Youth Unemployment

Thursday 14th June 2012 Lords Chamber

Motion to Take Note

11:36

Moved By

[Lord Adonis]

That this House takes note of the level of youth unemployment and its social consequences.

[Lord Adonis]

My Lords, in opening this debate on youth unemployment, I cannot help observing that we have two and a half hours to debate one of the most critical issues facing the country, which is one-10th of the 25 hours that the House has spent debating House of Lords reform in the past two months alone. Perhaps our priorities are not in quite the right order, or in the right proportion.

I doubt that many Members of the House deny the urgency of getting young people into jobs. A lost generation is in the making, which could scar Britain for decades to come. On this, I agree with the Deputy Prime Minister, who described youth unemployment as,

“a ticking time-bomb for the economy and our society”.

I also agree with what he said needed to be done, which is to get every unemployed young person earning or learning again before long-term damage occurs. The question for this debate is how far actions match words.

However you look at it, the situation is dire. There are 954,000 people under the age of 24 who are not in employment, education or training. Most concerning of all, 167,000 of those aged under 24 have been unemployed claimants for more than six months, a number that has more than doubled since last April, while 61,000 have been claiming for more than 12 months—a number that has more than trebled in the past year. Young people have fared far worse than older people in the severe downturn. We can debate why this is the case but for the young people affected this is not an academic debate, it is a personal catastrophe—an immediate source not only of low income but of low self-confidence, poor health, damaged relationships and often extreme social marginalisation, all of which only further harms their job prospects and adds to the cost of putting it all right. I doubt that your Lordships will dispute any of this. The question is what we do about it.

Of the analysis that I have read in recent months, I have been most impressed by the report of the Commission on Youth Unemployment, sponsored by ACEVO—the Association of Chief Executives of Voluntary Organisations. It highlights three priorities. First, young people need more job opportunities to be available here and now. Secondly, young people need better preparation and motivation for work. There needs to be a new vision for what ACEVO calls,

“the ‘forgotten half’ of young people who are not destined for university or a high-quality apprenticeship post-16”.

Thirdly, unemployed young people need the support of a far more active welfare state to help them to get into work and to stay there.

Let me take these three priorities in turn. First, on more jobs, almost everyone accepts that stronger incentives are needed for employers to recruit more unemployed young people. The present Government, after first scrapping the previous Government’s future jobs fund, have now recognised the need to do more; hence, the new youth contract offering 160,000 wage subsidies of just over £2,000 each for new private and voluntary sector jobs given to long-term unemployed people over this year and the next two years.

The youth contract represents 53,000 work opportunities over the coming year, which, in the face of 167,000 young people who have been unemployed claimants for more than six months, is not that many, even if they are all created. However, 53,000 would be a start, so I would be grateful if the Minister would tell us precisely how many young people have so far this year been recruited by employers from the Work Programme and what is the Government’s projection for the rest of 2012?

Will the Minister also tell us what progress has been made in creating the 100,000 work experience places also promised for this year in the youth contract? I strongly support work experience placements, provided the young people are treated properly, but they are of short duration—as little as two or three weeks each—and are not, of course, a substitute for real jobs paying real wages.

My party believes that we need to go further than the youth contract; hence our proposed real jobs guarantee for the under 25 year-olds who are long-term unemployed. For those who are out of work for more than a year, there would be six months paid employment with the state providing a wage subsidy for 25 hours of work and the employer covering the cost of 10 hours of training a week. I look forward to hearing from the Minister whether, if the youth contract does not rapidly reduce the number of the long-term young unemployed, the Government will consider adopting the real jobs guarantee and the bankers’ bonus tax which makes it possible. I urge the Prime Minister and the Chancellor to do so sooner rather than later if their concern about the young unemployed is more than crocodile tears.

The second priority is to prepare people better for work. Schools and further education colleges have a big job to do in this respect. Even with the rise in school standards over recent years, four in 10 16 year-olds are still not getting five good GCSEs including English and maths, which is all important in terms of their employability. Professor Alison Wolf’s recent report on vocational education contains a startling fact. Of the four in 10 16 year-olds who do not get five good GCSEs including English and maths, only 4%—I repeat, 4%—attain GCSE level English and maths in any vocational education and training that they do afterwards. As Professor Wolf rightly says, English and maths should be the essential building blocks in whatever courses are taken by post-16 year-olds without basic skills. Urgent reform is needed here.

Better still of course would be for teenagers to get English, maths and a good general education while they are still at school. School standards are still not nearly high enough, particularly in the many hundreds of comprehensive schools where a majority of teenagers are still not leaving with essential GCSEs. That is the reason why the previous Government concentrated the academy programme on the lowest performing schools—to give them a “big bazooka”, in the words of the Prime Minister. I urge the Government to focus new academies and free schools in disadvantaged areas and to do more to support the recruitment of highly motivated teachers into such areas by, for example, expanding more rapidly than planned the excellent Teach First programme.

The education system also needs to promote technical disciplines far better. That is why I strongly support the university technical colleges proposed by the noble Lord, Lord Baker. They are academies for 14 to 19 year-olds, each with a technical specialism—ranging from engineering and construction to the digital media—and each sponsored and managed jointly by companies and universities.

Then there are apprenticeships. Everyone now talks the language of apprenticeships, which is a welcome change, and the Government cite very large numbers for new apprenticeship starts. However, if you scratch the surface you find that most new apprentices turn out to be in their late twenties and all too many of them existing employees renamed apprentices because of the Government’s rebadging of the Train to Gain employee training scheme as an apprenticeship scheme. Large numbers also turn out to be on short-term training courses of less than six months’ duration.

There is a real danger that apprenticeships are being dumbed down as fast as they are being created. How many 16 to 21 year-olds were last year in apprenticeships lasting more than a year that had both an employment and college-based component, and how many employers offered such apprenticeships in that year? Is the Minister’s own department giving a lead and offering apprenticeships? Does he by chance have an apprentice in his own office? When I was Minister, I did not—and, looking back, I should have done.

This is not just tokenism. Unless central and local government give a strong lead, they cannot complain if the private sector does not follow. Public procurement has an important part to play here. For example, Kent County Council makes the creation of apprentices a procurement condition for contracts worth more than £1 million, with at least one apprenticeship required per £1 million spent on labour. The first such contract was recently awarded to a company delivering highways maintenance which, as a result, will take on apprentices to cover at least 3% of its jobs. The company, fittingly, is called Enterprise. We need to seek far more enterprising companies of that type across England.

Unless good-quality apprenticeships for the under-21s, leading to good-quality jobs, become far more numerous, we will never have secure pathways to employment for teenagers who are not on track to go to university. As the ACEVO report says:

“If the route to university is a well-signposted motorway, the route into work for these 16-to-18-year-olds is more like an unmarked field of landmines”.

In this respect, I am attracted by ACEVO’s suggestion that we set up an equivalent of UCAS for apprenticeships, with employers, national and local, large and small, advertising their apprenticeships through a single web-based system. The aim would be for this to become as near as possible a universal listing service.

We also need more and better work experience for teenagers while at school, and systematic mentoring of young people by young people themselves, including those in work mentoring those out of work or on their way into it.

Thirdly, on the welfare system itself, the Minister is a respected champion of an active welfare system, one far more focused on helping people into work and mobilising organisations which are good at promoting this to do so instead of relying just on a state bureaucracy. Is he satisfied that the current system is remotely active enough in helping young people into work and training, particularly those who are clearly in danger of long-term unemployment, or only casual employment, because they have few qualifications and virtually no work experience? The Minister’s flagship reform is the work programme, providing intensive and tailored support for the long-term unemployed. I shall read out the description I have been given of young people’s eligibility to be included in the Work Programme. It says that,

“some will be referred on a mandatory basis after 9 months of claiming JSA … some will be referred on a mandatory basis after 3 months of claiming JSA (if they are 18 and were NEET for 6 months prior to starting to claim JSA, or if they claimed JSA for 22 of the past 24 months … some can be referred at the discretion of Jobcentre Plus after 3 months of claiming if they fall into particular categories (e.g. if they are care-leavers, or homeless) … some will be referred immediately after their Work Capability Assessment to determine whether or not they should be on ESA as opposed to JSA”.

So that is all clear then. More to the point, I doubt that it is at all clear to the young people who need this support, many of whom need it a good deal sooner than nine months after going on the dole, or after they have notched up 22 out of 24 months on the dole. I know that as part of the youth contract more support within Jobcentre Plus is being provided to the under-24s, but I would welcome the Minister’s views as to how intensive support can be given to young people who are clearly in danger of prolonged unemployment before they have been unemployed for the best part of a year.

These are all vital issues and I look forward to what other noble Lords have to say. I end on a personal note. When I was 18, in 1981, I went to sign on in my local unemployment benefit office, which was the former Camden Town workhouse. I had a few months to go before university and in those days students on holiday were allowed to sign on. However, as I was filling in my form, the manager spotted me, came over, and said to me, “Oi, you look as if you can read and write. How about a summer job working here?”. Within 10 minutes I was on the other side of the counter. I was given precisely 10 minutes training and 20 minutes later I was taking fresh claims. I spent that summer and all my university holidays thereafter working as a counter clerk in the Camden Town unemployment benefit office. This was a life course in bureaucracy and all its glories, but, more to the point, it was a life course in unemployment and all its evils. This was 1981, when unemployment went over 3 million. We had them queuing round the block to sign on, often taking six or seven hours simply to get through the queue—young and old, many of them were in tears as they told their stories. Virtually nothing was being done to help them. I hoped then that that situation would never happen again, but it is happening again; it is happening now. We all have a duty to see that the resources of the state are mobilised to the full to bring it to an end as soon as possible.

11:51

[Lord Bates]

My Lords, it is a pleasure to follow the noble Lord. I congratulate him on securing this very important and timely debate. His moving story of how he secured his first employment reminded me of the vital importance of human intervention. We often deal in schemes, numbers and bureaucracy and forget that these are real people who can be excited and motivated.

My interest in the unemployed is exercised in a practical sense through my role as a patron of Tomorrow’s People in the north-east of England, which works with hard-to-reach young unemployed people and tries to inspire them to get into work. There is no doubt that it can make a profound difference to young people to interact with people who believe in them—perhaps they are the first people to do so—tell them that they can achieve things and that they are a solution rather than a problem. Work is going on as we speak in that body’s Working It Out programme, which is taking hard-to-reach young unemployed people in the north-east of England, who often come from households who have been unemployed for generations, and is getting 75% of them into employment or training. Given that those people often have no qualifications, I find that inspiring, as is the transformational effect on their self-confidence of starting employment or training, which the noble Lord also spoke of.

