Work and Pensions (CSR)

Oliver Heald Excerpts

Thursday 4th November 2010 Westminster Hall

[Miss Begg]

My hon. Friend is absolutely right; the issue seems to arise particularly with sanctions on housing benefit. When giving evidence to the Select Committee yesterday, Lord Freud suggested that sanctions on housing benefit would follow people wherever they went. The only way for them to get rid of the sanction would be to find a job, but some might simply not be able to do so. It could depend on where people live, as in some areas it is difficult to find a job.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

I am pleased to hear that the hon. Lady will not be retiring. It is good news for our Select Committee, as she is an excellent Chairman. What is her take on the fact that, for the first time, we are to have a really focused Work programme and a universal credit? That will remove many of the problems with withdrawal rates that the Committee highlighted in the past. Of course it is an expensive thing to do, but it is the right thing to do. Is it not right to praise the Government for doing that rather than concentrating on the cost savings that need to be made to make it affordable?

[Miss Begg]

I shall call the hon. Gentleman my hon. Friend, as he is a member of the Select Committee. I shall deal with the universal credit in a moment. However, my hon. Friend is right about the Work programme.

The point is that the Work programme does not kick in until people have been out of work for a year, unless they have come through the incapacity benefit and employment and support allowance route or unless they are young and unemployed, when they will come into the Work programme after six months. The sanction will kick in before the individual has had the very expensive help that we hope the Work programme will rightly provide. It is a combination of there possibly not being a job and there not being any specialist help. Even if the youngest child has just turned five, lone parents might have been out of the workplace for 20 years looking after the older children. They will need extra help, but they will not get it because the Work programme does not kick in until the year is up.

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[Mr Oliver Heald (North East Hertfordshire) (Con)]

The Chairman of the Select Committee has set out many of the arguments that are regularly deployed about the sort of cutbacks that are having to be made given the economic situation that this coalition Government inherited—the largest deficit in the G20 and a doubled national debt. However, she misunderstands, I think, what the Government’s ambition is. The Government have a grand ambition to help people into work and to provide incentives for that and the necessary help.

If we think back over the Labour years, one of the things that was most disappointing about them was that, at the end of the period, we had 3 million households in which nobody worked. Adults of working age may have lived there, but nobody worked. Many of the people concerned had never been approached about working. They had been on benefits for years and had not really had any help to try to get back into work. That is what this ambition and plan is about. The Work programme provides something that the Select Committee has been talking about for years—I am glad that the Chairman has welcomed it—which is a personalised service to help people back into work. I agree that there are some people who would benefit from having that help earlier in their job search than is currently proposed. The worry is that if we start the system at six months, we will not get any of the benefits of deflection. The fact is that many people find work in the second six months of job search.

[Julian Smith (Skipton and Ripon) (Con)]

Does my hon. Friend have any ideas for jobcentres? They could take some practical and easy measures before the Work programme kicks in to help people get back into work.

[Mr Heald]

I do have some suggestions. If one talks to providers—the big companies that provide these employment services—young people who are looking for work and employers, the one thing that they all say is that young people are bad at applying for jobs. When the future jobs fund was in operation, the employers’ reaction to it was generally quite favourable, but the one point that they almost all made was that the applications were poor. If one talks to job providers they will say that young people who have been out of work for six months will still not have a CV that they can leave with an employer. That is a classic thing that everybody knows about, and yet young people are not good at it.

The time has come for the Government to work the way that young people work: to put online simple information about writing a CV and how to get into work. Somehow, we are still missing that vital information. A lot of research shows that helping a young person with a job search early on, with simple information of that sort, is extremely helpful. It can be done through jobs clubs, a fantastic big society initiative happening in many parts of the country. That is just one idea on that subject.

It is refreshing to read Save the Children’s briefing for this debate. Although I do not agree with everything in it, it does something that is a model for an organisation. Save the Children, a marvellous organisation, at least starts its briefing with the good news, saying that the Government are doing some things that it strongly supports. If other organisations that send briefings to MPs were more realistic and acknowledged the good—the intent—and then went on to say what they did not like, they might find that they are more persuasive. I notice that the hon. Ladies do not agree. It is important to be realistic in this debate and not to over-state one’s case or make dramatic claims that are not borne out by the facts.

I want to ask the Minister whether universal credit is a big bang initiative, where we will have a sudden launch—with the new system explained to people—or whether it is proposed to have a transition, where a portfolio of benefits gradually moves in that direction, with the withdrawal rates being lowered and the earnings disregards increased. What is the conception behind that process?

Turning to the Work programme, I want to make three points. The first is that at the moment there is a patchwork of schemes continuing. We have got half the country covered by the flexible new deal; we have many cities with employment zones; we have the new deal for disabled people in some places—contracts are just finishing on that; the future jobs fund is running for a bit longer, and so on. It seems that there is a ragged gap in time between the ending of a lot of these programmes and the start of the Work programme. I wonder whether there is any scope for running on some of those schemes, or finding ways of employing the people who work for the big provider companies in that gap. It will obviously be very disruptive if the Work programme starts with quite a lot of people who have not had the help that they would normally have had. Contractors will have to wind down their staffing levels and then crank them back up again over a two or three-month period. I am interested to know if the Minister is at least looking at the gap.

The second point I wanted to make is about the work capability assessment, which the Chair of the Select Committee mentioned. It is concerning that 40% of people affected are now appealing. That may be expected with a system that is starting anew. I think the review is very welcome and I hope that it will deal with some of the problems that have been identified. It is excellent that there is a panel now, with Paul Farmer from Mind on it, which is a very good idea. I wonder whether there is not another problem. I understand that research shows that in some parts of the country, the system works reasonably well and there are not too many problems, but in London there are a lot of appeals and a lot of concern is expressed about the way that it works. Part of the problem may be that adequate attention has not been paid to the needs of minority communities.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I agree with the hon. Gentleman on that point. I think there are regional disparities in how some of these measures have been brought in, although there are underlying national problems. Certainly, in Plymouth I have met women with terminal cancer who have been sent for interviews in Bristol. Surely, the hon. Gentleman would agree that that is not right. There is a significant problem outside London, and it is not specific to minority communities.

