through which is written, “A JOB TO GET WORK”. It is a job to get work, because of many of the policies that the Government have introduced. The intricate web of employment opportunities that we have created in Rhyl over the past 10 years is in danger of being swamped if the Government’s plans are not properly introduced.

The Government need to end their targets to force and trick people off benefits. They need to work co-operatively with the public and voluntary sector, especially where there is a proven track record. They need to change the language through which the back to work debate is being conducted. They need to ensure that those who are furthest from the jobs market are not left behind while the more able are cherry-picked by private sector companies. They need to put aside party politics, accept what was good practice under the previous Government and carry it on. They need to develop a strategy to deal with areas with huge numbers of public sector workers, so that we do not have coal and steel town-type unemployment in the next decade. If they are serious about the private sector providing jobs for sacked public sector workers, they need to give specific help to promote enterprise among the unemployed; £3 million is not enough. Most of all, the Government need to develop a coherent strategy to promote growth and jobs across the board, not as an afterthought but as a key component of getting the country back to full employment.

9.58 pm

The Minister of State, Department for Work and Pensions (Chris Grayling): For at least the last five minutes of the hon. Gentleman’s contribution, that was a really disappointing speech. He spent 10 minutes setting out very eloquently the benefits of localism in Rhyl and the work that has been done by the local community to help young people and people of all ages into work. I listened with care, and he was actually making a good argument for the approach that we are taking in the Work programme. In a moment, I will set out how we hope that the Work programme will address some of the challenges faced by towns such as his.

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I am well aware of the excellent work that has been done on the ground in Rhyl. It is a good example of how a partnership between providers, local authorities, local business and other organisations to help people into employment can be fruitful. He referred to Working Links, and he will be aware that it is one of the preferred bidders for the Work programme across Wales. It has certainly built experience in Rhyl that can be used in the rest of Wales. However, that was where it stopped, and for the last five minutes of the hon. Gentleman’s speech, one would have believed that we were back to the rhetoric of the 1980s and the Morning Star. We heard a rather outdated view of class war and an apparent belief that Conservative Members and the Government have no interest in helping employment. He could not be more wrong. He needs to understand, first and foremost, the legacy that we inherited.

One would have believed from listening to the hon. Gentleman that the past 15 years were a period of great employment success, but nothing could be further from the truth. We have gone through a long period in which we have consistently had almost 5 million people on out-of-work benefits. Although there have been increases in employment, such as the growth by almost 4 million in the past few years, we know thanks to the assiduous work of the right hon. Member for Birkenhead (Mr Field), who spent a lot of time in the previous Parliament teasing out of the previous Government the reality of the labour market, that far too many of those jobs—indeed, the majority—went not to unemployed people in this country but to people coming to the UK from overseas. That was a great tragedy and a great failure. Billions of pounds were spent on nationally organised back to work schemes that did not deliver the change that we needed.

The hon. Gentleman made a good point when he said that he did not want to see the man or woman coming from Whitehall with a big stick to try to get people into work. I agree with him, but that was the failing of the previous Government’s policy. Programmes were designed in Whitehall, to a template designed in Whitehall and on a contractual basis designed in Whitehall, and they did not deliver the improvement that we needed. That is why we are determined to change things and have brought an entirely fresh approach to back to work programmes. I believe that that approach will help and harness the expertise that has been built up in his town of Rhyl over the months and years.

Let me explain to the hon. Gentleman how the Work programme is designed to work. He will be aware that the contracting of the programme has involved not only individual prime contractors such as Working Links but a network of private small businesses, voluntary organisations, local charities, local groups with expertise on the ground in dealing with unemployment challenges and local public sector bodies. A number of local colleges are also involved in delivering the Work programme. We have decided to say to those providers that it is not the Government who know best how to get people into work, and who are best placed to design the programmes that will work in various parts of the country, it is the professionals on the ground.

We have said that we will leave it to the providers to design what works. We want to encourage them to form excellent local partnerships such as the hon. Gentleman describes as having worked well in Rhyl. The only thing

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that we ask of them is that they succeed. We have put in place a payment-by-results regime, in which the prime contractors are investing £580 million over the next 12 months. We have confidence in their ability to build consortia of organisations and local partnerships, and in their capability to transform the lives of unemployed individuals around the country. We will reward them when they succeed in getting the unemployed into work. The scheme is designed to deliver the type of localism that he described in Rhyl. We believe that localism can work well around the country, and it is the essence of the Work programme and the black box approach.

Chris Ruane: We’ve been doing it for 10 years.

Chris Grayling: No, the tragedy is that the Labour Government did not do that for 10 years. There were one or two isolated pockets where there were very good local partnerships, and the hon. Gentleman has described one in Rhyl which was clearly very good, but in too many places that did not happen. Individual communities did not have the type of support that he described. They had top-down programmes designed in Whitehall. The man or woman from Whitehall with the big stick did indeed go down and tell people how things should be done.

I remember that when I held the work and pensions brief in opposition, I used to receive regular e-mails and letters from people who had been referred to the employment programmes that the previous Government had put in place and were hugely frustrated. They were being referred for a 13-week period, more often than not to sit in a classroom for the entire time, with a few lessons on how to fill in a CV and do interviews and the occasional work placement. However, they absolutely did not get the type of diverse programme that the hon. Gentleman described.