I also completely agree with the noble Lord’s analysis of the vital importance of education in this area and applaud the work that he did when he was an education Minister to promote the academies programme. I know he will find it every bit as frustrating as do current Ministers that often areas where there is greatest need are the last to get the quality of education that they require. It is all well and good saying, “Wouldn’t it be great if more free schools and academies went to the areas where they are most needed?”, but, having tried to set up an academy and a free school in an area where they are most needed in the north-east of England, I found that they were fought tooth and nail every inch of the way by dog-in-the-manger local education authorities and trade unions, which blocked their paths. I find it deeply frustrating to see people wring their hands while talking about the young unemployed but then deny them the education which could provide them with a pathway into employment.

I also very much respect the way that the debate was introduced because it recognised that youth unemployment has been a long-term trend, as was set out in the helpful briefing pack that we received for this debate from the House of Lords Library. Youth unemployment was not invented in May 2010; it has been rising steadily. As Demos says:

“Before the financial crisis hit, youth unemployment had already been on the rise. In fact, UK youth unemployment has risen … as a share of total unemployment for the past 20 years”.

It also observes that from January to March this year the rate was 1.7% lower than the previous year. That is an important point. Although 1.02 million young people being unemployed is a tragedy, we must remember that before the last election the figure was 923,000 and on a rising track. Thankfully, that figure is now beginning to come down just a little, although of course not fast enough.

I want to devote my contribution to what is happening in the north-east of England. I think that there is something else missing from the debate here. It is more than a scheme or a government grant; it is telling young people that there are opportunities out there if they search for them and are willing to push for them. Before the last election, the north-east suffered a series of blows to employment, with the job losses at Nissan and the shelving of the Hitachi trains order. I know that the noble Lord, as Secretary of State, argued vigorously with his friends at the Treasury over that order, but it was shelved. That was followed by the closure of the Corus steel plant. However, over the past couple of years, we have seen the reopening of the plant; we have seen Nissan recruit 2,000 people directly or through the supply chain, and we have seen the £4.5 billion Hitachi trains order go ahead, and that will create 1,000 jobs in Newton Aycliffe. In recent weeks, we have seen Offshore Group Newcastle announce 1,000 new jobs building foundations for wind farms. Moreover, over the past year the number of jobs in the accommodation and food services sector in the north-east has increased by 9,000, up by 12.8%; jobs in science and technology in the north-east have increased by 8,000, or 13.6%; and the number of jobs in the arts and entertainment have increased by 22.4%.

I make those points not in any way to diminish the fact that there is a very serious problem but to stress that if we drum into young people that there are no opportunities, the situation is absolutely dire and there is no hope, we should not be surprised to find that that is the world view they take, asking themselves, “What is the point of applying?”. There are things happening.

Government have a role in this. It is not just about what the private sector is doing; the Government have a role and a social responsibility, and that is referred to in the title of this debate. I would argue that they are exercising that role in a number of ways. As the ACEVO report mentioned, what we need more than anything else is job opportunities—we need businesses to create more jobs. Therefore, it is very important that we see things such as corporation tax being reduced from 26% to 24% and then to 22%, and the freezing of business rates, and it is important that new start-up companies will not have to pay national insurance contributions for the first year when taking young people out of unemployment. These things make a difference. We have seen £1 billion going into the Youth Contract. In addition, the regional growth fund has invested £157 million in the north-east of England, with 33% of the projects that the fund has committed to being in the north-east. Get Britain Building was a programme announced in the Budget, with £28 million invested in the north-east, delivering 750 homes and supporting more than 1,500 jobs in the construction industry.

The north-east is home to two of the enterprise zones. Of course, there is also the element of making work opportunities—particularly low-paid work opportunities—attractive to young people. Raising the tax thresholds, which has taken 84,000 north-east people out of paying tax altogether, is making those positions more competitive and giving people a better wage than was the case before those thresholds were raised. We have seen the number of apprenticeships in the north-east rise by 87% in the previous year—up from 18,510 to 34,550. There is absolutely no doubt that more can be done, but my argument is that a lot is being done and the picture is not as dark as it is sometimes painted in the media. There are opportunities out there and we ought to encourage people to realise their dreams and use the full talents that they have been given.

[Lord De Mauley]

My Lords, I draw noble Lords’ attention to the fact that Back-Bench contributions are time-limited to 7 minutes.

12:01

[Lord Bhattacharyya]

My Lords, I thank my noble friend Lord Adonis for securing this debate. As a former apprentice school governor, I declare my interest as chairman of Warwick Manufacturing Group and of being involved in industry all my adult life. This subject is very close to my heart.

My noble friend has set out the scale of the crisis. To take just one example, last year saw a 15% increase in long-term youth unemployment. It would be easy and largely justified to blame the Government for that increase, yet youth unemployment is not only a matter of fiscal policy and Work Programme funding. Young people in Britain are particularly exposed because of the structure of the British economy. We know this because youth unemployment was rising well before the financial tsunami.

Britain’s youth unemployment rate increased by a quarter in the three years to 2007, while the economy grew, so for long-term solutions we should perhaps look to countries that have low youth unemployment in good times and bad. Where do they focus? They focus on preparing young people for work. That is where we fail. We abolished our vocational technical colleges with the best of intentions. As technical colleges became universities, many lost their focus on employability for all. Vocational sub-degree courses went and work placements vanished. That was the wrong path to take.

We should look instead at fast-growing Brazil, where the number of students at technical colleges has quadrupled in 10 years, with one in four students doing a degree. Today, the Brazilian Government are building 150 more technical colleges. In Germany, the dual system of vocational education means companies pay to train the young, so they can hire the best workers after they get their Berufsabschluss. For Britain, the best example is perhaps Japan where youth unemployment has stayed incredibly low, even in the “lost decade”. Japanese technical colleges—the senmon gakko—educate a fifth of all school leavers in vocational courses. Tuition at senmon gakko costs more than in most universities, yet many students take a vocational course alongside their degree, such is their value in getting a job.

At secondary level, technical kosen schools which take students to higher education on a vocational path are massively oversubscribed. Both kosen and senmon gakko graduates have outstanding employment rates. In contrast, we in Britain fail too many young people not on track to “traditional” higher education. Employers report low basic skills and young people are too often left with qualifications of little value. I know that the company Jaguar Land Rover with which I am very closely involved cannot get youngsters to go there.

We have discussed this for 30 years and more, yet far too little has changed. As in Japan, we need better technical education at both secondary and post-16 levels. Of course, schools must first give all pupils the essential foundations of technical education, literacy, numeracy and science. We should also encourage innovation in technical education in university technical colleges, which my noble friend Lord Adonis talked about. I am delighted that we will have a university technical college in Warwick, but Britain needs more like it; we should have hundreds of them.

Next, we must transform vocational education after 16. There is huge demand for skills that are worth something in the jobs market. Young people apply for quality apprenticeships in huge numbers, but we have far too many useless skills providers. An easy way to make money is to set up as a training company, latch on to a funding body and provide some low-level vocational “qualification”. Sadly, we saw examples of this during the jubilee. To stop this, the Wolf report proposal of letting funding follow students rather than courses will reduce incentives to offer confetti qualifications.

Finally, we must introduce the values of the Japanese senmon gakko into all our higher and further education colleges. We need more flexibility, more modularity and more integration between courses and the jobs market. Some may protest at the factory floor arriving in the groves of academe. However, a law degree from Cambridge is also part of a well rounded vocational education. For apprentices as well as lawyers, vocational education must be a path to the top, not a dead end.

Young people are ambitious. We must be with them and create a route from apprentice to doctorate. I am a graduate. I did my apprenticeship and then a doctorate, which was paid for by the company that I worked for. Sadly, we see too many examples of where the Government have failed in this area. There have been many courses. I blame industry, too. It whinges left, right and centre that we do not have enough skills, but it should pay for them. In my case, industry paid. In all other countries, it pays. Of course, the Government must help.

12:06

[Lord Roberts of Llandudno]

My Lords, I, too, appreciate being able to take part in this debate, initiated by the noble Lord, Lord Adonis. What has struck me already is that we are all thinking in the same way. We are dreaming the same dreams and talking of young people not as statistics but as people with a personality, talents and skills that they can contribute to society. We are thinking about a generation of young people throughout the world who are without jobs and without a purpose in life. This can be a catastrophe not only for them but for society. I know from studying statistics on the Welsh valleys that with a high level of unemployment your level of health goes down, your dreams for young people change, and your whole attitude to society changes. We need to tackle this in a serious, cross-party way. I am glad that there has been no tribal discussion this morning.

The growth in youth unemployment between 2007 and 2012 was mentioned. It has occurred not only in the UK. In Denmark it is up from 7.1% to 15.1%; in the United States from 11.7% to 16.4%; in Poland from 18.5% to 26.7%; and in Spain from 19% to 51%. The problem is worldwide. In the UK it rose from 13.6% to 21.9%. We can see that the growth began before any talk of recession.

We can also see that unemployment is spread unevenly across the United Kingdom. The north-east has twice as many people out of work as the south-west. Birmingham has many areas where more than 20% of the population are out of work. In one constituency in Scotland, which happens to be held by the Liberal Democrats, only 1.2% of people are unemployed. There are dramatic differences. In Merthyr Tydfil and the Rhondda valleys, unemployment always touches 20%. It is unevenly distributed.

Areas that have already suffered from unemployment—I think of the Welsh valleys in the 1930s, where unemployment sometimes reached 40% or 50%—are again those that have been most affected. I suggest that one thing we could do is target areas in greatest need and make them areas of action on youth unemployment. We should target many resources to those areas.

Noble Lords have already mentioned the way in which structural unemployment in the UK has grown. In 2006 it was 13.6%, in 2010 it was 19.6% and today it is nearly 23%. This is a structural matter. I welcome the Government’s initiatives, but in a way they are like Elastoplast; they are not launching a big operation to treat a major need. Whichever Government take over at the next election, they will face the same problem of structural unemployment. Now is the time for us to forget party differences and for all of us to work together on this; otherwise we will be faced with a dilemma that could lead to serious consequences.

I think that I welcome the increase in the retirement age to 67 from 65. It does not affect me any longer, but it will create less opportunity for the younger age group to find work. Can we not have legislation that eases people out of work? When I was 65, I thought that I still had a few good years to go. Could we not reduce older people’s working hours to ease them out of employment while, at the other end, allowing youngsters to be tapered into it? Those who have many years experience in their job could mentor the young people entering that job market.

About a month ago I was with the Deputy Prime Minister in Llandudno at a meeting with apprentices. When we asked the apprentices what kind of careers guidance they had received in their schools, I was astonished to see that there was a thumbs down in nearly every instance. Careers guidance needs to be tightened. I know that there is legislation proposing to do that, but I would also like to ask the Minister how well we are doing in improving careers guidance so that youngsters are treated as people and not as statistics. When they go to Jobcentre Plus they should not be faced by some kind of mechanism or by the internet but by a person who takes an interest in them. Careers guidance should be there for them not only for their first job but for the years to come. It should be a lifelong experience of learning and talking over their problems, because people change and develop various skills and aptitudes as life goes on.