[Mr Heald]

Yes. These are the two worst examples I have heard. One person had terminal cancer, and the other attended a provider for a work discussion session with a drip. I think those problems have been ironed out to some extent. I hope that the review and the panel will help. There is possibly an issue about communication between the assessors and the people being assessed. Certainly in London, there are quite large minority communities, and I have been told by providers that one of the problems can be that Atos will have an assessor for whom English is not his or her first language, and the person being assessed may not have English as a first language. Apparently there have been quite a lot of problems as a result. Will the Minister consider whether there is a need to look at the question of communication, in London particularly?

[Natascha Engel (North East Derbyshire) (Lab)]

Although I do not dispute the point raised by the hon. Gentleman, I do dispute the disparities around the country. In the Adjournment debate I had last week, we heard that organisations that had taken people to tribunal to appeal against assessments in Oxford had had over 90% of them overturned. In Derbyshire, people supported by welfare organisations have a 75% success rate. That goes to show that the issue is the involvement of welfare rights organisations rather than a question of minority groups.

[Mr Heald]

The hon. Lady makes her point. There is some research, which I do not think has been published yet, that looks at the eastern region and London. It comes to the conclusion that the work capability assessments are working far better in the eastern region than in London. Talking to providers about why that might be, they raise the point that about a third of the population in London comes from minority communities. I thought the Minister might want to look at that issue.

My next point is one I mentioned before about getting CVs and help to young people early on. I made the point about going online. I hope that that is something that the Government will look at.

With regard to the movement from incapacity benefit and employment and support allowance on to jobseeker’s allowance, one issue that needs to be looked at is the fitness of our work force and the people who are moving from one benefit to the other. There is no doubt that there are a lot of people who start off with a back condition or possibly stress, and it is not treated quickly enough and becomes a chronic condition. I have made that point in debates such as this for years, and I think it is time that the Department of Health and the DWP looked more carefully at the issue of fitness. About two years ago, Dame Carol Black produced an excellent report about fitness and the work force. I know that she is still involved and I hope that it will be possible to build on her work and try to do more in this area, so that we end up with a work force who are fitter.

[Miss Begg]

Another problem is where employers employ occupational health professionals to assess people, and assess them as not being fit for work, when Atos has assessed them as fit for work for the work capability assessment. That is acting as a barrier very often for employers to accept people into the work force.

[Mr Heald]

That is right. Another point to make is that the Department of Health has a major group working on the issue of fitness, including aspects of fitness at work. I think that is something that the DWP should also be involved in. It should be a joint exercise, and Carol Black’s work should be continued.

I want to make a point about the consumer price index, and then a few general remarks. The consumer prices index is the European measure of inflation. There is no doubt that the retail price index distorts the measure, by including mortgage costs, which are erratic. I believe that in the longer term CPI is the better measure, and I understand that in Europe there are discussions about how to include housing costs in it. Over time CPI will be improved, whereas RPI has been rather erratic over the years, and has often led to poor results.

The overall effect of the changes is to give value for money to the taxpayer. It is an issue of fairness. I know that people say, “Housing and other benefits are being cut, and that is unfair on individuals who may have to move or who will have to negotiate with their landlords for a lower rent.” I understand that argument, but how can we explain to someone who takes home the average wage of £374 a week net that in difficult economic times, when they are hard pressed, it is right to spend more than £20,000 a year housing someone in a better house than they can afford? It is a hard argument to make.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

One can explain it by pointing out to them that the majority of housing benefit claimants are not living in properties of four bedrooms or more, and that the amount that the Government are presenting as the mean average for housing benefit claimants is wildly exaggerated, as I am sure the hon. Gentleman knows.

[Mr Heald]

The hon. Lady will have seen the briefings from certain organisations; I know she has read them. She will see in there the examples that are given—a family paying £400 a week in rent is a classic example. To someone who takes home £374 a week net, £400 sounds an awful lot of rent. That, of course, is the maximum.

[Alison Seabeck]

A number of the people who currently pay those higher rates moved into the areas where they live and into that type of accommodation 20 or 30 years ago; they have worked in low-paid work. The areas have gentrified over time and housing rents have gone up. That is not their fault. Their roots are there, and the expectation from the changes is that those people will be moved out of those areas, which is deeply unfair.

[Mr Heald]

I would contest what the hon. Lady says. Of course, it is true—I see the hon. Member for Bermondsey and Old Southwark (Simon Hughes) in his place, and I have a long connection with his constituency—that there are areas in London that have gentrified and changed over time; I agree. However, the sector of the market that we are discussing—the private rented sector—is not the one that the hon. Lady is really talking about. The private rented sector is the area of the market where people do not stay for 27 years. They move, regularly. It is a sector of the market in which people stay for a year or two. Something like 40 per cent. of that market is people who have been in their homes for less than three years.

[Simon Hughes]

The hon. Gentleman is right; he knows Southwark as I do. However, the pattern is not uniform, and the hon. Member for Plymouth, Moor View (Alison Seabeck) has a good case. To give one example, just over the bridge is a square called West square, where former Prime Ministers and Cabinet Ministers have lived. However, some of the houses, which are all privately owned, have been lived in by working-class families, who lived there all their lives. They are privately owned and rented, and have continued with private tenants. Scattered throughout my constituency, as well as Westminster and every London borough, are considerable numbers of people who have been for between 10 and 50 years in private sector rented accommodation, and who do not want to move.

[Mr Heald]

The hon. Gentleman knows Southwark like the back of his hand, and I accept that there are people who have been in the private rented sector for many years, but that is not the overall picture of that sector of the market, which is one of shorter-term lets. Of course, the nature of the contracts on those properties is short term.

Of course there should not be undue hardship. I agree with the hon. Members for Hampstead and Kilburn (Glenda Jackson) and for Plymouth, Moor View (Alison Seabeck), and with my hon. Friend the Member for Bermondsey and Old Southwark, about that. That is why there is a fund to deal with cases of hardship. The Government have not gone into it saying, “This will be a harsh regime, with no possible exceptions.” They have set aside £140 million to deal with those problems.