I am all in favour of some of the initiatives that the hon. Gentleman mentioned, although I do not know the details of every one. He described young people setting up their own market stalls and unemployed young people rebuilding community centres to gain the skills that they need. I applaud such valuable initiatives.

One thing that excites me when I look at the ideas of Work programme bidders is that we have challenged them to move beyond where they were before. We set a minimum performance standard in excess of what previous national programmes had achieved, precisely because we wanted to drive innovation, new ideas and much more tailored provision. I do not want one-size-fits-all provisions, because, as the hon. Gentleman knows, they do not work. A wide variety of individuals have been on benefits for the long term. He referred to young people who grew up in households in which their parents and grandparents did not work, and who had no experience of a working environment as they grew up. We must help those people back into an understanding of what they can achieve in the workplace. Some older people find that the profession that they spent 20 or 30 years in is no longer available to them. We need to help them to find something different to do with the remainder of their working years.

The Government have actively sought new ideas and a new approach. The exciting thing about the Work programme bids is that there have been real signs of innovation that move beyond that 13 weeks in the classroom and the structure of past programmes.

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Kerry McCarthy (Bristol East) (Lab): I appreciate the need to recognise that unemployed people are individuals with individual circumstances, to which the Minister has referred. My concern is that Jobcentre Plus does not always recognise that at a local level in respect, for example, of the new requirement that lone parents seek work when their youngest child is aged seven—the age is eight at the moment. I hear tales of people being told that they are regarded as not looking for work, because they say that they cannot work in the evenings because babysitters are unavailable, or because they turn down a job that starts at 9.30 am and they have to drop the kids off at school on the other side of town at 9 am. Will the Minister reassure me that such people will not be penalised?

Chris Grayling: I can absolutely give the hon. Lady that reassurance. She will know that there is a definition of reasonableness in deciding whether somebody should be required to take a job. We only expect lone parents with a child at primary school to take up a job that is consistent with school hours—it would be absurd to expect a lone parent to work a night shift, for example. I absolutely assure her that that is the case.

While we are on that point, I will pick up the point that the hon. Gentleman raised on targets. The truth is that we discovered that problem, were horrified about it and put a stop to it immediately. However, is he aware of the roots of the problem? The roots are in a set of benchmarks that were introduced by Jobcentre Plus regions to judge whether appropriate sanctions were being achieved in each area, why there were differences, and whether policy was being applied uniformly. In an organisation that is, in my view, too target and detail-focused, the consequence was that in some areas, that was interpreted as a need to apply the individual target of which the hon. Gentleman is now aware.

However, the hon. Gentleman might be unaware that the those benchmarks were introduced in 2006 under the previous Government. Jobcentre Plus is much too focused on targets and goals. Benchmarks are turned into individual targets for front-line staff, and the organisation’s culture does not appreciate the fact that we want front-line individuals to use discretion. We are going through a long change process after 13 years. Jobcentre Plus is used to taking diktats from the top, but this Government are saying, “We want you to use discretion in the front line and to take the right decisions in the interests of individual with whom you are dealing. We do not want you constantly to look back over your shoulder to ask what the centre is saying.” That is an important development, but it will take us time to feed through the whole organisation.

Ironically, given what the hon. Gentleman said about targets, that policy dates back to changes made by the Labour party when it was in power. Indeed, last April it changed the rules actively to encourage an increase in the number of sanctions—again, something that we inherited. It is easy to look at the current Government and say, “What are you doing?”, but actually it is a problem which we inherited, which has grown and which we are now trying to unpick.

The hon. Gentleman referred to the future jobs fund. I know that Labour Members are wedded to it, but in truth it cost four times as much per job outcome as the previous Government’s other scheme, the new deal for young people. At the end of the day, given that we have

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inherited the biggest budget deficit in Britain’s peacetime history, we have to take some hard decisions and look for value for money. The problem with the future jobs fund was that it was a six-month work placement in the public or voluntary sector with no clear pathway through to a long-term career. We took the view that it was much better to invest our money in apprenticeships, where the young person spends an extended period with a private sector employer gaining skills that will provide the foundations of a lifetime’s career and that will not simply lead to a shutter coming down at the end of six months.

We are pretty early on in our apprenticeships programme, but we are already having considerable success in getting employers to take up apprenticeships. I was delighted to go to Newcastle earlier in the week and see the front page of The Journal announcing a great success for the paper’s campaign to encourage small employers to provide apprenticeships for young people. That is the kind of partnership that I really like. I absolutely agree with the

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hon. Gentleman about the importance of local partnerships. I want local employer groups, papers and public sector organisations working together to encourage young people to take up apprenticeships and to encourage local employers to provide apprenticeships. He will know that we are focused on ensuring that we provide work experience places for young people, but above all we are trying to ensure that decisions are taken locally. In the context of what is being done in Rhyl, there is nothing in the Work programme that prevents that work from continuing. Excellence will flourish in the Work programme. The whole system is designed to give local communities, providers on the ground and local organisations the freedom to do what works for the individual, which is what is important.

In conclusion, I regard unemployment, particularly youth unemployment, as among the most important of this Government’s challenges. I am relishing the chance—

10.12 pm

House adjourned without Question put (Standing Order No. 9(7)).