I have mentioned in this Chamber before that we need to have a Minister dedicated to tackling youth unemployment. Many strands need to be gathered together: the Department for Work and Pensions as regards retirement, the Department for Business, Innovation and Skills, the Department for Education and the devolved Administrations. We need to introduce a co-ordinated approach where everyone, perhaps under one Minister, can talk together and say, “Yes, we can bring those strands together more effectively than we do at present”.

I urge the Minister to agree that we should go for one Minister and establish action areas to tackle youth unemployment. We should consider easing in at the younger end and easing out at the older end. We should also ensure that personal skills and careers advice is given to youngsters so that they can look forward to a career that makes the best use of their talents and therefore contributes to the well-being of every one of us.

12:13

[The Lord Bishop of Chester]

My Lords, I gladly support what has been said in the debate so far. I particularly pay tribute to the brilliant way in which the noble Lord, Lord Adonis, introduced the debate. The noble Lord, Lord Roberts, is a Methodist minister and I hope that he will not find anything tribal in my contribution from these Benches. Indeed, at one point he might even find me singing the same hymn to the same tune, which will be wonderful.

I wish to approach the issue in not quite the same way as other noble Lords have so far but simply from its moral dimension. I shall try to tease out how to approach it in that way. Nurturing the next generation is arguably the most important task and challenge facing any society. Of course, this does not apply only to humankind but is true throughout the created world. In the animal kingdom it is rather hard-wired. One has to think only of the way in which a mother bird or a lioness will defend its young, or the incredible feats that birds undertake to migrate to their proper breeding grounds. As I say, it is hard-wired into the rest of the animal kingdom.

One of the problems of being human is that we have an ability to override our hard-wiring in a way that is not open to those who do not have the precious commodity of human freedom. Let me put this in terms which may resonate here and there in the Chamber. We have been placed in the garden of paradise, but we have eaten of the fruit of the tree of the knowledge of good and evil. I could be tempted to add, “and there is no helping us”, but I shall leave that thought on the tip of my tongue. Let me put it in different terms. Human life, uniquely in the created world, for all its glory and beauty, is prone to a certain dislocation that is unique to human society. Nature red in tooth and claw is complicated for us by the moral possibilities, or indeed immoral possibilities, that human beings have uniquely to confront. That can produce the Mother Teresa, the Gandhi and the Mandela, or it can produce the Hitler, the Stalin and the Pol Pot in equal measure. I say this because I believe that the phenomenon of youth unemployment presents at its heart a moral challenge. Of course it has social and economic aspects on which we will probably concentrate in the debate, but unless it is regarded first and foremost as a moral challenge, I suspect that what we come up with will tend to be superficial, sticking-plaster solutions.

I shall address two of the moral dimensions which are quite tricky to get right, and I should like to hear the Minister’s response to these two issues at the end of the debate. The first is what I would call intergenerational equity, a point just touched on by the noble Lord, Lord Roberts. Let us not underestimate the great change that has happened. The younger generation of today is facing a much more difficult time than my generation did. This is a reversal after several generations where the younger generation had it easier than the preceding one. We have now gone backwards. When I left university 43 years ago—incidentally, at the same time and place as the Minister—the thought did not occur to me that there would not be a job when I graduated. It simply was not on our radar. How times have changed since then. The thought that, in my 20s, I might have to go back to my parental home because there was nowhere else to live would hardly have occurred to me then. Given the reversal we face today, life is tough for the younger generation in a unique way.

My question is this: does the older generation, my generation, feel a responsibility towards the younger generation to do whatever needs to be done to address and alleviate the deep social evil of large-scale youth unemployment? I return to the issue of the retirement age. I understand entirely the reasons for abolishing compulsory retirement ages, but as we have heard, there is a certain conflict between doing that and having a society with large-scale youth unemployment. Ideally, of course, there would be no conflict, but rights often have to be balanced. Indeed, the term “right” has an absolute sound to it and we do not think that it must be qualified and balanced against other rights. If we were in a period of good and steady economic growth, perhaps I would not be too anxious on this point, but if we are in a period of endemic low growth, my fear is that the rights we give to older people to work as long as they like comes into conflict with the proper needs of the younger generation. How, as a society, do we address this?

Other societies deal with this in their own ways. In other parts of the Anglican communion, young people are simply found work within the extended family—the village community—so it is managed. I know of communities in this country where young people in a particular ethnic group or community are found work, because that is what the community does through the ethos of the extended family. We seem to have lost that, so how do we gather it back as a society nationally? We are facing a very difficult issue.

My second and concluding moral question concerns what I call international equity—equity between nations—and I refer here to the free movement of labour within the European Union. Again, I am entirely in favour of it in principle, but because of the role of English in the international world now, there will tend to be more people wanting to exercise the right to work in England than in some other countries. That is simply the way the world is. What happens, then, if there is serious competition for jobs with our own young people raised in this country? What research is being undertaken to look at this problem, to see whether it is a problem and, if so, how to address it? We cannot simply carry on thinking that it is too difficult an issue to confront.

I will end where the noble Lord, Lord Adonis, ended, with vacation jobs. One of the tragedies today is that there are so few of those sorts of jobs available to students and other people just to get some experience of work. In my generation, we all learned so much from that sort of work, getting our foot on the ladder. In my case, it was being a dustman. It was the easiest thing to do: work for six weeks emptying the bins and then with the money I would go and have a holiday. I spent six months of my life being a dustman. It taught me a great deal—and language I do not use much these days. No doubt the Minister will have his own story to tell.

12:21

[Lord Wood of Anfield]

My Lords, the current downturn has now lasted longer than not only the recession and slow recovery of the early Thatcher years but the great depression of the 1930s. In both these previous cases, GDP—national growth—had returned to its pre-recession level by the 50th month, just over four years after the onset of the decline. However, today, in June 2012, UK GDP is still more than 4% below the level at the beginning of 2008. As well as the short-term impact on living standards and jobs, this depression, which is what I think it is, will create numerous problems, as we all know, for public finances, living standards, skills and business prospects. But surely primary among the concerns that we all have for the legacy impact of this depression is the effect on youth unemployment.

There is a traditional pattern to the debate about unemployment. Those who prioritise economic efficiency tend to caricature those with a concern about the human cost and the social consequences of unemployment as utopian bleeding hearts who do not have the interests of a strong, dynamic economy to the fore. Meanwhile, those concerned with the unemployed and their life chances tend to caricature their opponents as heartless Dickensians putting the interests of business above the interests of working people and their families. If there is a choice between caricatures, noble Lords will not be surprised to hear that my own sympathies tend to the latter, but both views strangely converge on a separation between the economic dimension of unemployment and the social and personal dimension.

I do not believe that this separation makes sense because the evidence strongly confirms that prolonged periods of unemployment not only have severe and long-term consequences for the individuals affected but are very bad for our economy as well. Labour mobility, including occasional transitional phases of unemployment, is of course a necessary lubricant to structural change in a dynamic economy, but seeing large-scale and sustained unemployment, particularly among young people, as a necessary price for the rebalancing of the economy, raising productivity, containing inflation or incentivising greater effort is just plain wrong. It is an economic mistake, it is not supported by evidence, and it is not just prompted by a lack of compassion.

Other people in this debate have talked, and I am sure will talk, about the considerable human and social cost of youth unemployment. For example, there is now overwhelming evidence that prolonged spells of worklessness are linked to significant increases in rates of suicide, cancer and divorce. There is also a transmission effect across generations; we know that unemployment among adults has been shown to have an effect in reducing the earnings of their children when they enter the workforce later. These considerations alone should give us cause to prioritise youth unemployment more than I fear is being done at the moment, whether in good or bad economic times, but I would like to spend three or four minutes looking at the economic effects of unemployment, which are often cited, wrongly I think, in mitigation against the social and personal effects.

From a macroeconomic point of view, the current economic crisis is a curiosity on the unemployment front because the labour market performed relatively well during the initial contraction in 2008-09. In that period, the recession inflicted a fall in GDP of about 6%, which was far worse than that in the recessions of the 1980s and 1990s, with a full six quarters of falling output. However, whereas in the previous two recessions the fall in employment was broadly in line with the fall in GDP, in this recession, the fall in employment has been much less, at around 2%.

The worrying side of unemployment is this: although the rise in unemployment has been less than might have been expected initially, large-scale unemployment has persisted far longer than previous recessions would lead you to expect. In the 1990s, Britain came out of recession at the end of 1991 and unemployment started to fall six quarters later. However, in this downturn we came out of recession in autumn 2009, but nine quarters later unemployment had continued to rise, to 8.4%. This was even before Britain entered a double-dip recession.

Unemployment has risen among all age groups, especially in the past 18 months. This is the result not just of economic stagnation but of policy change. The youth labour market has performed particularly badly in the most recent downturn, rising from 14% to 20%, then stabilising in the middle of last year, before deteriorating further and rising to 22%.

What are the economic effects of this? One consequence of prolonged high levels of unemployment is an increase in the rate of structural unemployment in an economy. We know that shocks that increase unemployment affect the structural rate of unemployment more the longer they persist.

Secondly, far from promoting more efficient labour markets, workers with a history of unemployment—in young people’s case, with little or no history of employment—are often offered less secure jobs because they lose valuable work experience or skills while they are unemployed, or because their unemployment experience is seen by employers as a signal that they are not good enough or are low-productivity workers. Youth unemployment takes people off the ladder of skill and career progression, or away from means that they can never get on to it.

Thirdly, economic evidence suggests that unemployed workers may lower the wages that they think they can get as time passes and accept poorer-quality jobs that are more likely to be eliminated, and so are more likely to experience further unemployment. Repeat spells of unemployment go hand in hand with jobs that are low paid and unstable.

Fourthly, we know that entry into the working population at the start of a recession is more than just bad luck; the longer you spend unemployed or economically inactive in your youth, the greater the prospect of longer periods of unemployment later in life. On average, each one of the quarter of a million or so young people who have currently been unemployed for more than a year will spend around a further year in unemployment and a further year in economic inactivity in the near future.

Lastly, we also know that a wage effect casts a shadow into young people's futures. As well as reducing employment prospects, youth unemployment means lower future wages than you would otherwise expect. Research suggests that someone who has had a spell of unemployment of more than a year in their early years of work will have average pay at the age of 42 that is more than £7,000 less than that of someone who has not suffered unemployment.

These considerations destroy the idea that what may be painful for individuals is beneficial for our society or economy, that the short-term transition impact of unemployment may somehow be a necessary adjustment for long-term efficiency, and that what is suboptimal from a social point of view is optimal from an economic point of view. It is depressing to hear people argue that youth unemployment is down to young people’s reluctance to take jobs. That is a misunderstanding of the economics of the moment. I find it more depressing still to hear the argument that, when it comes to unemployment, there is a choice between what is in our collective economic interest and what is in the interests of the more vulnerable in our labour market. Unemployment is not medicine; it is a sign that something is going wrong.