I think that it is wrong to overstate the problems against the background of the very difficult economic position that the country is in and the need to make cuts—any Government would have had to make cuts. There is a third point, which is that there must be fairness. We are all in it together, and I think that the balance that the Government have achieved is fair. It is wrong to view what is being done as though the overall ambition were to cut back the size of the state. The overall ambition is to get people into work. If we do that, that is how we will cut the welfare bills. I think that, with the economy and the measures that are being taken, things are looking quite encouraging.

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[Damian Hinds]

I am grateful to the hon. Lady for that intervention and for the opportunity to comment on it. I did not talk about evidence from various bodies or organisations. I said that “all the economic logic” suggests that with a change this extensive, there will be downward pressure on rents—it does suggest that.

[Mr Heald]

According to evidence to the Work and Pensions Committee from the landlords’ bodies about 30% of landlords would reduce their rents; London Councils said that about 40% of landlords would reduce rents, and, in discussions in the Select Committee, members of the Committee were doing their arithmetic on the basis that 50% of landlords would reduce rents. So there is a body of evidence that a very significant number of landlords will negotiate lower rents.

[Damian Hinds]

I am grateful to my hon. Friend for clarifying that matter for us.

I want to turn to the coalition’s reforms of incapacity benefit. Of course, the genesis of those reforms also began in the last Government’s time in office, when Tony Blair managed to tempt Sir David Freud out of retirement and Sir David found a kindred spirit in James Purnell. In May 2009, Mr Purnell said:

“It is very important tor us to provide people with help to get back into work, and to improve the incentives for getting back into work. That is why we are re-testing everybody on incapacity benefit to make sure that they are on the right benefit. That is why we have tightened the gateway, to make sure that only the right people get on to the benefit, and that is why we will require everybody for whom it is appropriate to have back-to-work support.”—[Official Report, 11 May 2009; Vol. 492, c. 531.]

Again, I am not sure that that description of what needs to be done can be bettered and so, once again, I will not try to do so.

It is right that no targets have been set for the numbers of people who will go into the three different groups, because the programme has to be about identifying what is right for each individual, whether that is helping them directly into work, helping them to prepare for the world of work or offering them long-term and unconditional financial support at a rate that will be, of course, higher than the one that pertains today.

Clearly, there are some issues related to the early workings of the work capability assessment, as has been outlined by my hon. Friend the Member for North East Hertfordshire (Mr. Heald) and others, including issues about intermittent conditions and certain mental health conditions. Of course, it is good that there was a pilot phase, so that these issues can be studied and tackled. I know that Ministers are conscious of the need to tackle them and I welcome the Harrington review, which was referred to by my hon. Friend the Member for Stroud (Neil Carmichael), and the consultation with mental health charities.

The biggest issue of all is ensuring that work pays for everybody. It is not a new issue; it has been around for an awful long time. There is a difficult trade-off between, on the one hand, having a decent living standard for those who cannot find work and, on the other, incentives for those who can find work, and if there were a “third hand” it would be about avoiding the sort of sky-high marginal withdrawal rates, which are effectively tax rates, that create cliff-edges in terms of certain numbers of hours of work in a week or that completely discourage people from taking on some form of work. Of course, we must also try to keep the whole system simple and low-cost to administer. So it is an enormous challenge.

Twenty years ago, when I was an undergraduate and we were talking about these issues, people used to talk about the 97% effective marginal tax rates at their peak and sometimes, in extreme cases, rates that were effectively more than 100%, once the additional costs of going to work and so on had been factored in. Of course, that situation existed under a Conservative Government, so I am not making a party political point. However, not enough has changed since then.

The problem is that if we want to change that state of affairs, mathematically we either have to reduce benefits to levels that just would not be acceptable or withdraw benefits more slowly as people’s incomes rise. That second route is, of course, much more attractive but it is also extremely expensive, at least in the short term. So I am delighted that the Government, despite what has been a very difficult trade-off for them over the summer, have managed to find the £2 billion that is necessary to fund the universal credit. As hon. Members know, that new integrated benefit seeks to simplify the system, improve incentives, smooth transitions into work, reduce in-work poverty and cut back on fraud and error. I believe that that £2 billion is money very well spent.

Taken together, the reforms to incapacity arrangements and the plans to make work pay are, of course, complemented by the Work programme, which was also referred to by my hon. Friend the Member for North East Hertfordshire. That programme will treat everyone as an individual in a very practical way, while continuing the “Purnellian” principle of using non-state institutions to help people into the world of work and indeed into lasting jobs.

Collectively these measures, enabled by the comprehensive spending review and some of the difficult trade-offs that have to be made, can have an enormous impact on the DWP. That is because, as we have said already, the single biggest variable factor is the number of people who are in work compared with the number of people who are not in work. With these measures, we can encourage and help many more of our fellow citizens into work and in so doing we can create a more fulfilling future for them, a more cohesive future for our society and a much more sustainable future for our economy.

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[Mr Heald]

I am following the points that the hon. Gentleman is making about the most vulnerable people and not concentrating only on DWP. One great strength of the CSR that is not really about DWP is that tax credits have been increased to help the poorest children and ensure that we do not increase child poverty. That is part of the big picture.

[Neil Carmichael]

My hon. Friend the Member for—

[Mr Heald]

North East Hertfordshire.

[Neil Carmichael]

Thank you. My hon. Friend is absolutely right. This is much more about the overall impact of the CSR.

The changes that this Government are introducing were anticipated in some respects by the last Government. It is misleading to say that we are suddenly coming in with a wild charge to cut expenditure simply because we want to, or even because we need to, although we certainly do. There is a general feeling that changes in the pension benefits arrangements are necessary. A good example is moving incapacity benefit on to employment and support allowance. That was not our idea from just a few months ago; it was already the direction of travel of the last Government. I will discuss that in a bit, but I have four points to make.

The first is that the CSR has certainly propelled changes in the ESA; quite right, too, for the reasons that I have given. Secondly—it is important that we make, understand and keep repeating this point—people who really need help will not go without help. Severely disabled people will get appropriate support. It is critical to make that point, because we do not want anybody to be unnecessarily alarmed.

