EU: Youth Unemployment (EUC Report)

Lord Shipley Excerpts

Tuesday 17th June 2014 Lords Chamber

[Lord Shipley (LD)]

My Lords, I am glad to speak in this debate. I was not actually a member of the committee but I have a keen interest in issues around youth unemployment and have spoken previously in your Lordships’ House on the subject. As someone who was not involved in the deliberations of the committee, I find the report a very impressive piece of work. It is very detailed and contains a very helpful discussion of all the issues around youth unemployment.

I will mention two things in particular that I like about it. The first is the title—Youth Unemployment in the EU: a Scarred Generation? I think the question mark at the end is important. I think there is a very real danger that we are going to have a scarred generation, but it does not necessarily follow that we will if the right policies are adopted in what appears to be a period of continuing growth from now into the future. The actions suggested in the report that could alleviate the impact of youth unemployment, together with the actions the Government are already taking, mean that we can get more young people into productive employment.

The second thing that I am particularly pleased about is the report’s clarity on the varying definitions around youth unemployment and the associated definitions around NEETs—as we know, those not in employment, education or training—and inactivity, which is not quite the same thing as NEET, because it relates to anyone who is not working at all and is not available or looking for work.

There are many statistics across the EU and within the United Kingdom, but the truth is that whatever statistics you use—for example, whether you categorise students in full-time education—youth unemployment is too high both in the UK and across the EU. We simply have to get more young people into work. The report is right when it states that more control over EU funds should lie locally, and is also right when it acknowledges that the EU’s main role besides funding is to advise on successful innovation and good practice. I support the committee’s view that ESF funding should be assessed on real outcomes rather than just the cost and numbers of participants in schemes.

I hope that we may now be seeing the start of a downward trend in youth unemployment in the UK. It may be too early to say but there seem to be some signs of it. The number of young unemployed people who are not full-time students has now fallen by just under 100,000 since 2010. The number of NEETs is lower than at any time since 2005. One thing we have to do is to continue work closely with small firms because they are responsible for four of every five jobs created between 2010 and 2013. It is important to understand this because this performance by the SME sector in recent months has been impressive—as has the performance of the Government in encouraging apprenticeships.

Since 2010 1.6 million apprenticeships have been created and I welcome the plan to build this up to 2 million apprenticeships by 2015. Many of these apprenticeships are in the private sector. The previous Government created short-term placements predominantly in the public sector, and half the people on them returned to benefits. What this Government are doing is much more sustainable and we need that sustainability because youth unemployment has structural causes. It is not just a recent problem, although without doubt the financial crisis in 2008 and the consequent recession made it worse.

The youth unemployment rate across the EU in 1994—20 years ago—was 20%, very close to the current level. Thirty years ago, in 1984, youth unemployment in the UK was very similar to what it is now. Spain today has very high youth unemployment but in 1987 it actually stood at 45%. Even in 2006 in the UK, following a four-year period of growth, there was still very significant youth unemployment.

I think there is a structural issue, because Germany—which I will come on to in a moment—does not have that same structural problem. There is a cost to the Exchequer in this because youth unemployment costs several billion pounds. Some estimate it as more than the entire budget for further education for 16 to 19 year-olds in England. We would agree that it is better for young people and our economy to spend that money on training and apprenticeships and getting young people into jobs.

The committee has clearly had a debate about the Youth Contract and the Youth Guarantee. Its view on the Youth Guarantee differs from that of the Government. Clearly there is going to be a further discussion around that and I hope it might be possible for everyone to get round a table to have it. The Youth Guarantee is a guarantee for young people leaving school that they will have an immediate opportunity of employment.

My view is that the Government and all their partners must be focused on outcomes, which means that young people need to be suitably prepared to enter apprenticeships, employment or training. That means that they need a pathway at a personal level to enable them to move seamlessly from school to an apprenticeship, to vocational training or to college or university without waiting, and that they are “work-ready” when they enter the world of work rather than being expected to learn on the job.

The Government’s reply is that the Youth Guarantee model would not fit the UK. However, I think it could. What matters in this is the individual—that every individual has a personal plan and that they feel wanted and engaged. The statistics around NEETs and those who are inactive suggest that not everybody feels wanted and engaged. Therefore the principles behind the Youth Guarantee seem very important.