12:28

[Baroness Sherlock]

My Lords, I commend the noble Lord, Lord Adonis, on an incredibly impressive start to the debate. In case there is a noble Lord present whom I have not bored on the subject, I should declare that I serve as a member of the small, cross-party Riots Communities and Victims Panel, which published its final report in March 2012. We are still awaiting the promised government response, which will be any day now, I am sure.

In touring riot-hit spots around the country, we asked people why they thought the riots happened. Lack of opportunities for young people came up everywhere we went. I do not for a moment posit any simplistic causal link between youth unemployment and rioting, but the issue was raised so often that we felt as a panel that we had to look into youth unemployment alongside other issues, so we looked at the various steps that are being taken and the schemes that are being used to help young people into work, and made a series of recommendations.

With regard to the Government’s Work Programme, the panel questioned whether the payment structure built in enough incentive to those providing it to work with the most difficult cases. We were concerned that, for example, if someone was an entrenched NEET, to use that term, and the provider had not managed to get them into work after a significant period, there was not much incentive to carry on working with or investing resources in them. That suggested that targeted intervention was needed. The panel recommended that there should be a joint central and local government intervention after someone was unemployed for a year and that any claimant still unemployed after two years on the Work Programme should be offered a guaranteed job and additional support. There was a clear feeling that people should not be parked on the Work Programme and not moved on. My view is that we should intervene far earlier than that, but that was the shared view.

There are various ways to guarantee someone a job. The most common ones that we hear about are wage subsidies or incentives for employers, but I also want to highlight the use of intermediate labour markets. During my time as an adviser in the Treasury, I spent many happy hours discussing the cost/benefits of intermediate labour markets with officials, and I suspect that the Minister may have had similar experiences. I have always been rather a fan of ILMs, but as I am sure the Treasury has pointed out to the Minister, they are expensive and times are tough.

However, if we look at both sides of the account book, as my noble friend Lord Wood showed us so eloquently we begin to see the extent of the economic problem caused by having so many young people not in education, training or employment. For example, it is estimated that the cohort of 2008 NEETs will cost the UK economy £22 billion and the taxpayer £13 billion over their lifetimes. In three local authority areas alone, the estimated direct cost to support just 1,989 NEETs for one year is £14.8 million: almost £7,500 each. The extra costs to the public purse—for example, through benefit claims, crime or mental health-related issues—were estimated at another £40 million.

In other words, the costs of inaction are extremely high. ILMs have been shown to work well. Research from the Joseph Rowntree Foundation found that, properly managed, ILM programmes can deliver more sustained progression from welfare to work than other programmes for the long-term unemployed. More than 90% who get a job are still in work after six months, compared with just 40% in other programmes, and their longer-term earnings tend to be higher. An evaluation of ILMs in Australia found that the benefits consistently outweighed the programme costs.

My second point is the regional dimension touched on by the noble Lords, Lord Roberts and Lord Bates. The touching optimism and commendable positivity of the noble Lord, Lord Bates, notwithstanding, my experience in my home town of Durham is that there is considerable unemployment among young people and considerable fear about the future. There is a growing challenge: as young people still in school look at their older brothers and sisters leaving school and not getting jobs, it becomes even harder to persuade them to stay on and work through to their full potential.

Has the Minister seen the latest edition of the Northern Economic Summary from IPPR North, which showed that the number of NEETs is highest in the north of England, at 19%, compared with just 16% in England on average. Furthermore, the amount of time people are spending on JSA is increasing. Almost half those claiming JSA in the north have been doing so for more than six months, with the average length of time for which people are claiming benefits more than double what it was during the 2008-09 recession. That goes to the points made by the noble Lord, Lord Wood, about the risks of the depth of unemployment this time around and the consequences for the economy as well as the individual.

IPPR North suggested that unless targeted measures are introduced to help young people urgently, the gap between the north and other regions in the number of NEETs is likely to carry on growing. Interestingly, its solution was not dissimilar to that reached by the riots panel. It concluded that the Government should offer a guaranteed job paid at the minimum wage or above to anyone who has been unemployed and claiming JSA for more than 12 consecutive months. It proposed that the guarantee should be matched by an obligation to take up the job or to find an alternative that does not involve claiming JSA. It suggested introducing that on a targeted basis: for example, for people living in areas where the job density ratio is twice the national average.

Many noble Lords have commented that there is potential cross-party agreement in this area. Certainly we can agree on one thing about youth unemployment—we are all against it, but we would like a step beyond that from the Minister. I want to hear a sense of urgency in tackling the problem. There is always the risk that we feel that unemployment is always there, but the noble Lord, Lord Wood, made the case that it has not always been here on this scale. If we go back to the situation of the 1980s, as described by the noble Lord, Lord Adonis, the country as a whole will suffer considerably.

The economic case for action has been made. I also agree with the right reverend Prelate the Bishop of Chester that there is a moral case. For me, it is simple; the core job of government is to so order society as to enable its citizens to flourish. I spend too much time going around the country meeting young people who, by the age of 19 or 20, already feel that they have no choice, that their life course is set and that they will never achieve the kind of things that other people took for granted. It is up to us today, and I want the Minister to take a lead. What steps will the Government take to ensure that those young people have hope and that we as a country can live with the consequences of our policies?

12:35

[Lord Ramsbotham]

My Lords, I, too, congratulate the noble Lord, Lord Adonis, on obtaining this important debate and for the way in which he introduced it, which reflects entirely the motivation and determination he showed when he was a Minister in the education department.

While echoing many of the things that have been said around the House, I want to think outside the box. I do so because what has been said recently, particularly in connection with the riots, has stimulated three questions which have been in my mind for a long time. They are unconnected, but one was particularly stimulated by the right reverend Prelate the Bishop of Birmingham in our recent debate on the report on the riots. I have long believed that the only raw material that every nation has in common is its people, and woe betide it if it does not do everything it can to identify, nurture and develop the talents of all its people, because unless it does so, it has only itself to blame if it fails. That is a burden on all of us, not just our educators.

The second question refers to a visit that I paid to the Indian Army in 1973, including the state of Orissa in East India. That evening, we had an audience with the very impressive governor of the province. I said to her that I had noticed, driving around Orissa, that I had not seen a single agricultural machine, all I had seen were people with hoes and spades. She said: “You tell me which is best. Is it best to have machines producing more than you can use; or is it better to have everyone in employment?”. It is a question I have never been able to answer.

The third question refers to when I was commanding Belfast between 1978 and 1980. During that time, I used to see a great deal of a very interesting politician called Paddy Devlin, one of the founders of the Social Democratic and Labour Party, who was imprisoned in the 1950s as a member of the IRA but was a very distinguished Minister of Health in the short-lived power-sharing executive in 1974. During that time, there was a proposal that a car factory should be developed by a firm called DeLorean on the interface between the Catholic and Protestant areas, employing people from both sides, but the Catholics did not have a tradition of working with metals in that sort of industry. The Government established an employment centre in Turf Lodge, in the heartland of Catholic west Belfast, to start training people to get jobs in the DeLorean factory. That was objected to by the IRA, who sent in the 10 year-olds to try to burn it. They failed, so the 14 year-olds were put in. They did not do it, but the 16 year-olds made a much better job of it, which left a derelict site which I then took over as a base.

During that time, I had a long talk with Paddy about unemployment in the area, because I was concerned that there was nothing for people other than that. He explained to me that one reason why the IRA burned the DeLorean training centre was because it did not want people to be employed. He said that a man wants to earn enough money to feed, clothe and house his family, to have a holiday and, occasionally, to change the wallpaper. If society produces that, he will support it. If society does not, he will not. If there was therefore a possibility of that happening and driving people away from the IRA, it wished to bring them back in. At the same time, Paddy asked me if I knew how many unemployed there were in that part of west Belfast. I said that I did not but that I would try to find out, so for July 1979 we counted all the men of employable age and what they did during that time. We found that the unemployment rate was about 80%. I mentioned this to Paddy and he said, “I would not have been surprised if it was 90%”.

To echo very much what the noble Lord, Lord Roberts, said, it is therefore terribly important that instead of taking figures which represent an average over a whole area, we should identify hotspots. This brings me to there having been some figures in the report on the riots which struck me as being very important. They were perceptions: the 83% who felt that youth unemployment was a problem in their area and the 71% who felt that there were insufficient opportunities for young people. Only 22% felt that public services were doing enough.

In that climate, we then find talk of youth contracts, payment by results, career support guarantees, youth job promises and apprenticeship programmes but I am bound to ask: for what? Are the jobs actually there which can be operated by the young people to whom we are promising all these guarantees, supports, results and so on? Have we ever analysed exactly what the situation really is in terms of the availability of jobs? We live in an era when, as one found in Orissa, machines are taking over from men and labour-saving is the phrase, so where are these jobs? I ask that because it is hugely important that the Government should establish precisely what the job situation is going to be before making all these promises. There is nothing worse than to make promises that are totally incapable of being kept, particularly to the young. With the disillusioned young, they will lose not only this generation but other generations for the future.

12:42

[Lord Giddens]

My Lords, I congratulate my noble friend Lord Adonis on having secured this debate and on introducing it in such a lucid and compelling way. To quote him, I say, “Oi! I would give you a job any time”, although my noble friend has held a lot of interesting jobs.

As the noble Lord, Lord Roberts, said, youth unemployment is a gigantic problem across the world. In the Middle East and north African countries, more than 90% of young people aged 16 to 24 are not in work. A high proportion of those young people are NEETS or, as they like to say in continental countries, ninis—neither in education nor work. Ninis is a slightly more compact way of putting it. Indeed, youth unemployment was one of the sources of the Arab spring, as we know. Twenty per cent of young people in the EU are ninis and, as has been mentioned and as is very familiar, the problem is especially acute in Spain.

I ask noble Lords to remember that measuring unemployment is very complex. Sometimes it is better to measure by rates but often it is better to measure by absolute numbers, as long as you factor in population growth and so forth. It is very important to be precise about the statistics that one is using. However, these statistics clearly show that in a global society, there is a structural problem of enormous significance with potentially long-term consequences. To summarise what other noble Lords have already said, it could be said that youth today, in industrial countries and in the UK, faces a perfect storm. I will mention three factors here.

First, this recession—it may be a depression, as my noble friend Lord Wood said—is no ordinary recession. It seems, to me anyway, to be in some part a crisis of competitiveness in western countries as a whole, which will be very difficult to repair and which will demand large-scale restructuring. There are no easy options for us here any longer and the processes of reconstruction will bear heavily on young people, even if only on the “last in, first out” principle.