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[Kate Green (Stretford and Urmston) (Lab)]

I start by thanking you, Mr Turner, and hon. Members present for your tolerance in allowing me to resume my participation in the debate. I have been attending a Public Bill Committee sitting for the past hour. I am sorry to have missed the contributions of other Members and encourage them to intervene to repeat points that might already have been made that relate to my remarks.

I am pleased that the Backbench Business Committee selected the subject for debate this afternoon, not only because it was partly in response to representations I made to the Committee, but because this set of policy announcements is one of the most significant that the coalition Government have made. It will have far-reaching implications, not only financially for families now, but for the philosophy surrounding welfare provision. It is beginning to take us into new territory and challenges some of the assumptions and positions that have pertained for the past 60 or 70 years. The debate is an important opportunity to start to talk about that.

It is notable that we have had several debates in this Chamber and on the Floor of the House that speak to concerns right across the House about the implications of some of the Government’s proposals, particularly in relation to housing benefit reform. I want to address some of those points again this afternoon and, inevitably, speak much more widely about the broad range of financial support for families that is provided by the welfare system and by the benefits and support programmes that are the responsibility of the DWP.

One of the great difficulties when looking at financial support for households is that it is provided by a number of Departments. It is difficult to disentangle the implications of one benefit change in one Department’s area of responsibility and look at it in isolation when assessing the overall impact on low-income households. I hope that we will have some leeway this afternoon to look beyond the rigid parameters of the DWP. That was certainly already the case when I had to leave the debate earlier.

[Mr Heald]

Does the hon. Lady agree that the increase in child tax credit is a vital part of the overall picture?

[Kate Green]

That is the kind of point that it is important we recognise in debate. I recognise that the increase in child tax credit is one of a tiny number of measures, if not the only one, that we have seen so far from the Government that try to redress some of the reduction in or withdrawal of financial support elsewhere. Ministers have highlighted the fact that the increase is significant in ensuring that there is no rise in child poverty as a result of the measures that have been proposed overall. I regret such paucity of ambition, as the intention is simply not to see child poverty increase. Previous Labour Governments were criticised—rightly, I guess—for not achieving as much as they had set out to do. The proposed increase seems a poor and rather limited attempt to move forward, which I very much regret. I would welcome hearing from the Minister how the Government expect to catch up on the target to eradicate child poverty by 2020 when they expect to make no progress at all between now and 2012-13.

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[Simon Hughes (Bermondsey and Old Southwark) (LD)]

It is a pleasure to take part in this debate. I am present almost by accident, because my hon. Friend the Member for Cardiff Central (Jenny Willott) would normally have been the Liberal Democrat spokesperson. In many ways, she is a greater expert than me. I am afraid that I have broken the spell—there would have been women leading for all three main parties, together with the Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Miss Begg) and the Chair of the Backbench Business Committee, the hon. Member for North East Derbyshire (Natascha Engel). We men would have had to muscle our way in. I apologise for that, but I hope that in spite of my lack of technical expertise, I can none the less share something from my experience. Like the hon. Member for Aberdeen South and my hon. Friend the Member for North East Hertfordshire (Mr Heald), I am one of the old hands in such a debate.

I welcome the Minister to her post, and I endorse what was said earlier. The approach taken by the Secretary of State and the Minister responsible for pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) has shown encouraging, progressive and challenging new thinking that looks to restructure an important Department. I welcome the opportunity to look at how that will be done.

I speak not only as an old-school Liberal, with Beveridge and Lloyd George as my political forebears, but as someone who has lived and represented the inner city for all of my time in this place, and half of my life. I know how important it is to have a strong welfare state, but that we must always encourage those who can to find and stay in good-quality work.

A friend of mine, the deputy head of a primary school in Leeds, once showed me how they were taking 10-year-olds to do work experience in their final year of primary school. More than half the youngsters in that school had nobody at home who went to work, so a role model who worked was missing in their lives. I hope that at the end of the five-year coalition programme, difficult though it will be in some areas because of our financial position, we will have a more equal society, a greater percentage of people in work and a higher skill base, but that we will still always protect the poor and the vulnerable from falling through the safety net.

I commend the single Work programme. I have long felt the need to pull together the ways in which people are assisted into work. From my constituency experience, I have to say that the system has not been working. As the Government implement the single Work programme, I ask them to take heed of what is stated in the coalition agreement:

“We will realign contracts with welfare to work service providers to reflect more closely the results they achieve in getting people back into work.”

The disparate contract system has not worked, and there have been some poor providers. It has been a mixed scene, and we need a more reliable network of ways in which people can go into the system.

I also commend the ambitious plan for a system of universal credit. That is what we should aim for. The system has seemed complicated, and if it is complicated for us and the Department, it will be doubly complicated for people who have to navigate themselves through it as users, often during other pressures in their lives as well.

From my experience, the “tell us once” initiative, is beginning to work. That is when someone reports a death—a bereavement—and all the systems of government are notified. That approach needs to be expanded at central and local government level so that people can feed into the system.

I am not in the Chamber to give a eulogy or a set of plaudits, because there are one or two things that the Government should take on board and improve. However, some things are really encouraging, as was the speech by the hon. Member for Gloucester (Richard Graham).

The first point in the relevant part of the Liberal Democrat manifesto is immediately to restore the link between the basic state pension and earnings:

“We will uprate the state pension annually by whichever is the higher of growth in earnings, growth in prices or 2.5 per cent.”

One of the first announcements made in the Budget and reflected in the comprehensive spending review—proving that the coalition is a partnership and that both parties contribute—was that pensions will be linked to earnings again. That is welcome because it is an important subject and one of the biggest issues that pensioners have raised with me in Parliament ever since the link was broken under Mrs Thatcher’s Government.

It is important that we are moving towards equality in pension age, as mentioned by the hon. Member for Aberdeen South, but it is right for that limit to be set at a higher level. Frighteningly, I heard the other day that average life expectancy for men is now 88. That is extremely disturbing in many respects, although of course we welcome people of that age and beyond. If life expectancy is 88 for men, it will be older for women because women are more resilient and better able to survive, do well and keep working than men.