I will mention the role of Newcastle Gateshead, my home city, which is a Youth Contract pathfinder, in helping 16 and 17 year-olds into employment, education or training. It is interesting to note that almost half of 16 to 17 year-olds who have taken part have moved into employment or training; others are in education. That seems to be a sign that the policy is working. If so, that is an example of good practice that can be spread.

There is a very interesting statistic about the north-east in the Library briefing for this debate. It has the highest level of youth unemployment in the UK at 25%, but has a lower rate of youth inactivity than many regions, seven of which—including London—have higher rates of inactivity. I have puzzled over what the cause of that might be and have drawn the tentative conclusion that the Youth Contract is now helping. Over the past two months, 1,124 apprentices were taken on in the north-east. The National Apprenticeship Service has just announced this figure two months into its 100 Days Apprenticeship Challenge. Some 650 regional companies have taken on those apprentices, backed by the North East Chamber of Commerce and training providers, and impressively supported by the region’s press. That is partnership working at its best.

I will say something further about Germany’s youth unemployment. It is under 8%. Germany has high levels of youth employment and almost no unemployment among those in education. It has apprenticeships and vocational training in secondary education. That leads me to the role of our schools. Schools have a statutory duty to provide a careers service, yet a few months ago Ofsted reported that three-quarters of secondary schools were not executing their statutory duties satisfactorily.

Advice and guidance is broader than just careers advice. Students need to understand better the qualifications and skills required to enter an apprenticeship, particularly in science, maths and IT. They need programmes of visits to local employers to experience what the possibilities might be. Schools are central to the development of relationships with local employers through programmes or visits, exchanges and other opportunities.

In conclusion, the UK is doing better than many eurozone countries. Youth unemployment is far too high; we must learn from Germany. However, we have to use every lever within our power and remember that this is everybody’s problem to solve, not just the Government’s.

--- Later in debate ---

[Baroness O'Cathain]

My Lords, I thank everybody who has taken part in the debate. I particularly thank my noble friend the Minister. I gave him a slightly hard time—only slightly. I can be much more ferocious than that. His response was very good but, in listening to it, I reflected how confusing this whole issue is. We have so many different ways of looking at it. If I were 17 years of age with not much educational background, I just wonder how I would react having listened to this debate. Perhaps I would say, “There are the people in suits and dresses saying they are going to do this and that”. The Minister mentioned about 20 different and confusing areas that could solve the problem. Is it not just all too confusing? The final point that my noble friend made about the Youth Guarantee and the Youth Contract did not reflect the letter that I saw, which was much more along the lines of, “Oh well, okay, the Youth Contract is all right”, but people in Brussels were still saying that they really wanted the Youth Guarantee. Perhaps we should have another discussion about that.

In the mean time, I thank everyone who has taken part in the debate. I certainly want to say to my noble friend Lord Shipley that I am sorry he thought that the report was depressing. The fact is that it is a depressing situation.

[Lord Shipley]

I am sorry but I said that it was an impressive report, not depressing.

[Baroness O'Cathain]

I am sorry. That is the second time “sorry” has been mentioned in this House tonight. It is nice to be able to say sorry.

The situation is actually depressing throughout the EU but there are shafts of light coming in. One of the great things about the report is that it is not political. We did not mention parties and tried to work for the good of the youth of the whole European Union. We should, in particular, use the experience that can be observed in the member states and test it out to try to solve our own horrific problem—because it is a horrific problem. I go back to the right reverend Prelate the Bishop of Durham’s analysis in his maiden speech the other day. We have to remember that.

The Minister neatly glided over the situation regarding local enterprise partnerships and did not say whether he was prepared to consider whether they should consult young people, in groups or individually. We received most of our really good evidence from talking to those young people. After all, it is the young people who count. That is why we are doing this and why I hope we have made a difference to the future of these young people by exposing a lot of the stuff in this report.

I thank again all our staff. There are so many thanks going around this Chamber but I could not have done any of this without the terrific support that we received, and the members of the committee have been ideal. If noble Lords want them as chairmen of other committees, look at all of them. They do an excellent job, and I thank them.

Motion agreed.