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Hywel Williams (Arfon) (PC)
I am pleased to have secured a debate on a pressing issue at an opportune time. Unemployment in Wales, particularly unemployment among young people, is worrying. The valleys, for example, have the highest benefit claimant count not only in Wales, but in the United Kingdom. The report, “Tackling Worklessness in Wales”, by Sheffield Hallam university, is therefore timely, and I commend it to hon. Members. It is makes for interesting reading, and it is condensed in both the introduction and the conclusion for easy reading—for some hon. Members.
Unemployment is only one side of the coin, as the titles of the debate and of the report indicate. Unemployment is in some ways merely a consequence of the lack of a job. That sounds self-evident, of course, but I sometimes get the feeling that some commentators—not all, by any means, on the Government side—see unemployment only as an aspect of a personal failing. Reading the tabloid press, it is sometimes portrayed as an aspect of personal wickedness, but obviously people cannot work if the jobs are not there or if their personal circumstances make it difficult or impossible for them to set up on their own. I left a secure job at a university to set up on my own six years before I was elected as an MP and fell in with a bad lot here. Six years of self-employment taught me a great deal.
There are two themes to my contribution: first, I will discuss the dire unemployment and economic activity figures; and, secondly and significantly, I will examine the need to take robust steps to create work. Sheffield Hallam university estimates that we need 170,000 extra people in work in Wales to bring us up to the standard of the best parts of the UK. That is a huge challenge. I immediately accept that the previous Government took great steps to increase the number of people in work. I know that this Government have that aim, but it is a huge number to reach.
Jessica Morden (Newport East) (Lab)
In the Select Committee on Welsh Affairs, which just met upstairs, the Secretary of State for Wales could not answer the question posed by the Sheffield Hallam report of where the private sector jobs will come from for the thousands of people coming off incapacity benefit due to the Government’s welfare changes. Does the hon. Gentleman agree that the Government should slow down and look at the dire consequences of what they are doing?
Hywel Williams
I agree with the hon. Lady. The changes in welfare are being brought forward too quickly, but I am also concerned that the work on the other side of the coin—creating jobs for people who will hopefully be leaving the benefits system or unfortunately be moving to lower levels of benefit—is not being prosecuted sufficiently.
Figures were released in the report today, and the situation in Wales is particularly worrying. I hope that referring to only some of them will mean that I am not tediously repetitive, but they make for interesting reading. The total number of jobseeker’s allowance claimants in my constituency is 1,245, and there were 364 jobs available at the jobcentre in the month in which the figures were collected, which is 3.42 claimants per job. If one adds in everyone who is on Department for Work and Pensions benefits, the total figure goes up to 5,590. I share the Government’s ambition of moving people who have been long-term sick or disabled back towards work. I agree entirely with that, because work is good for everyone, but it is a huge challenge just in my constituency.
In the most dire example in Wales—Rhondda—there are 2,315 claimants, which is 28.23 claimants per job, so there are 28 or 29 people chasing every job. I accept that some jobs are not advertised, but are available elsewhere. [Interruption.] The hon. Member for Aberconwy (Guto Bebb) is smiling. Hopefully, I have drawn one of his teeth. I accept that statistics can be misleading, but there are 12,540 DWP benefit recipients, which means 152.93 claimants per job. The challenge is enormous. Incidentally, if, Mr Weir, you were sad enough to have looked at the debate on my ten-minute rule Bill about three weeks ago, you would have seen that the hon. Member for Rhondda (Chris Bryant) claimed that the figure is 84 per job. Presumably, he knows his constituency better than I do, and possibly the official statistician, but he says 84 and I say 152.93. The challenge is enormous.
I am afraid that the situation is the same throughout the valleys. For example, Cynon Valley has 122 DWP benefit recipients per job. Interestingly, when one looks at the other side of the coin—where the jobs are—Alyn and Deeside has more than 1,000 jobs posted, so the figure there is 1.55 claimants per job, which is almost a job for everyone who is claiming JSA. That is a good situation to be in, but it stands out in Wales as the exception rather than the rule.