I welcome the fact that winter fuel payments have been maintained, which was a manifesto pledge made during the election. I know that the issue is controversial and debatable, but in the end that pledge was honoured. All those initiatives are welcome, especially those relating to pensions and elderly people.

The announcement on child tax credit was good, as that will help families with children to have the funding they need. It is good that we have not backed away from our ambitions on child poverty. In her intervention, the Minister rightly said that we must start by saying how we will ensure that things do not get worse. The Labour Government were disappointing in many social ambitions, such as those on fuel poverty, child poverty and so on. They let the gap between the rich and poor widen. It is important that we hold on to our ambitions and, as the Minister said, seek to build on them and take our youngsters out of poverty.

I thought it was understandable and right to try to deal with the child benefit issue, although I know that it is controversial, particularly in the Conservative party. I understand the difficulties and I do not pretend that there is a perfect cut-off in terms of the wage level at which the benefit is set, or the choice between a one-wage or two-wage family. We can come to different conclusions about that, but there is a good case for saying that people on high incomes should not get the same level of universal benefits as everybody else. I understand the logic behind the argument for universal benefits, but when hard choices have to be made and budgets saved, everybody must share the responsibility.

I am glad that we will have permanent cold weather payments, rather than the rabbit-out-of-a-hat payments that we had under the Labour Government, when if we were lucky one year, there was an announcement. That change is positive.

I am pleased that there will be additional money for youngsters as part of the pupil premium. That scheme crosses Departments in relevance, and means that poor and disadvantaged youngsters will be better supported when they are under five, as well as when they go to primary school.

I have a couple of concerns, which I flagged up with the Deputy Prime Minister and this morning in the Department with my hon. Friend the Member for Thornbury and Yate and Lord Freud. As I pointed out in an intervention on the hon. Member for Aberdeen South, I want the Department to look again at future legislation relating to the 10% automatic cut in jobseeker’s allowance after one year of unemployment. That decision is not sustainable for some people. I understand the incentive argument, but there are some areas—they may be very different from my constituency—where there are few jobs and people have to travel a long way to find them. There are no opportunities, however hard people try. To say that there should be a reduction in the benefit seems harsh, and I hope that the Government will revisit that.

I shall make one other substantive point before leaving the Minister with a final thought or two. There may be a moment for another colleague to intervene. For me, the real issue of the moment is the housing benefit debate. I am conscious that coming down the track are regulations that will change housing benefit for next year. I shall concentrate on one of the proposals, in respect of which I hope that there is some scope for modification without breaking the superstructure of the plan and which is of more national, UK-wide significance than the capping issue. That is of more significance in central London, where of course I have an interest. I am referring to the proposal to reduce the housing benefit payment from the 50th percentile of the rents in the broad rental market area to the 30th percentile next year.

I hope that the Government will reconsider the proposal, because there are all sorts of reasons why it may not deliver the ability for people to find housing in the community they come from, and communities are important. As the hon. Member for North East Hertfordshire knows, there are communities just as much in Southwark, Westminster, Chelsea and Hounslow as there are in any other part of the country. To expect someone to move from a place that they are renting—I could cite West square, just over the bridge in Southwark, or it could be Covent Garden—and where they have lived all their life to somewhere four boroughs away, where they have no relatives, no friends, no links, no community and no history, is unreasonable.

I understand some of the issues, but there are ways in which the Government could be positive in dealing with them. As I understand it, 70% of the housing benefit claims in Blackpool are in the private sector, so by definition if the level is lowered, that has a huge effect on the market. Of course there is a difference between a place such as Blackpool and a place at the bottom of the league table such as Southwark, which is 31st out of the 33 London authorities and where only 13% of housing benefit claims are in the private sector. There, a Government change does not automatically change the culture of landlords and the market. I hope that the Government will bear that in mind.

Where demand exceeds supply, by definition there will not be available supply in a place around the corner for someone to move to. In addition, there are people whom we should not be asking to move when there are significant reductions in their benefits. I have seen the figures in the Government’s own impact study, which they produced in July. It states that the estimated percentage of losers varies from 71% in London to 90% in Yorkshire and the Humber, and the average loss per loser varies from £7 a week at the bottom end to £17 a week in the London region. Those are significant changes. Suddenly to have to find £17 extra a week in London, for example, may just not be possible, however careful people are with their household budget.

My suggestion is that the Government should consider, first, phasing any change, rather than going from the 50th percentile to the 30th. I know that it is not happening on one day, because it happens over a year on the date of the anniversary of the renewal of the claim. Secondly, they could consider treating people who are already in housing and recipients of benefit differently from new claimants. I am happy to continue to engage in debate with Ministers, as are other colleagues, to try to find a way forward. I am trying to be non-partisan; I am not making party political points, but I think that there must be a new way of being able to deal with what is an impending problem.

There are concerns among colleagues from around the country about the age for the shared room rate being put up from 25 to 35 in areas where accommodation is very difficult to find. I just pass that on, so that it can be on the agenda. There are also concerns about the transfer of council tax benefit administration to local authorities in due course, with a reduction in the amount available. That will be on the agenda of the Minister and her colleagues and the Department for Communities and Local Government.

The one thing we need to do as we implement some very radical but very good policies is to ensure that as people may be losing jobs in the public sector for a while and we are trying to create jobs in the private sector, we have in place organisations and people to assist them in moving from one form of employment to another in a very organised local and regional way. I have started to talk to colleagues about that. There is willingness on the part of the Government to consider it. If we are really to ensure that people do not feel frightened and insecure but feel encouraged and supported, we need not just changes in structure, but support systems to help people to make the life transitions from one form of work to another, or from no work to work, which are very important.

[Mr Heald]

On the idea of phasing, is the hon. Gentleman thinking that we would go to the 40th percentile? What is his idea?

[Simon Hughes]

I am seeking to explore ideas. It may be possible to move in the first place to the 40th percentile and later to the 30th. I am conscious that we do not want to force people to move twice. I do not think that would happen if there were much smaller reductions in the benefit and therefore people’s budgets were less hugely affected. I do not pretend that there is only one answer, but I am keen that we ensure that we are not uprooting people and assuming that they can find somewhere. This is all about predictive markets and how the market will respond. It is very difficult to know what the outcomes will be. Whatever the experts say, I do not think that we can predict things with surety. Therefore we need to err on the side of caution rather than risk, because we are dealing with people’s lives and homes, and for people with insecure lives and insecure incomes, having secure homes is very important.

