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House of Lords

Thursday, 25th January 1996.

The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Chichester.

Youth Training Allowance

Earl Russell asked Her Majesty's Government:

    Why they have not uprated the youth training allowance and the youth training bridging allowance.

The Minister of State, Department for Education and Employment (Lord Henley): My Lords, the Government set minimum allowances which are topped up by a significant proportion of training providers and employers. They reflect the future career benefits to be gained from their training.

Earl Russell: My Lords, does the Minister agree that if those allowances are, as he implied, adequate now, they were grossly excessive in 1988? Is he aware, further, that they have caused considerable top-up costs to the Department of Social Security? Will the Government consider transferring responsibility for uprating those allowances to the Department of Social Security, which has an organised uprating procedure?

Lord Henley: My Lords, I do not agree with the noble Earl in his first supplementary question. We have no plans to so uprate the allowances. If more money went into allowances, less would go into training.

As he is aware--though I understand that he feels otherwise--we believe that the policies we are pursuing whereby we seek to prevent young people of 16 and 17 from receiving income support are in their best interests. We provide three possible avenues--education, training or work. I am pleased to say that we now have only around 8 to 10 per cent. who are not pursuing one of those three options.

Lord Molloy: My Lords, does not the Minister agree that the failure to uprate youth training allowances could possibly mean that those not entitled to income support may become progressively worse off? Is that not an unfair situation?

Lord Henley: My Lords, I do not believe that to be the case. Many employers or training providers top up the allowances. Where individuals are in hardship, income support can be available; but we do not believe that there should be general entitlement to it for 16 and 17 year-olds.

Baroness Gardner of Parkes: My Lords, for those of us who are not so well informed, can my noble friend make clear what is the difference between the youth

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training allowance and the youth training bridging allowance? What kind of money is involved in the amount a person receives each week?

Lord Henley: My Lords, the youth training allowance is £29.50 for 16 year-olds and £35 for those aged 17 or over. The bridging allowance, which is £15 a week, is paid to those who are waiting to take up training under the YT guarantee.

Lord Weatherill: My Lords, perhaps I may ask an allied question, and I apologise for not giving the Minister notice. I declare an interest as a trustee of the Prince's Youth Business Trust which over the past 10 years has set up in business around 24,000 young people. They are being severely affected by the phasing out of the enterprise allowance. Will the Minister please look at the situation again? The enterprise allowance will be much cheaper than keeping a young person on the unemployment register.

Lord Henley: My Lords, I appreciate that the noble Lord speaks with extraordinary experience, and I am grateful to him for declaring his interest to the House. It is a valuable interest to society. I am prepared to look at the issue. As the noble Lord said, the matter goes slightly beyond the Question on the Order Paper.

Lord Morris of Castle Morris: My Lords, does the Minister recall that the Government defended the decisions not to uprate the YT allowance as long ago as 1992? They said:

    "the current minimum allowances are sufficient to meet the normal requirements of trainees living in the parental home".--[Official Report, Commons, 10/7/92; WA351.]
As the noble Earl, Lord Russell, said, 1988 and 1995 are a long way apart. But in the same column of the same edition of the Official Report the Government said:

    "Employers benefit considerably from Government expenditure on YT and are strongly encouraged to supplement trainee incomes wherever possible".
Can the Minister tell the House how many employers did so then, and how many do so now?

Lord Henley: My Lords, I cannot answer the noble Lord's question as to how many employers supplemented trainee incomes then. As regards the present time, two-thirds of trainees are either in paid training or in receipt of the allowance and finding it topped up.

Lord Rochester: My Lords, why are those allowances not uprated on the same basis as other allowances for which the Department of Social Security is responsible?

Lord Henley: My Lords, they are not social security benefits and they should not be seen as social security benefits. I made clear earlier, but I think that this is a point worth making again, so I shall repeat it: if more money goes on allowances, less money is available for training. We have a very good record on training. As I said earlier, something of the order of over 90 per cent.

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of our 16 and 17 year-olds are either in work, in training, or staying on at school or college. In fact, more are staying on at school or college than ever before.

The Countess of Mar: My Lords, can the Minister explain why severe hardship payments for this group of young people increased from 1,669 in May 1990 to 10,988 in May 1994, and is that trend continuing?

Lord Henley: My Lords, I do not know whether the trend is continuing, but it obviously shows that the social security offices are applying those rules in the appropriate manner. However, I can advise the noble Countess--I know that she has advocated this for a long time--that merely giving 16 and 17 year-olds an automatic entitlement to income support would not only be highly expensive, but would not serve their best interests. In fact, I think that fewer people would stay on in full-time education or enter work or training if we were to go down that line.

Lord Stallard: My Lords, the Minister mentioned that £15 is the bridging allowance for a trainee, but does he accept that it does not matter whether it is the Department of Social Security or any other department which pays that £15? Our point is that £15 in 1988 is now worth at least £21.76. Therefore, is it not about time that we accepted that that £15 is inadequate in 1996 and should be uprated, irrespective of who uprates it? According to a dossier from the citizens advice bureau, hundreds of thousands of people are suffering hardship because such allowances are far too low.

Lord Henley: My Lords, the £15 to which I referred is purely a bridging allowance for those waiting to start training--a training that will benefit them. As I made clear, those who are in vulnerable groups and likely to suffer severe hardship will have an entitlement to income support, but we do not think that there should be an automatic entitlement to that support.

Earl Russell: My Lords, the Minister argues that this is not a matter for income support, but why has the youth training allowance been allowed to fall so low that it is topped up out of income support? Has the Department for Education and Employment compensated the Department of Social Security for the charge that it has thereby imposed on its budget?

Lord Henley: My Lords, generally speaking, the figures are more or less above the rates of income support. As I have said, we do not believe that there should be an automatic entitlement to income support, but that it is right that there should be an entitlement to income support for those suffering severe hardship.

RAS: Privatisation Benefits

3.15 p.m.

Lord Bancroft asked Her Majesty's Government:

    What benefits they expect to accrue to the public sector borrowing requirement from the proposed sale of Recruitment and Assessment Services (RAS).

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The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, the sale of the Recruitment and Assessment Services (RAS) will not significantly affect the public sector borrowing requirement. Privatisation will benefit RAS, freeing it to compete for business in wider markets and offering new opportunities for investment. Existing customers will benefit because, freed from public sector operational constraints, RAS will be better able to improve its services.

Lord Bancroft: My Lords, I am much obliged to the noble Earl for effectively confirming by his Answer that the Government's decision is explicable only in terms of ideology. That is not the Question that I asked. However, is the Minister aware of the disquiet that is being caused by the privatisation (without parliamentary process or discussion) of a main safeguard of Civil Service integrity, however hedged about by contractual conditions? Is he further aware that last year RAS recruited 100 per cent. of the administrative fast-stream entry, the future leaders of the service, and has increased its share of total Civil Service recruitment from 7 per cent. to 11 per cent.?

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