Secondly, as the right reverend Prelate mentioned, the older generation now has a stranglehold on resources—for example, in the housing market or, in future, pensions. My source is in some part The Pinch by David Willetts MP, an interesting discussion of intergenerational inequality. Younger people are bound to struggle in such a situation. It implies that we must have greater intergenerational equality. I would dispute to some degree what the right reverend Prelate said about early retirement ages because countries that have those, such as the southern countries in Europe, also tend to have high levels of youth unemployment while countries in the north that have a very high proportion of older people in employment, such as Finland, also have low rates of youth unemployment. Those things are not necessarily oppositional.

Thirdly, it is very important that a major part of what restructuring will involve is that fundamental changes are happening in labour markets. There is a leap in the levels of job destruction, primarily as a result of the impact of IT and automation, as has just been mentioned. The lifespan of an average medium-sized firm today is only about one third of what it was in the 1970s and therefore young people today will face a very volatile job market. For that reason, I have some reservations about apprenticeships—at least, in how they should be structured—because life skills and adaptability are likely to be as important as technical skills. We just do not know when a technical skill will become obsolete. It could happen almost overnight as it did, for example, in the printing industry some years ago.

The level of youth unemployment in this country is lower than in many other EU countries but, as the noble Lord is especially prone to say, if you measure it in absolute terms its increase is perhaps not as great as some critics argue. However, it would be a great mistake to try to normalise these statistics because young people are going to face the very demanding structural conditions that I have just mentioned. For these reasons, the crisis is too deep to be addressed simply by active labour market measures. I am not necessarily against the youth contract, the Work Programme and so forth—they are mostly continuations of new Labour policy under other names anyway—but those are really palliatives, even if a lot of money is spent on them.

I have three questions for the Minister. Macrostructural intervention is likely to be far more important but here the Government’s cupboard is worryingly bare and their policies on job generation are alarmingly weak. First, where will new net jobs come from? In this country we have, as it were, a primitive policy of deregulation which I do not think any other country in the world is following today. Surely more active collaboration between government and business is needed, as are more long-term planning and a more active industrial policy than the Government have.

Secondly, how will the Government confront inequality of a structural nature, which has a massive impact on long-term youth unemployment, and what is their position on the need to further reduce child poverty where, after all, new Labour has been pretty successful? I am in favour of a tax that would switch from the very rich to the very poor. That is a sensible and, now, a feasible idea.

Finally, the Government should be boosting numbers in higher education rather than cutting back. Countries in the southern rim—Spain and so forth—have about 40% in higher education, like us. Successful countries such as Germany or the Scandinavian countries have 53% to 60%, which has the dual function of keeping people out of the labour market and getting them into jobs. I welcome the Minister’s comments on these points.

12:50

[Lord McFall of Alcluith]

My Lords, I am privileged to participate in this debate. I congratulate my noble friend Lord Adonis on his compelling and lucid exposition of the problem and the way forward. As my noble friend Lord Giddens said, this is a complex problem, and we have to see it in the wider context of inequality and global unemployment. According to ILO figures, there are 75 million unemployed people aged between 18 and 25. The first thing the Government should do is to look again at growth. That has been missing from this agenda, and it is very important that we look at it.

There have been recessions in the 1980s, the 1990s and now. After each recession, youth unemployment went up, but since this recession youth unemployment—those without work and not in education—has increased by 232,000. Mention has been made of the Labour Government’s target to eliminate child poverty by 2020. That was not fully achieved, but the figures today show that 900,000 young people have been taken out of poverty. That is a cause for some celebration, but there is much to do. I suggest that the Government copy the Labour Government’s 2020 target for child poverty by having a similar target for youth unemployment. The first priority should be to reduce it to pre-recession levels using jobcentres. The Labour Government used jobcentres, when they were revamped, very well to get people into employment. Establishing a youth employment and skills service would be very important in that area.

The Government need to be mindful of the welfare cuts of £2 billion that took place on Good Friday this year. There has been talk of an extra £10 billion of welfare cuts. It is very important that the Minister says that that will not happen, because the cuts that have taken place have already affected low-income families and people looking for jobs. Today’s Daily Telegraph reports the Secretary of State for Work and Pensions saying: “Get a job, IDS tells parents on dole; Working at least 35 hours a week is only way to lift children out of poverty”. We agree, so we are looking for government proposals to see how that is done. The overriding message today has to be that it is not the private sector that is going to do this. We are facing massive deleveraging. As the noble Lord, Lord Giddens, said, this recession is going to take many years to sort out. We are talking about a decade or more, so a government initiative and an active welfare state are very important.

The Government could illustrate their commitment on that by ensuring that each government department—indeed, each government Minister—has a number of such young people. If the Prime Minister were seen coming out of Downing Street into his car with a couple of young unemployed people behind him, it would send a powerful visual message that the Government were taking this issue very seriously. A Minister for Young People, particularly unemployed young people, is very important.

Education has been mentioned. Education is the way forward. I left school at 15 or 16. My second chance came by going back to night school, then to further education and then to university. For me, that was the pathway forward. It was my salvation. We cannot emphasise enough the need for education. The suggestions that have been made to the Minister today should be taken very seriously. We should use further education colleges, particularly in the technical skills areas and local areas, to foster that extra employment for young people. Above all, the economy needs to be rebalanced. There is a growing north-south divide. I know that from representing an area where employment has consistently been relatively high. I suggest that there are still lessons to be learnt from the Mittelstand in Germany and from the Fraunhofer Institute about how they integrate manufacturing and education. A lot could be made of that issue.

We are establishing a forgotten and invisible generation, particularly those without skills or qualifications. I saw that when I was a deputy head teacher in the 1970s in Glasgow. I was put in charge of a truancy unit, as it was called, for children who did not come to school. They were demotivated at such an early age. They were alienated, and it was very difficult to get them to engage. The message is that we should not give up. We need a more intensive approach in education. My noble friend Lord Adonis made a number of very valuable suggestions on education, which I think the Minister has taken on.

As a former teacher, I have also seen the long-term effects when young people leave school alienated and disillusioned. It has been my sad experience to meet some former pupils 10 or more years later. They have a partner or a wife and children, but when you ask them about their job, they say they have never had one. Between 18 and 25 are the precious six or seven years. Experience and statistics show that if we do not get young people at that time, we have possibly lost them for life. That is the message that we have to address today. The overriding question is how we address the insecurity in society. As the right reverend Prelate said, our generation feels that the next generation will not have the same chances. I suggest that economic progress and social stability go hand in hand and, if we do not tackle youth unemployment with vigour, we are destroying the future not only for young people in this generation but for all in society.

12:56

[Lord German]

My Lords, I too pay tribute to the noble Lord, Lord Adonis, for securing this debate. I shall say a few words later on about his opening remarks because he raised matters of great importance that lie underneath this important issue. As many noble Lords, including my noble friends Lord Bates and Lord Roberts, have said, this is not a new problem. We have seen the number of unemployed young people reaching ever upwards since 2002, but it is acerbated at the moment. Young people are especially badly hit by poor economic times. Employers are reluctant to hire new workers, more experienced workers compete for lower paid entry-level jobs and older workers hold on to their jobs for longer than usual.

As the noble Lord, Lord Giddens, said, this is not simply a UK problem. It affects the developed world and the developing world alike. Across Europe, the Americas, the Middle East and north Africa, the problems are the same. In its recent youth employment trend report, the ILO forecasts that the current high levels of youth unemployment around the world will continue for the next four years. The growth in the knowledge economy, globalisation and technological change have led to a fall in the demand for low-skilled workers. Entry-level jobs tend to be concentrated in the service sector, and many of them require people to have soft skills. We can think of the people who answer the telephone when you have a banking problem or an insurance problem. They require soft skills and a readiness to be available for on-the-job work from day one. It is regrettable that many of our young people without work are not coming out of the education system with these skills.

We have a long-term issue with a serious short-term spike, although the short term might extend over two or three years. As with all longer-term, deep-seated problems, a degree of political consensus is required if we are to tackle the long term. In his very interesting opening remarks, the noble Lord, Lord Adonis, concluded that there were areas of great agreement, which is what we are hearing today. For the longer-term problems that we are going to have to deal with, which will span more than one election period, does he have any ideas about how we can promote that consensus over a number of years? Equally, does he have any idea how we can produce it for the UK as a whole? I was interested, and I know that my interest was shared by many people around the Chamber, in the way in which you have to handle the education system and make changes to ensure that we get the outputs that we need. However, I know that those views are somewhat in conflict with those of some of his colleagues currently holding ministerial posts in the country in which I live. If we have a requirement to provide UK solutions to problems of this sort, I wonder how we can best get together and reach that consensus, which cannot be achieved without the education and skills agenda.

My second point is about the underlying problem that we are trying to solve here. You could address different remarks to different parts of the problem, but I agree with the ACEVO commission on UK employment, whose conclusion was that there is a,

“lack of vision for the ‘forgotten half’ of young people who are not destined for university or a high quality apprenticeship post-16”,

and that the route into work for these 16 to 18 year-olds was,

“more like an unmarked field of landmines”.

That drives me to the conclusion that the issue that matters more than any other is those young people who are in the NEET category, a term we have used extensively in this debate. I suspect that that is too general a title but this group is the most difficult to reach, and early intervention is crucial if we are to make a change, which is why the pupil premium is so important in getting in early. In terms of intervention, those people are the most difficult to reach—the high fruit on the tree, if you like; the most tricky to find appropriate solutions for. They become even more important at times of economic difficulty, as more educated younger people enter the jobs market at the lower-skills end, so displacing the unskilled. All the figures now show that a growing number of people are moving into that category of core NEETs.

I shall give your Lordships examples of pre-NEET work being done in two areas that I know well. The first is at Newport High School in Wales and the second is Bedminster Down School in Bristol. Both these schools have taken pupils from the age of 13 out of the school environment altogether, put them into a community environment and worked with them on trying to raise their skills, with such a level of success that those pupils have achieved a pass rate of five GCSEs or more of about 50%, and about 50% of that 50% are going on to post-16 education. These experiments are probably being replicated around the country. Are we building upon those successful stories of local experience and local work, which may well be replicated by voluntary organisations and schools throughout the country? It is important that we try to meet the substantial needs of this group of young people who are so difficult to reach.

The youth contract contains a suite of measures, but does the Minister believe that they are yet of sufficient scale to deal with the problems that we are facing in both the short and long terms? I also believe that we will have to do more on the supply side. Most of the interventions that we have been talking about are on the demand side, but we have to work much more strongly with employers. The Chartered Institute of Personnel Development rightly says that employers can and should make a difference by building a relationship with young people from school to labour-market entry. What are the Government doing to support the institute in its campaign to engage more employers? On the demand side, it is really a question of whether the Government have done enough to rationalise the myriad relatively small-scale funded interventions. I know that the Local Government Association is keen that that should happen.