Welfare Reform

Oliver Heald Excerpts

Monday 11th October 2010 Commons Chamber

[Mr Duncan Smith]

The right hon. Gentleman refers to the benefit cap, as announced last week. I think that it is fair. It is fair for us to offer an explanation to the public, most of whom work for low incomes and pay their taxes. They do not want to see somebody on benefits disincentivised from work because of the very level of money that they receive. I repeat what I said in the statement: to net-out £26,000, somebody in employment would have to earn about £35,000. So, I do not think that the measure is effective, in the sense that we are bearing down too hard. It is fair.

On housing, over the next few years we will manage the process with the changes to housing benefit. After all, over the last five years of the right hon. Gentleman’s Government, housing benefit costs ballooned by £5 billion a year, and they were set to balloon to £20 billion a year. I have one last point for him: his Government had the lowest number of houses built at any time since the 1920s. I wonder whom he blames for local authorities having had to place people in those expensive houses.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

For a generation, disability campaigners have pressed for more jobs for people with disabilities, yet the employment rate of those people has remained pitifully low. Does my right hon. Friend agree that what his pilots aim to achieve, taken with the universal credit, is a situation in which people with disabilities get a fair break and a chance of a job, and that if they have a fluctuating condition there is a benefit system that supports them?

[Mr Duncan Smith]

Yes, I agree. That is exactly the point of all the changes that we are making, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) is bound with that to review all that we do for disabled people in order to ensure that we do not write them off at any stage but give them an opportunity to go to work, if they can. We will absolutely support those who are not able to go to work. It is their right, and we will ensure that that is the case.

Housing Benefit

Oliver Heald Excerpts

Tuesday 13th July 2010 Westminster Hall

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As ever, it is a pleasure to server under your chairmanship, Mr Hancock.

I am mindful that a number of colleagues have approached me to say that they are keen to speak in the debate—that is an indication of how serious the Government’s recent proposals are—so I do not propose to go into detailed background about housing benefit. The Minister, along with my hon. Friend the Member for Westminster North (Ms Buck), is one of the most expert Members of Parliament on this subject. None of us need a history lesson on housing benefit, and I hope that the Minister will focus on answering the serious points that we all need to raise.

The cap on housing benefit levels that was announced in the Budget is devastating for London and for Londoners. Only four London boroughs are completely unaffected. I do not have time to go into some important general issues to do with the provision of affordable housing, so I will instead focus on the impacts in relation to housing benefit in Hackney and more widely.

In addition to the cap on benefit levels, we will see an impact due to the local housing allowance level being limited to the 30th percentile of a local reference rent. There will also be a devastating impact due to the perverse proposal to impose a 10% cut in benefit for those who are unemployed for more than a year, which will be particularly hard for young people aged 18 to 24, who are among those hit by the highest levels of unemployment. That is a particular concern of organisations such as Catch22, which is a charity that works with young people.

More than 650,000 homes are rented in the private sector in London, so this subject touches the lives of many people. More than a third of those homes are rented to families who receive the local housing allowance. High rents in London are not a new phenomenon and are driven largely by a housing shortage. Figures provided by London Councils show that when the local housing allowance was introduced in 2008, the rent charge for three-bedroom properties in central London was £700, which is twice the level of the proposed cap. Looking further back to 2005, the then local reference rent, which excluded the top end of the market, recorded the rental market as follows: £435 a week for two-bedroom properties; £546 a week for three-bedroom properties; and £625 a week for four-bedroom properties, all of which are above the cap recently proposed—some seven years later. It seems that the Government are making decisions without looking at any evidence or at history. The lack of affordable alternatives in London meant that the previous Government’s desire to achieve a reduction in rents through the introduction of the local housing allowance was not fulfilled, because local housing allowance rates have risen as they chase the ever-increasing level of rent in the wider market.

According to a parliamentary answer, 14,000 households will be affected by the changes. The Minister has acknowledged the impact. We need him to tell us what measures will ameliorate those changes, if the Government go ahead with them. I should like the Minister to explain that figure and to say how the private rented housing market will be able to cope with the likely upheaval that it suggests. In addition, he needs to address the impact on families at a human level.

There is an assumption that people will be able to move to lower-price properties, but the pace and scale of change will present a challenge in that regard, even without the huge impact that there will be on children and families, and on low-paid workers. It is important to ask where that low-rent property will be available. It will not be available in my constituency. Will my constituents be forced to move to the borough of Barking and Dagenham, which is no doubt delightful, but not convenient for work and schools for my constituents with Hackney connections? The impact, including the social impact, on those few boroughs that will be unaffected could be huge.

For those listening to this debate who are not aware of the situation or are not from London, I point out that all central London boroughs are affected, including that covered by my constituency and that of my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott)—the whole of Hackney—as well as Barnet, Brent, Ealing, Haringey, Hounslow, Lambeth, Merton, Richmond and Wandsworth. The changes will have a particular impact in London.

It is interesting that the Government have professed their intention to get rid of the Minister for London. That is all very well, but I believe that there is a spokesman—or spokesperson—for London. However, I wonder whether the hon. Member for Wimbledon (Stephen Hammond) has been asleep on the job because it seems that this measure has been advanced without any understanding of its wider impact, particularly in London, which is the driver of our economy. The Mayor of London has also written to the Government to outline his concern.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

Does not the hon. Lady accept that the level of housing benefit—and how it is set—affects the rental market? The National Landlords Association has said:

“Landlords will have to look at their profit and loss and decide how much they can afford to cut their rents by.”

The hon. Lady will have seen examples in the Evening Standard last night of properties being rented at almost double the market value to housing benefit tenants.

[Meg Hillier]

The hon. Gentleman brings me nicely to my next point, and I shall deal with his second point in a moment. Let me be clear that I am not saying that all is perfect with housing benefit, as the Minister, from his previous incarnation as an academic in this area, knows all too well. Although I have been unable to source the reference, I believe that the current Leader of House famously said, “Let housing benefit take the strain,” when a previous Government made changes following which social housing rents increased.