Guto Bebb (Aberconwy) (Con)
I congratulate the hon. Gentleman on securing the debate. Does he agree that the situation in Deeside, for example, is indicative of the fact that the manufacturing base there is extremely strong? The Government will emphasise developing the manufacturing sector rather than depending on state-created jobs, as the previous Administration did.
Hywel Williams
I agree with the first part of the hon. Gentleman’s intervention. I have long been a supporter of manufacturing, although it is not a prominent sector in large parts of rural Wales. The situation in Alyn and Deeside is helped by the fact that it is immediately adjacent to the Cheshire plain, where there are many jobs, and the huge investment in Airbus. There are lots of reasons, but it is a situation to which some people in the valleys might aspire. Alyn and Deeside has had a lot of Government help to reach that position.
The final column of figures is striking. It shows that there are nearly 72,000 JSA claimants, which is nearly 4.5 claimants per job, and more than 350,000 people on DWP benefits, which is nearly 22 claimants per job. The figures are breathtakingly difficult to cope with for any Government, either here or in Cardiff. The total Jobcentre Plus jobs available in June was a little over 16,000. We are talking about an enormous problem, and I do not envy the Minister or the Welsh Assembly Government, who are of a different political stripe but who have the same sort of aim, their jobs.
Some groups are hit particularly hard, and there is an issue of gender. There are now more women claiming JSA than at any point since the previous Conservative Government were in power in 1996. Across the UK, the number of women claiming JSA rose by 9,300 last month to a 15-year high of 493,000. That shows that there is an issue for women. The figures are expected to worsen, because the coming cuts are to the public sector, where there is a preponderance female employment, so women will be hit harder again. About two thirds of people employed in the public sector in the UK are women, so there is a differential effect.
The cuts come at the same time as a report from the Chartered Institute of Personnel and Development notes that unemployment will remain high across the UK until 2015. The report was produced by crystal-ball gazers, so one has to take the figures with a pinch of salt, but that is their prediction. A real fact, which I think the hon. Member for Aberconwy has referred to, is that we know that 77,000 Welsh people have been claiming out-of-work benefits for 10 years or more. That is a startling and unhappy fact.
The Government’s welfare reforms are predicated on the assumption that jobs will be there for those who move off higher benefits. Welfare reform was originally partly introduced to encourage more people into work during a period of high unemployment, but it is now one of the more controversial aspects of the Government’s policies. The figures show clearly that the jobs are not available. I will not stray too far down this road but, in passing, there is a real danger that the net effect of job cuts, welfare reform and so on will be to force many people not into work but on to lower benefits.
Of course, the Government hope that the private sector will grow and take up the slack, but unfortunately growth is weak in the Welsh economy. In Wales, the private sector is weak and previous jobs growth in Wales was mainly in the public sector. I do not know whether there is a causal relationship and whether growth in the public sector leads to a weak private sector or the other way around—the private sector is weak and so public sector jobs take up the slack. We are talking about a complicated relationship.
We all agree that we must aim for jobs growth in the private sector. I do not blame the private sector in Wales, because we have to accept that the economy in Wales has been dealt successive blows for many years with the closure of heavy industry and the legacy of long-term illness and disability. As someone who belongs to a party that was in government until recently, I say that we must accept that economic policy in Wales, as conducted by Governments of every party, has not been as successful as we all hoped that it would be.
I hardly need to say therefore that I am in favour of developing the private sector. However, the private sector in Wales is intertwined closely with the public sector, and cuts in the public sector might endanger or even hamper growth in the private sector. The picture is complicated. The Sheffield Hallam university report states:
“The loss of public sector jobs will exacerbate the situation.”
We are looking at a complicated picture. Employment in the public sector is important but, of course, those sorts of jobs are going in the cuts. There might be a double blow to the Welsh economy of fewer public sector jobs and less business for the Welsh private sector.