This debate has been a wonderful opportunity to work together in seeking common solutions, and I believe that it has gone a considerable way towards achieving that.

13:04

[Baroness Howells of St Davids]

My Lords, I thank my noble friend Lord Adonis for raising this subject for debate and for the sympathetic way in which he has outlined his concerns.

Those noble Lords who have heard me speak will realise that my research is always from the school of life. I would like to take a few minutes to concentrate on the young black British male. From time to time, I meet young British men whose skins are black to discuss their concerns. I would like to share one such story. A 24 year-old with a university degree in quantity surveying has been seeking employment for the past two years. His question to me was: “If you were a young black man, would you go looking for work?”. It was a rhetorical question, so I waited. He continued: “I wake at 6 am and switch on the radio, and all you hear is that black boys are criminals—another killing, another raid on a black person's home. If you’re lucky, you have a hot drink, get dressed and set off to attend an interview. You take the bus or train, and the papers and the conversations are all about black boys—not black criminals, but all black boys. You sink into yourself and behave as though you were dead or deaf. You arrive for the interview and you feel exposed, you’re on show, and not as a quantity surveyor—no one in the room looks like you. You enter into an interview trying to sell yourself. No one is really listening. You want to shout, ‘I have the qualifications and all I need is the chance to show you that I can do it’. You see the red faces and what I think are their lying eyes. Would you bother to go for another interview, and another, and another? I have had 50 interviews in two years—no job”.

His story is not an isolated one. Others in the group nodded through everything that he said. What did I say? My answer was to try to convince the young man that he had done his bit and that his only failure would be not to try, attempting to get him to understand that over the past two years he has been experiencing the canker of racism, power and prejudice. Often we are in danger of blaming the victims. In effect, the victims are less blameworthy than those with power who fail to see their potential, beyond the colour of their skin. The excuses are numerous and I am sure we will hear a lot more about this as the debate continues. Most reports have highlighted why unemployment among young black men is higher than white unemployment and have made excuses such as lower educational attainment, attending less prestigious universities, living in areas of high unemployment, migration and sector clustering. All these reasons have some truth but at the base is institutional racism in this society. I refer the Minister to an April briefing by the Runnymede Trust on race and community because it poses cause, effect and possible solutions.

I return to where I began. Blaming the victim is unhelpful. It is often said that they do not want to work, but I can tell noble Lords that the majority of young black men want the same things as young white men. They want to work in a job that pays a living wage. Despite the failures in the education system, most have managed to prepare themselves for adult life according to ability. Like all of us, they want to be safe from criminals, safe from terrorists and have clear air and clean water. They want time for family and friends so that when they grow old they too can retire with dignity and respect. A life without unfair discriminatory practices, which cut across race, religion, class and language, is all that they ask. The Government cannot solve all these problems, but they should be mindful of how they deal with racism. The Stephen Lawrence report recommended certain steps that could be taken. I sit here and watch those steps being dismantled daily.

The Government need to take a good look at what has been achieved and stop cutting away at all the good practices that have been put in place—to unlearn the racism. Take a look at what is happening in football: employment for young people, whatever the colour of their skin. Take a look at what is happening in motor racing. Take a look at what is happening to the black teachers who have studied to enter our education system, and at how they, too, are victims of racism. Take a look at the police; they, too, are the victims of racism. How do the Government see them getting justice when these things happen and when the very road towards justice is being cut from under their feet every day?

We should be looking at what is really wrong with society. Getting a job is a good thing. Being denied a job because you are the colour that you are pervades the black community throughout this country. Some are lucky; some get jobs. Again, they always have to look at themselves in the mirror as a black person and then as a white person. The benefits of looking seriously at black youth may stop you from having to blame them for every evil when the next riots happen.

13:12

[Lord Touhig]

My Lords, I join all noble Lords in congratulating my noble friend Lord Adonis on this debate, which is most timely. I will concentrate my remarks on the challenges faced by young disabled people, in particular those with autism, when they seek to continue education or secure employment after the age of 16.

Young disabled people at 16 hold the same aspirations to stay in education and find fulfilling careers as their non-disabled friends—a point which was well made in the National Autistic Society’s publication The Undiscovered Workforce, which was launched as part of its campaign to increase employment opportunities for people with autism. We know that disabled young people are two and a half times more likely not to be in education, employment or training than their non-disabled peers. Furthermore, just 15% of adults with autism are in full-time paid employment. These are clear signs that the educational provision available to young people with autism is currently not allowing them to achieve their ambitions.

A host of reports in recent years has evidenced that the transition to adulthood for young people with autism and other disabilities is poor, and that there is a serious lack of educational opportunities for this group. An Ofsted report stated that,

“the real choice of education and training opportunities at 16 was limited for many young people with learning difficulties and/or disabilities. Inspectors found few courses available for young people with the lowest levels of attainment”.

For many young people with autism, particularly those with complex needs, the choices for post-school learning are very limited indeed. We know that young people with autism want to access employment and training. However, we also know that they need the right support in order to do so. While there is a dearth of education and training available for many young people, young people with autism have far fewer options. The lack of education and training for young people with autism is directly related to youth unemployment. Currently only one in four young people with autism continue their education beyond school, and so are adequately equipped to enter the world of work.

I am 64. When I was thinking what I should say today, I tried to imagine what it would be like to be 16 and autistic. What would it be like to face the next 50 or 60 years of my life staying at home with parents, family and carers, or living in a residential home? What of your Lordships—what if each of us was 16 and autistic? What if all the experiences, opportunities and achievements each of us has enjoyed in our lives had never taken place? That is the prospect for up to 75% of autistic youngsters: a cruel exclusion. The life experiences that we all take for granted are denied to them.

That is why post-16 education options are essential to support young people with autism into work and community life. Both of these outcomes benefit society as well as individuals and families. The social impact of unemployment for young people with autism is huge. Not continuing in education or training beyond school leads to a loss of potential for young people and for society as a whole. Failure to provide opportunities for education and training that will lead to employment denies young people with autism the right to fulfil their potential and to contribute to society.

In addition, there are huge social costs. Failures to provide for young people with autism also lead to higher long-term financial costs. In one of its reports the National Audit Office found that £1,000,000 per person could be saved by supporting young people with learning difficulties to gain life skills and be more independent. It also found that supporting a disabled young person to access work reduces lifetime costs to the public purse by £170,000 per person.

Is there a solution to this problem? Yes, there is. We can ensure that government initiatives such as the youth contract are accessible to young people with autism and others with disabilities. Can the Minister say how the Government will make the youth contract fully accessible to disabled young people? Can he confirm that the Access to Work funds will be available for young disabled people doing internships and voluntary placements? The raising of the participation age to 18 is most welcome. However, it appears that little thought has been given to what that might mean for young disabled people, many of whom are not in employment, education or training, not through choice but as a result of a lack of suitable provision. The raising of the participation age will only help young people if it coincides with the development of more and better educational settings. Have the Government invested the extra funding that is needed to meet the additional demands of young disabled people who are currently not participating? How have they calculated the level of this need? They must take into account all additional needs, not just those of young people with SEN.

The charity Ambitious about Autism produced an excellent document entitled Finished at School. It makes a number of recommendations in this document which I believe would improve post-16 education for learners with autism, which would have an impact on levels of employment. The document makes four key points: there should be a clear legal right to educational support up to the age of 25 for young disabled people; a funding system which gives young people and families more information, choice and support is needed; a cross-government focus on outcomes and destinations for young disabled people is needed; and, finally, a further education workforce with the skills to support young people with autism to achieve their ambitions is essential.

The Minister is a friend—he is a friend of all those who campaign and support people who want to improve the quality of life for people with autism. In my time in this House and in the other place I have certainly found that he has listened. I hope that he will listen to us on this occasion.

13:19

[The Earl of Listowel]

My Lords, it is a privilege to follow the noble Lord, Lord Touhig, and his passionate advocacy for autistic adults and children. I, too, am most grateful to the noble Lord, Lord Adonis, for securing this important and timely debate. I thank the Minister for organising a seminar recently on the employment support allowance. It allowed many of us the opportunity to speak to the manager of a jobcentre—to have the privilege of speaking to someone who had spent much of her life helping adults and young people into employment. It was a very helpful experience.

I will concentrate on the lack of employment for young people leaving care. They are especially vulnerable because of their poor start in life. They are heavily overrepresented in the NEETs group; a third of 19 year-olds leaving care are NEETs. One sees the consequences too easily. Half of the juvenile prison population have had care experience, as have a quarter of the adult prison population, while one in seven rough sleepers have care experience. The best chance to protect these young people from such poor outcomes and help them into the job market is to give them an excellent experience while they are in care—to seize the opportunity then to build the resilience that they need.

To concentrate on the most vulnerable group of children in care—young people in children’s homes, who are the neediest 7% of the 60,000 children in local authority care—we could do far better to give them that excellent experience. I highlight these children in part because recent child protection failures for girls, with 187 incidents of suspected prostitution coming from children’s homes in the past 10 months alone, have highlighted the need for reform. Your Lordships may have noted the reports regarding these children on the BBC news and “Newsnight” last night.

There is now an opportunity for the Government to ensure that, in future, young people leaving children’s homes are far more ready for employment or periods of unemployment. For instance, they might institute an independent inquiry into residential care which could look at the professional qualifications of staff and the possibility of emulating the success of the Scottish Institute for Residential Child Care, which is devoted to training staff. They could seek to emulate the success of initiatives in the teaching profession, looking, for instance, at the Training and Development Agency, the National College for School Leadership and the excellent programme Teach First, about which the noble Lord, Lord Adonis, spoke. That is now being stretched to Social Work First and could perhaps be applied to residential care.

In social work, the Government could consider copying the College of Social Work and the introduction of chief social workers in each local authority and central government. They might engage with the public in seeking funds and practical help. They might look to the great success of the charity Volunteer Reading Help, which, in partnership with the Evening Standard, raises funds and recruits reading mentors to work with thousands of our vulnerable children in primary schools. Surely many of the public would be moved to volunteer to help children in residential care with their reading. Some businesses might wish to support services for these young people as an expression of their corporate social responsibility. These are all our children.

The single greatest concern about children’s homes is the mismatch between the qualifications of the staff and the needs of the children. In England, we require staff to have a level-3 NVQ in childcare and a manager to have a level-4 NVQ. They are roughly equivalent to an A-level and the first year of a degree, respectively. On the continent, the norm is a bachelor of arts degree, yet as residential care is far more widely used there, the needs of their children—a mixed group—are far lower. Therefore, we have a perfect storm, with often poorly qualified staff caring for very needy, often very challenging, children.