--- Later in debate ---

[Meg Hillier]

I agree. We must not lose sight of the majority of our constituents. Good law is not made on the basis of rare exceptions.

The hon. Member for North East Hertfordshire (Mr Heald) raised an interesting point about housing benefit levels in the private rented sector. Some private landlords have been in touch with me to say that they are concerned that they will no longer wish to rent to anybody who is either in receipt of benefit or likely to be. Given the current economic situation, the group of people who are likely to be in receipt of housing benefit will grow, because many people could be affected over the next few years. We heard yesterday about cuts to the NHS, and job losses are coming from all directions. That will mean that for many people in the private rented sector who want stay in their home and their community, the only option will be to look to housing benefit to take the strain.

[Mr Heald]

Does not somebody have to speak up for the hard-pressed taxpayer? Average earnings—take-home pay—in this country are £374 a week, but the hon. Lady is arguing that people should be able to rent properties for amounts hugely above that.

[Meg Hillier]

There is an interesting divide in the Chamber—not on party lines, but on London and rest of the country lines. Those of us who represent London see the reality of the situation. Yes, the housing benefit bill has increased, but tinkering in such a way is not the solution. The subsidy needs reform, but it is flexible, and that flexibility is useful. In the current climate, with job losses looming, we tinker with such flexibility at our peril. If wholesale reform was being proposed, we might want to look at that, but at the moment we are talking about tinkering with the system in a way that damages London.

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[Mr Oliver Heald (North East Hertfordshire) (Con)]

Average earners in this country—taxpayers—take home £374 a week. Is the hon. Member for Hammersmith (Mr Slaughter) seriously arguing that they should chip in so that £2,000 a week can be spent through housing benefit for a family? He needs to wake up. The fact is that the housing market for rentals is affected by the level of housing benefit and the housing allowance. In Wolverhampton, 75% of the rental market is housing allowance. The maximum amount that can be claimed for a four-bedroom property is £693 a month and—guess what?—that is what they all go on the market at.

[Several hon. Members]

rose—

[Mr Heald]

I will give way in a moment, but first I wish to mention Blackpool. The effect of the local broad rental market area, which takes in surrounding areas such as Fylde, has been to put up all the rents in the centre of Blackpool. There are other examples, including one in yesterday’s Evening Standard showing that housing benefit rents are higher than ordinary rents. The National Landlords Association states that the effect of the change will be landlords looking at their profit and loss and deciding by how much they can afford to reduce their rents. The fact is that housing benefit and the rental market are intertwined and it is ridiculous to say otherwise.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the hon. Gentleman agree that those on the lowest incomes pay most in income tax, as a percentage of their income, rather than those on higher incomes? The idea that these measures are somehow unfair to taxpayers is completely misguided.

[Mr Heald]

The hon. Lady makes my point exactly. If someone with a job that does not pay much is struggling and paying taxes, how will they feel to see a family renting at £2,000 per week?

[Lyn Brown]

Will the hon. Gentleman give way?

[Mr Heald]

Of course.

[Mr Mike Hancock (in the Chair)]

Order. I urge hon. Members to consider that at least six more people have indicated that they wish to speak. If we have such a rate of interventions, they will not all get in. Please can we be fair to each other?

[Lyn Brown]

I am grateful, Mr Hancock. Other people would like to contribute to the debate but will probably find it impossible.

I want to make it absolutely clear that the hon. Member for North East Hertfordshire (Mr Heald) is talking about one case that has been cited in the Daily Mail, The Mail on Sunday or wherever. In Newham, in London, the rent for a five-bedroom house is £350 a week, not the ludicrous amounts that the hon. Gentleman is talking about. Perhaps he will focus his remarks on the real world, rather than the world of Notting Hill.

[Mr Heald]

The hon. Lady must recognise what has happened to the housing benefit budget. It has gone up in a decade from £14 billion to £21 billion, and has been pushed there the whole time. When the Work and Pensions Committee looked at the issue before the election, some people were seriously arguing that we should remove the five-bedroom cap so that someone could get a seven-bedroom house on housing benefit—there is no end to it. Someone needs to speak up for the ordinary taxpayer.

What about large families? The hon. Member for Hampstead and Kilburn (Glenda Jackson) talked about that issue in Hampstead. If ordinary working people want to have a large family, that is their individual choice, and it probably means that if they are not subsidised to a huge extent, they will be a bit more crowded and cannot live in the part of London in which they want to live. People with large families need to be more realistic about the way of the world.

Jobs and the Unemployed

Oliver Heald Excerpts

Wednesday 7th July 2010 Commons Chamber

[Yvette Cooper]

The troubling approach that the new Tory-Liberal Government are taking is to cut the help to get people back into jobs and to cut their benefits when they cannot get back into work. The Secretary of State has claimed to be concerned about intergenerational poverty and worklessness, but the truth is that many of the problems that the Government worry about have their roots in the unemployment and hopelessness of communities without work in the 1980s. If they are really serious about tackling long-term poverty, they should act to prevent long-term unemployment now. They talk about broken Britain, but the truth is that their party broke Britain in the 1980s and now they are trying to do the same thing again. Let us look at their actions in the first four weeks: cuts of £1.2 billion in support that was getting people back to work; cuts in the future jobs fund; cuts in the youth guarantee and in help for the long-term unemployed just when they need it most; and a Budget that cuts the number of jobs in the economy so that there are fewer jobs than there would have been, not just next year but in every year for the rest of the Parliament too.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

Many of the previous Government’s measures helped some people into work, but the 3 million workless households where no adults of working age were working were barely touched in the Labour years. It is all very well to talk about the 1980s, but what was happening between 1997 and the last election? Precious little. Many of those people never saw anybody from Jobcentre Plus or anyone else. They were just left to stew.

--- Later in debate ---

[Chris Grayling]

What we sent to the hon. Gentleman in the written answer was the details of the future jobs fund placements in his area. We have to be careful with taxpayers’ money, and it would therefore not have been prudent to collect data down to constituency level. However, the information is there for him to see, and when he looks at those data, he will see that the success of the future jobs fund in creating jobs has been consistently below target all the way through.