I have long believed that we need to have better integration between job finding, job placements provided through Jobcentre Plus and the Work programme, and those Welsh Assembly Government Departments that can have a profound effect on people’s ability to take up jobs. I refer hon. Members to my ten-minute rule Bill, which I introduced a few weeks ago but did not get a Second Reading. I do not want to repeat the arguments that I made then, except to say that the Welsh Assembly Government have responsibility for services such as education and training, further and higher education, skills development, health and social services and child care—I could go on—and that a certain synergy could be achieved by better co-ordination with Jobcentre Plus and the Work programme. I have no doubt that those services could be better combined and co-ordinated to enhance jobseekers’ hopes of finding work.
The crux of my argument today is that we need not only to equip and motivate jobseekers better, but to introduce a variety of other policies that will provide jobs. We need a concerted effort at job creation and to provide long-term jobs rather than stop-gap placements that disappear after the target has been reached. That has been a feature of job creation in Wales over the past few years.
Guto Bebb
I could not agree more on the issue of creating long-term jobs. One of the sad facts of the situation in Wales is, in the 1990s, we were consistently at the top—or very close to the top—of the United Kingdom regional league table in terms of creating self-employment. In the past five years, we have consistently been in the bottom part of that league table and have, in fact, been in last position. The fact that the Government are introducing the enterprise allowance scheme again is a positive development, because a significant number of businesses in north-west Wales that were founded under the old enterprise allowance scheme still survive.
Hywel Williams
The hon. Gentleman makes a good and pertinent point. As I said, I am very much in favour of encouraging self-employers, and there are steps that we can take to do so. My entry into self-employment could not have been more disastrous. I left university and tried to claim a bit of benefit, as someone who supposedly knew something about the system, only to find that when I was down in Cardiff job hunting, I should have been at home signing on. I was therefore denied a bit of money that I might have claimed because I was not idle at home; I was out searching for that illusive job.
Other measures for which we in Plaid have argued in the past include a temporary cut in VAT to kick-start the economy. Of course, we recently had a vote on that. The Government parties voted against the proposals and I am afraid to say that the Labour party abstained. Some hon. Members will know that, since 2008, we have campaigned alongside the Federation of Master Builders and others for a specific cut in VAT on repair and renovation. Following last year’s ECOFIN decision, VAT on repair and renovation could go down to 5%. Other countries have followed that path by reducing VAT on labour-intensive industries, and they have had effective results. Many pre-1919 houses are in a particularly dire state and need fixing. That is peculiar to some parts of Wales, particularly the valleys. The work is available and there are, of course, the workers. What we need is a more favourable tax regime to encourage those workers to do the work. The Federation of Master Builders estimates that we could create about 100,000 jobs.
Hywel Williams
I will give way once more, but I am anxious to hear what the Minister has to say.
Guto Bebb
I am extremely grateful to the hon. Gentleman. May I concur with the comments that have been made? As a Member for an area that is very dependent on tourism, I have also heard the argument for a reduction in VAT for the tourism sector. Any Government who want to create enterprise and employment should look carefully at using the tax system to do that although, obviously, that has to be put in place once we have the public finances in order.
Hywel Williams
That is a moot point. I do not have the figures at my fingertips, but when VAT on construction services was reduced in Italy, a large number of people who were working cash in hand realised that becoming legal and paying a lower rate of VAT was worth while. Allegedly, the tax take went up, so given the Government’s current situation, it might be useful to consider that. I have not seen the operation of the famous Laffer curve being proven in such a way before but, allegedly, that was the case in Italy at least.
The 100,000 jobs that it is estimated that such an approach could create would be local, but there is also a strong equality case in favour of the policy. I put this question rhetorically rather than to the Minister: why should a young couple pay more for renovating their terraced house when a banker who retired early with a big pension pot does not pay VAT on his newly built ranch-style property in the south-east? I had to get that one in. There is an equality issue, and lots of young people are trying to renovate their houses, so the proposal would be a great help to them.