A project that brought German residential childcare workers to work in children’s homes here was undertaken. Professor Claire Cameron evaluated this work and commented that the German social pedagogues,

“were also rather taken aback by the role of the residential worker in England. They”—

the pedagogues—

“had a range of professional qualifications, the majority of them graduates, and some were also equipped to be employed as social workers in their own country, or to work with other user groups as well in a range of other responsible roles. In contrast, in children’s residential care their English equivalents have low status and little influence. Their professional input is marginalised and they lack autonomy. They usually refer on to experts rather than take control of issues themselves”.

She went on:

“Our child care system is over-bureaucratic and risk-averse. History and policy have created this set of circumstances or not altered them. It is unsurprising that our continental visitors often felt bemused and deskilled”.

The author Paul Connolly grew up in a children’s home. He learnt to read and write in his 20s, and went on to found a successful business and to publish his best-selling autobiography, Against All Odds. When asked the secret of his success, when so many of his peers had died young, he said that he had always sought to surround himself with successful people. For him, the route out of an abusive children’s home environment was a local boxing club and the men there who took an interest in him and encouraged him to become a boxer. Mr Connolly has written to the Children’s Minister, saying:

“I attribute my success to the people who positively influenced me, and my avoidance of negative influences. My experience was that as soon as I left the care system I cut all ties with everyone that was connected, and I surrounded myself with people I could aspire to … It is so important that these vulnerable children can aspire to somebody that has achieved in life and presents a positive role model”.

There are many fine examples of good practice in residential care, and most of those who work there sincerely give their best efforts for these children. However, government action is needed if a consistent high-quality standard of care is to be offered to these young people, and if they are to develop the resilience to succeed in what is now—and will continue to be for several years, as noble Lords have said—a challenging employment market. For many young people, the best placement is in a high-quality children’s home. We need a strategy for this sector to prevent further drifting downwards. I look forward to the Minister’s reply; he may wish to write to me.

13:26

[Baroness Turner of Camden]

My Lords, I thank my noble friend for introducing this debate and for the manner in which he did so. We are all aware of the statistics. We know that more than a million young people are unemployed, in many cases without the hope of getting any kind of job. Moreover, they are surrounded by a culture in which far too much emphasis is placed on money and possessions.

It is now nearly 12 months since the riots—the 5 Days in August, to quote the title of the excellent interim report published in the aftermath of the riots. The panel conducting the investigation did not cite one particular cause, but the riots involved mainly very young people. Mainly male, they mostly came from relatively deprived areas and felt excluded. That is no excuse for the violence and arson that happened. However, if a generation of young people feels that it is not part of society, the social consequences for the rest of society are likely to be dire. Indeed, the panel felt that it was possible that there would be further riots in the future.

The Government have made certain cuts in public provision, which has not helped. It was wrong to dispense with the EMA, the allowance introduced by the previous Government, which was designed to assist young people taking on further education and training. Some of the rioters claimed that they had nothing to do; clearly, it is not a good idea to economise in youth provision.

However, the big problem is the lack of employment. Here, as many of us have said, the decline of the manufacturing base in this country has resulted in a lack of employment even for skilled people. This is now generally recognised. My own union, Unite, has long campaigned for more support for manufacturing. It believes that a diverse and thriving manufacturing sector is necessary and that the economy should never again have to rely on the service sector to generate employment and growth. It clearly has not done so. In this context, the provision of adequate training is very important. I am pleased to see that there has been a revival of interest in apprenticeship training.

In a recent document, Unite said that ensuring that there are sufficient workplace skills is a matter of shared responsibility between the Government, employers, trade unions and individuals. It believes that the Government must take action to ensure that employers train their workers. The only way to ensure that this happens is through the introduction of a statutory training levy. It quotes the example of the vocational education and training system in Germany, which offers qualifications in a broad spectrum of professions and skills, and can flexibly adapt to the changing needs of the labour market. Trade unions are involved and co-operate fully in the system, which is widely respected throughout Germany.

I have referred previously in debates in this House to the role that unions can play. The TUC has a department concerned with training and operates its own department called unionlearn. It also supports courses of further education for members at Ruskin College. I believe that the Government should provide the right conditions for employers to take on apprentices and must provide funding and support, particularly as regards SMEs. That is far more important than interfering with and removing employment protection, which has been suggested in some quarters. These are just some thoughts about youth unemployment, which we all find very troubling.

Ultimately, of course, it depends on the economy. There are many critics of the Government’s present direction, although it is to be hoped that there are some indications that that direction may change. Austerity as a policy is not providing the improvements sought. As a result there is much dissatisfaction among ordinary working people, with rising costs, stagnant wages and a general feeling of insecurity. This is unlikely to produce jobs for young people. A young person with a job, and perhaps a hope of advancement, has a stake in society and is unlikely to riot. But to deal with these problems we need a policy for growth, which is increasingly recognised. In the mean time, some of the measures supported by the unions, including my own, particularly the union policy documents that they have produced, are certainly worthy of consideration.

13:31

[Baroness Prosser]

My Lords, I, too, thank my noble friend Lord Adonis for initiating this debate. As everyone has said, he introduced it in a very interesting and exciting way. Very many young people are waiting to hear what can be done to help them get a good start to their adult lives. There have of course been a whole range of attempts by various Governments to deal with the problem of youth unemployment. This problem has been with us through good economic times and bad. I agree of course that ameliorating steps must be taken to try to use all possible levers to make sure that young people become connected to the world of work.

Many others have spoken about the various schemes currently in place and I do not want to comment too much on that aspect of the problem. I want instead to address the two overarching issues which in my view have given rise to this problem, and which have also already been touched on. First, I shall turn to the vastly changed structure of the labour market, which has gone from a manufacturing, all-hands needed economy to a service-based landscape with high skills and high rewards for the relative few at the top to the lower skilled and certainly lower paid many at the bottom. Consequent to this change comes my second point; namely, the failure of subsequent Governments to recognise that this change calls for a major overhaul to the provision of education and training.

I am obviously pleased by the increase in the number of young people moving into further education and the increase in university numbers. I am also the first person to say that an all-round education is a good thing. I agree that access to quality literature and poetry is part of the stuff of life—although, perhaps I may say, not necessarily learning poetry by rote. I welcome the proposal that primary school children should learn a foreign language. I believe that discipline, good manners and timely attendance are essential steps towards becoming a good citizen. But I also think that education has to be provided within the context of “What is it for? Where will it lead?”. How does this stage in a young person’s life help them when they move to the next stage? Why is academic education valued so much more highly than vocational training and skills?

Recent research by City and Guilds, which looked at the views of 3,000 young people aged between seven and 18, showed that the link between education and employment is central to tackling youth unemployment. Some 69% of those young people thought that maths was very important to helping them get on in life. However, the 14 to 18 year-olds said that they found maths boring and irrelevant. More than half of the 16 to 18 year-olds said, unprompted, that taught maths should be geared towards real life and set in relevant or practical scenarios. In this country, we are in dire need of employees trained in technical and scientific subjects, the basis of which is a good appreciation of maths. Here half of our young people are turned off the subject before they have even reached the age of taking their GCSEs.

In the same research, it was found that of the 64% of 14 to 18 year-olds who had received careers guidance from their teacher only 14% had found it useful. They found the most useful source of guidance was visiting an employer. However, of the 16 to 18 year-old cohort only about a quarter had had the opportunity of a workplace visit. Why is there not an organised programme of workplace visits? Work experience can be a very good thing but taster visits well before a youngster has made exam or subject choices can help to clarify what is expected and needed, not only in terms of knowledge and study but in terms of behaviour and how to dress et cetera. I am sure that many schools do good work linking up with the local business community but far too many do not. Taking away the careers advice function from schools will only make this matter worse.

In 2010, I was asked by the Recruitment & Employment Confederation to chair a task force into the issues around youth unemployment. We produced a report with a number of findings, many of which were directed towards the relationship between education providers and employers. Subsequently, more than 100 employers have signed the REC charter, which commits them inter alia to develop links with local schools and colleges, to promote apprenticeships and to participate in specific initiatives developed by, for example, the Prince's Trust or Business in the Community.

While these ideas are aimed at employers, this does not let the Government off the hook. Reducing financial support for students is hardly the right message to be sending at a time when there is a skills shortage in the labour market, which is currently being filled by better trained and better educated workers from overseas. Intensive support is required to train our young people for all levels of employment. Vocational courses have for too long been the poor relation but we also need investment in research and high-level technical skills. Fiddling about with a short-term patchwork of schemes and programmes is hardly likely to put us on a footing with our competitors, never mind help us out of this recession.

It is not even cost effective. Research by ACEVO shows that in 2012 the £4.8 billion cost of youth unemployment to the Exchequer is higher than the budget for further education for 16 to 19 year-olds. Add to that the cost to society generally of a generation of disaffected young people and this is not a good picture. On one final point, I find it strange that this debate has been designated as falling within the purview of only the DWP rather than the Department for Education or the Department for Business, Innovation and Skills. It is within those departments that the answers to this problem will be found. I hope that the debate will be brought to the attention of the relevant Ministers.

13:39

[Lord Collins of Highbury]

My Lords, I thank my noble friend Lord Adonis for initiating this debate. The only thing I am slightly surprised at is that we occasionally meet in the local greasy spoon and I am getting bigger and he is getting thinner. I do not know what I am doing wrong.

To be unemployed is horrific, whatever age you are. Clearly, we cannot separate the rise in youth unemployment today from the country’s overall economic performance. However, as my noble friend Lord Wood said, research studies have shown that youth unemployment has risen more steeply than all-age unemployment in this and recent recessions. That has not always been true. Up to 1970, unemployment rates for people under 20 were below those of all ages. According to Paul Bivand, in his piece for the TUC circulated by the Library on the youth labour market, Britain’s structural youth unemployment is rooted in the recessions of the 1980s and 1990s. The recoveries from those recessions never saw the return to the norm of young people leaving school at 16 and immediately going into a job or getting a job. Even when the economy was booming, approximately 7% to 9% of all young people were headed for long-term worklessness from the age of 16.

The costs of long-term youth unemployment, now and in the future, are enormous. As my noble friend Lady Prosser said, according to the ACEVO Commission report, chaired by David Miliband, the cost to the Exchequer in 2012 of youth unemployment will be £4.8 billion, which is more than the budget for further education for 16 to 19 year-olds and will cost the economy £10.7 billion in lost output.

What are the long-term costs to the individuals who start adult life as unemployed or in a job with little scope for development? Unfortunately, the experiences of young people who are in work are not always seen as a policy concern. While many people will progress from lower paid jobs into better work, some are at high risk of cycling between unemployment and low-paid work. Of those young people who have left education, 17% are in elementary work, while 13% are in sales and customer service occupations. Without support to progress into better jobs and build their qualifications, these young people face uncertain labour market futures. There are also very high rates of under-employment among employed young people who are not in education, with 9% of those who are not in education and are working part time doing so because they cannot find full-time employment.