Lastly, as I realise that time is moving on, we also need to boost self-employment. I agree with the FSB, which estimates that the self-employed contribute £21 billion to the UK economy every year. It argues persuasively that self-employment is a key driver to achieving economic growth. That is particularly the case in Wales, as self-employment is a feature of much of rural Wales.
I agree with the hon. Member for Aberconwy when he argues for enterprise zones, particularly enterprise zones themed around certain types of activity. The only thing I worry about is that if we have enterprise zones throughout the UK—not just in Wales—they will not act as an incentive hub for a wider economic picture. In some places in the early 1980s, jobs were poached from other areas and the net effect was less than one had hoped for because, rather than creating new jobs, companies moved in to benefit from the improved climate within the enterprise zones. That is a particular worry. I understand that the Government intend to have such an enterprise zone somewhere in the north-west. I am not sure what is going to happen, but I will certainly keep an interest in the matter.
Irrespective of welfare reform, we need in Wales to boost the private sector, to equip our workers and workless people better, and to improve the integration of services to ensure that there are jobs for our people and prosperity for our country. We need a work creation programme—that is the missing part of the jigsaw. If that sounds a bit like the case for a future jobs funds 2, so be it, particularly if that is aimed at those who are inevitably at the end of the queue when jobs are being handed out—the long-term unemployed, and those incapacitated by illness or long-term disability.
The Minister of State, Department for Work and Pensions (Chris Grayling)
I congratulate the hon. Member for Arfon (Hywel Williams) on securing the debate. I will have to respond to him relatively briefly because I think I have only nine minutes in which to speak.
The hon. Gentleman made his points extensively and thoughtfully, but I do not recognise the degree of bleakness in the picture that he portrays. I recognise that unemployment remains a major challenge for us around the country—it is one of the most difficult parts of our inheritance. I accept that a number of areas of Wales, like a number of areas of England, Scotland and Northern Ireland, are affected by deep-rooted problems of worklessness. However, Wales has been one of the brighter spots in the labour market in recent times.
The hon. Gentleman talked about the private sector. In Wales in the past 12 months, the truth is that 31,000 net new jobs have been created. In reality, that represents a higher number of jobs in the private sector because the figure also takes into account job losses in the public sector. In the past year, Wales has proved that it is possible to grow private sector employment. Unemployment in Wales has fallen by 16,000. He asked where the jobs would come from. The truth is that in Jobcentre Plus in the past three months, nearly 48,000 vacancies have been taken in across Wales.
The total number of people on jobseeker’s allowance in Wales as a whole is 71,600. While I recognise that we have a challenge, and I particularly accept that we have a challenge in individual areas of Wales, the picture is not as bleak as the hon. Gentleman suggests. I certainly do not think that it is as bleak as is portrayed by the Sheffield Hallam research, which argues that, in the valleys alone, 70,000 more jobs would be needed. As the total JSA count for the whole of Wales is 71,000, I would have to say that its view is on the pessimistic side.
The hon. Gentleman is absolutely right—my hon. Friend the Member for Aberconwy (Guto Bebb) is also right—to say that we really need to support the growth of self-employment in Wales. A central part of the task of encouraging and fostering economic and employment growth in Wales is supporting the self-employed. That is why I am committed to the success of the new enterprise allowance in Wales, which will help people off benefits and into self-employment, and it is why I hope that the new Administration in Cardiff will make self-employment a particular focus of its work with business.
If I was replying to a debate about an English region, I would be setting out a number of other areas in which the Government are taking steps to try and deal with the unemployment and worklessness challenge, including through apprenticeships, which are an essential part of our strategy. Particularly for the young unemployed, apprenticeships are a much more cost-effective way of delivering support and opportunity than the extremely expensive future jobs fund, which provided six-month placements in public and voluntary sector organisations at a time when the best job opportunities were arising in the private sector. The cost of that scheme was three to four times more than even the new deal for young people under the previous Government. The scheme was not affordable and did not deliver clearly improved results on either value or outcomes in comparison with other schemes. Investment in apprenticeships delivers a much better alternative, so I hope that the new Administration in Cardiff will pursue that route.