Things will change only when society, government, families and employers alike see that the transition from school to work can and should be a positive pathway to developing skills and life-long learning. Through the debate, I have heard many noble Lords refer to the importance of ongoing training. I am very sad at the demise of the industrial training boards, which ensured that all employers took responsibility. As many other noble Lords have said, the path from school to university is well known and supported, but 50% of our young people do not head in that direction. In my family in the 1970s, three out of the four children went into long-term apprenticeships and training. Now the job destination has little in terms of opportunities, is too often ad hoc and low quality, and sometimes chaotic and wasteful of public money.

Schools need to improve their relationship with the world of work. That does not mean right at the last moment; it means that on an ongoing basis relationships with local employers are incredibly important. On the subject of term-time employment, from the age of 15 I took a Saturday job working in the Swan and Edgar department store in Piccadilly. It taught me a lot of lessons, including the importance of being on time, because my pay of 19 shillings and 6 pence would be docked if I was not. I agree with the noble Lord, Lord Roberts, and my noble friend Lady Prosser that what we need is to bring all aspects of government together in bearing on this issue. It cannot just be a matter of benefits. What steps will the Minister take to ensure that there is joined-up action by the Government?

Labour supports any step to help unemployed people back to work, but the measures in place and those recently announced provide no real guarantee of a job. Today, after nine months of unemployment, a young person will be referred to the Work Programme, where a young person can go for two years and fall out of the back of it with still no job, having been unemployed for 33 months. It was reckless to scrap the future jobs fund in May 2010 and, with the youth contract announcement, provide no help to young people until April this year. In effect we have had two years of inaction from the Government on this important issue. The 160,000 youth contract work subsidy placements over three years means just over 53,000 funded jobs every year, fewer than the future jobs fund, which provided 105,000 starts between October 2009 and March 2011. There is no guarantee that these jobs will be created, as it is merely an incentive rather than a guarantee. I repeat the question asked by many noble friends and noble Lords. How does the Minister think, in reviewing the scheme, that its scope and number can be advanced?

A central ambition of Ed Miliband and the next Labour Government will be to conquer long-term youth unemployment. As my noble friend Lord Adonis has already said, a policy towards meeting that objective was announced in March this year, which is a real jobs guarantee for young unemployed people out of work for more than a year. The scheme will ensure that after 12 months of unemployment, all young people aged between 18 and 24 will go on a six-month long paid job, preferably in the private sector. This would apply to at least 110,000 people. For that the Government will pay the wages directly to cover 25 hours of work per week at the minimum wage. In return—and again this is the responsibility issue—the employer would be expected to cover the training and development of the young person for a minimum of 10 hours per week.

The Government have a responsibility to provide opportunities for young people, employers have a responsibility to train them, and young people have a responsibility to make the most of those chances. I endorse what many noble Lords have said, including my noble friend Lady Sherlock. We need to give real hope and real opportunities to young people. Here I share the views of the right reverend Prelate the Bishop of Chester, who was right to stress the need to nurture young people, because it is a moral issue as well. It is in our interests as the older generation to do that for future generations.

In Spain I saw someone wearing a T-shirt on behalf of the Indignados. The T-shirt said: “Future of Youth—No job, no home, no pension, no fear!”.

13:50

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I thank the noble Lord, Lord Adonis, for the tone he set in introducing the debate, which noble Lords have followed. This has been a very thoughtful debate. The noble Baroness, Lady Sherlock, got it right when she said that we are all against youth unemployment but the question is how we solve it.

Before I get on to some of the meatier stuff, I ought to deal with the moral dimension introduced by my erstwhile fellow student, the right reverend Prelate the Bishop of Chester. I reassure him and my noble friend Lord Roberts that there is good evidence to show that there is a positive correlation between having both more older people and more younger people in the workforce. The person who has done the best research in that area comes from the Benches opposite in the shape of the noble Lord, Lord Layard, who is not present but has done excellent research on this matter.

Clearly, the recession has had a major impact on the participation and unemployment rates of young people. As other noble Lords have pointed out, the relevant figures, having been broadly stable since about 1998, started to go up again in a very disturbing way from about 2004. I remind noble Lords of the underlying figures. In 1997, the number of youngsters who were unemployed or inactive was 1.14 million. By the time that this Government came in, the figure stood at 1.39 million and it has gone up a little since; it is now 1.42 million. Therefore, we are looking at something that stems from much more than a recession; we are looking at a structural factor in our economy and the failures of our education system to keep up with the changing economy and ensure successful transitions for all young people, as so many noble Lords have pointed out.

The noble Lord, Lord McFall, asked whether there should be a statutory target for youth employment. We do not think that that is the right answer. The noble Lord, Lord Giddens, asked where the jobs are coming from. The Government seek to turn round the economy to get those jobs provided by the private sector. Indeed, private sector employment overall has gone up by 45,000 in the quarter, a quarter of a million in the year and by 634,000 since the election.

The figure for youth unemployment is over the emotive 1 million mark. However, a lot of them—30%—are full-time students who are looking predominantly for part-time work. Rises in unemployment have been driven by longer-term factors. People who bear the brunt of those changes in the labour market are those who are trying to get into the market; that is a natural factor. However, joined to that is significant demographic change with a larger number of young people entering the labour market than was the case 10 years ago.

The noble Lord, Lord Adonis, talked about the Wolf report. Like him, I read that report with some astonishment and was shocked by its finding that at least 350,000 16 to 19 year-olds were getting little or no benefit from post-16 education. That report has been adopted in its entirety by the Government and we are trying to make the wholesale changes in the vocational education system that it recommends.

We also have lower productivity than many other nations, which is partly explained by the lack of skills in the working population. Increasing participation is designed to make a significant contribution to economic growth. However, it is easy to get too gloomy. A large number of youngsters succeed in education and make a successful transition into the world of work. The number of young people not in full-time education and unemployed is around 10% of all 16 to 24 year-olds, which is lower than after previous recessions. The noble Lord, Lord Adonis, talked about the long-term unemployed in this age group. One of the things that was distorting the figures was the fact that as youngsters moved into the long-term category, they were taken off on to training courses and were not classified in that way.

When you look through the figures at the underlying position, you will see that there has been an increase in the number of long-term unemployed since the election, but it has not doubled. Today, it stands at 167,000. If you calculated it on the same basis, it would be some 153,000 at the time of the election. Therefore, there has been an increase, which is not satisfactory in any way, but it is not a substantial, horrific figure. If you look at the total number and not just the long-term figure, there are signs that there has been a small decrease—again, this is not good enough—in the number of young people on jobseeker’s allowance and other forms of temporary support.

The right reverend Prelate the Bishop of Chester asked about the EU and the other moral question of the movement of labour. We are looking at this issue. Interestingly, over the past year, in contrast to before then, the employment rate of UK nationals has held up better in this market than that for non-UK nationals, which has fallen.

The noble Lord, Lord Giddens, and the noble Baroness, Lady Prosser, asked whether we should increase the number of young people in higher education. We have not changed the principles that date from 1963: namely, everyone who can benefit from higher education should be able to get it.

Clearly, too many young people are not in education, employment or training. However, most young people spend only a short time in that NEET category. The ones to worry about are those who spend a long time in it. As I think the noble Lord, Lord Wood, said, the longer-term impact of spending too long out of the workforce affects many factors. I endorse all that he said about the economic effect. That clearly concerns us as a Government, just as it concerns him.

The programme of education reforms, including increasing the freedom of schools, will help to raise attainment for all pupils by the age of 16. This year, we are increasing our investment to a record £7.5 billion to fund education and training places for 16 to 17 year-olds. Regarding the question of my noble friend Lord Roberts on careers guidance, through the Youth Contract we are putting in place extra adviser support for 18 to 24 year-olds, including referrals to careers interviews delivered by the National Careers Service.

We are also implementing a £180 million scheme to target financial support to young people who need it. This will provide guaranteed bursaries of £1,200 a year to help young people to overcome barriers to participation. Our approach to supporting unemployed young people into work is based on an individual’s need for short-term or more intensive, long-term support. For those who are closer to the labour market, the focus is on engaging young people in real work with employers and keeping them active in looking for a job. The options are work experience, skills, advice on apprenticeships and support with job search. My noble friend Lord German asked about working with the CIPD. We are working closely with it, particularly on finding employers who can offer work experience. Jobcentre Plus is working in every part of the country, placing thousands of young people in work experience.

Regarding the youngsters who need more support, the noble Lord, Lord Adonis, had a little bit of fun over how we are trying to make sure that the resources go towards the people who really need it by getting them into the Work Programme early. The aim is to get these people in at the three-month stage and the rest at nine months. As the noble Lord will be perfectly well aware, one way that we achieve efficiency through the Work Programme is by concentrating on payment by results. Clearly we will be able to improve the programme as it develops by refining the payments as we isolate those who are harder to help.

Last April we launched the new £1 billion Youth Contract, which has been discussed. Regrettably, the cost of intermediate labour market interventions is very high for what they achieve, and we think that there are other ways of going about this. In answer to my noble friend Lord German, who asked whether the Youth Contract is enough, I can say that it has a very good take-up rate.

We are pushing out a lot of apprenticeships, with 256,000 having started in the first six months of the academic year 2011-12. In answer to a question put by the noble Lord, Lord Adonis, of those 256,000, 79,000 were for 16 to 18 year-olds, although I am afraid I do not have the data for 16 to 21 year-olds. We have introduced grants to encourage, particularly, smaller employers to take on youngsters in the 16 to 24 year-old age group.

Again in answer to the noble Lord, Lord Adonis, we have placements for work experience and apprenticeships in the DWP and across government. We have already put 49,000 people through work experience, and about half of them are now off benefits after taking part in the scheme. The success rate is virtually identical to that of the future jobs fund, but the difference is that the work experience scheme has cost £325 per placement, whereas the future jobs fund was running at around £6,000 a place.

Clearly, young people have borne the brunt of long-term structural and demographic changes in our economy and our society and also of failures in our education system. Noble Lords pointed out that other countries were rather more successful. Youth unemployment is too high and it has long-term negative consequences for individuals and for wider society. We are working across government to minimise the long and short-term impacts of young people being NEET and to ensure that they get the opportunities and support that they need.

We are determined to increase the participation of 16 to 24 year-olds in education, training and work to make a lasting difference to individual lives, improve social mobility and stimulate growth. We are interested not in quick fixes but in lasting change and we are changing the structures to help people on that basis. The change is aimed at helping young people to succeed in their careers and to make a much needed positive contribution to our future economic success.

14:05

[Lord Adonis]

My Lords, I have had my say. I just want to thank all noble Lords who participated in this important debate and to say that I hope it serves as a call to action in tackling what we all agree is one of the most urgent social crises of our time.

Motion agreed.