It is also important that the new Administration in Cardiff do a good job on economic development. If we were talking about another part of the UK, I would be talking to the hon. Gentleman about the importance of the regional growth fund to invest in manufacturing, and research and development facilities, in those areas of the country that have lower levels of private sector employment and bigger employment challenges. Again, I hope that the new Administration in Cardiff will take the lead set by the coalition Government in Westminster to set up a similar mechanism to the regional growth fund to invest in precisely the kind of opportunities that he rightly says that Wales needs.
We are taking clear steps to try and deal with the issue of worklessness in Wales. Alongside the introduction of the new enterprise allowance, that is being done through two particular schemes. The first is our work experience scheme, which is designed to address the challenge that young people face to get a first foothold in the workplace. All too often, they face the challenge of not having the experience to get a job, and not being able to get such experience without a job. One thing I learned quickly on becoming a Minister was that the previous Government’s rules said that if people did more than two weeks’ work experience, they lost their benefits. That was crazy. We have now changed that rule and it is possible to do up to eight weeks on benefits while doing work experience.
In addition, we have turned the whole system on its head and are now actively looking for work experience opportunities for young people across England, Scotland and Wales in an approach that will give young people an opportunity to gain initial experience in the workplace and show potential employers what they can do. I hope that that will prove to be a route into apprenticeships. Again, I hope that the Government in Cardiff will work with us to ensure that there is a clear link between the work experience opportunities for which we are looking through Jobcentre Plus, those first few weeks in the workplace, and an opportunity for those young people to move into an apprenticeship.
The other part of our strategy to help the long-term unemployed is the Work programme, which is now operating throughout the whole country. In Wales, we have two providers: Working Links and Rehab Group. Rehab Group is one of our two part-voluntary sector prime contractor groups. Alongside those two prime contractors, there is a network of different organisations around Wales helping to provide specialist support for the long-term unemployed. What makes the Work programme different is that it is all about delivering much more personalised and tailored support to the long-term unemployed and those who are moving off incapacity benefit.
I would take another issue with the Sheffield Hallam report. As a result of the changes we are making to incapacity benefit, no one will lose benefits except those who are currently in receipt of contributory employment and support allowance, which will be time-limited, and those who have other financial means. If people do not have an alternative form of support, they are not suddenly going to be cast on to the streets, but that is a point about which the report gives a slightly misleading impression.
I describe the Work programme as a giant employment dating service. It is about matching individuals to the right job opportunity, and a job opportunity in which they are likely to stay. It is important to the providers that they deliver because we do not pay them unless they get people into sustained long-term employment. They cannot earn their full fees for a conventional jobseeker for 18 months after that person has entered work, so if someone ends up in the wrong job and is likely to drop out, the provider will inevitably lose out financially. The providers therefore have every incentive to ensure that they match individuals to the right job opportunity in which they have the best chance of staying.
The Work programme will deliver a much better support than has previously been the case. It unleashes best practice. It will succeed the most if it delivers what works the best. There are no diktats from Whitehall—no instructions about how to do this—because it is all about delivering what works for individuals. I am confident that the Work programme will take back-to-work support to a new level and help many of those people who are trapped in pockets of long-term unemployment in Wales to find and move into opportunities that arise.
I am confident that we will see economic growth across the country. The independent Office for Budget Responsibility is forecasting significant growth in private sector employment in the next few years, and that has already been happening in Wales. The key is to ensure—this was not happening under the schemes that we inherited from the previous Government—that those who are trapped on JSA and other benefits have, when possible, the opportunity to take advantage of vacancies when they arrive. Our reforms are all about making work pay, supporting people into work and trying to create an environment across the UK in which business can flourish, grow and develop. In Wales, with the additional contributions that I hope will come from Cardiff to work with us on economic development and creating opportunities for business to grow and develop, I hope that that will provide a solution to the very real challenges of worklessness in Wales that the hon. Gentleman rightly identified.
Question put and agreed to.