Let me lay to rest one myth today. We have not stopped the future jobs fund. Tens of thousands of additional places will be created over the next few months under the future jobs fund. We have said, however, that we need to take tough decisions in the light of the mess left behind by the previous Government. Also, by next spring, we will be bringing on stream the Work programme, which we believe will provide long-term support for those who are looking to get back into work. I shall say a bit more about that in a moment.

[Mr Heald]

Does my right hon. Friend agree that the overall picture of Labour’s employment schemes shows that they helped into work the people with the highest levels of skill, and people aged between 25 and 49, and that a vast population was simply left behind that could not compete with the people who were coming into this country and taking the jobs that were on offer?

[Chris Grayling]

My hon. Friend makes an important point. What we learned from the new deals was that people were simply cycled round and round. They went through the system again and again because they were not placed in sustainable employment. That is one of the problems with Labour’s approach.

Let me tackle the issue of the future jobs fund head on, because we have heard a lot today about Labour’s flagship scheme. Around 100,000 future jobs fund jobs are still being created under the current scheme, costing up to £6,500 each. As the right hon. Lady said, most of them are in the public and voluntary sector. I could be wrong, but my idea of sustainable employment is not a six-month work placement in the public and voluntary sector. It is about getting people into long-term roles in the private sector, which can provide a long-term career for them. That is why our emphasis has been on creating apprenticeships, and 50,000 new apprenticeships have been created in a very early move by this Government.

--- Later in debate ---

[Mr Oliver Heald (North East Hertfordshire) (Con)]

The House appreciated the passion with which the hon. Member for Wakefield (Mary Creagh) put her case, but if she were being frank she would accept that, in the 1960s, 1970s and, again, in the 1980s, this country faced some difficult economic problems. If she looks back at the history of interventions in the job market, she will see that since 1979 we have tried various options. Indeed, there has been some success in putting people back into work by using employment-market interventions, but I am sure that in her heart of hearts she will accept that we have let many people, particularly during the past 13 years, fall by the wayside.

The people who were getting jobs through Labour’s employment schemes had skills or were in the age bracket of 25 to 49 years old. Many other people became part of that workless group whereby 3 million homes had no adult of working age in work at all. Those people were not seen on programmes, and very few of them were seen at all, so we need to consider a programme that really challenges that situation and looks to provide the help that people need in all aspects of work. Too many schemes have been based on just one benefit: if people were on one particular benefit, there was a scheme for them; and if people were from one age group, there was a scheme for them. However, we need something that captures all the issues and removes all the barriers to employment, so that everybody gets a fair deal from the Government.

There are some encouraging signs in the labour market. The Chartered Institute for Personnel and Development’s latest quarterly survey shows for the first time in six quarters a plus 5 figure for the employment intentions of employers: they do intend to employ people. The figures for the south-east are particularly good, showing a strong intention to employ. Equally, Reed in Partnership, an excellent contracting company, has shown that the number of advertised vacancies is up by 5%, so there are some encouraging signs. However, the real question is whether the increase in private sector employment will be enough to deal with the undoubted fall in public sector employment and the likely redundancies there. That is the challenge for the next few years—to ensure that private sector employment increases sufficiently.

At The Times CEO summit last week, Sir John Rose, chief executive of Rolls-Royce, one of our best companies, was reported to have said that we as a country were very self-satisfied about the services boom in the Labour years, but that during that time manufacturing capability and competitiveness were on the slide. He noted that in higher education we are educating 7,000 people a year in media studies, at a time when China is educating technicians and people who will have skills in the nuclear industry. He rightly said that during that period we did not concentrate enough on investment in technical education at the secondary and tertiary levels, and that we need to address that issue if we are to have a future of success in the private sector.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

On Reed in Partnership’s job index, the hon. Gentleman mentioned the figure for growth, on which the organisation comments in its press release, but that growth is predominantly in financial services, accountancy and insurance. The index also states that, compared with February, the figure for this month in charity and voluntary work is minus 30 index points; in construction and property, it is minus 7; in engineering, it is minus 8; in health and medicine, it is minus 19; in scientific, it is minus 6; in social care, it is minus 8; and in training, it is minus 15. In the north-east—my area—the salary index has also fallen, so fewer jobs are being advertised for less money.

[Mr Heald]

I think the hon. Gentleman is wrong, because the headline figure shows an increase of 5% over the past six months, but he is right about the differences between sectors and regions. He makes an important point, which we should not ignore, and I shall return to it later in my remarks. However, Sir John Rose’s point was also well made. On the question of what needs to happen in this country, the role of apprenticeships should not be ignored, and 50,000 more apprenticeships are welcome, particularly given the good quality of education that they provide in technical areas.

In the latest CIPD survey, there is a lot of criticism of the abilities and work-readiness of our graduates, and there is a lot to be said for schemes such as internships, which get people ready for work so that they can do a good job as soon as they enter employment. I represent North East Hertfordshire, and a good thing about Hertfordshire is that we, as a county, have a series of institutions that are business-facing but educational. Our colleges are business-facing, and our university is well known as business-facing, which means that the county asks businesses what skills they need and our university provides the skilled workers. In terms of the employment service in Hertfordshire, if a graduate who is placed with a Hertfordshire company needs an extra skill, our university will teach them it, and our colleges all feed into that. It is no coincidence that we have the lowest number of NEETs in the country.

[Mrs Jenny Chapman (Darlington) (Lab)]

Teesside university, the university of the year, is basing itself in my constituency, and I am quite interested in the hon. Gentleman’s idea about graduates not being prepared for the workplace. Will he please identify exactly when in the history of university education employers said, “All our graduates are prepared for the workplace”? When was that golden age of preparedness?

[Mr Heald]

The hon. Lady makes an extremely good point, which is that we are not good enough as a country at preparing people for work. If we look at why we have so many workless families, and why employers are dissatisfied, it goes right back to the beginning—to school. The fact is that 40,000 young people leave school every year in this country who cannot read, write and add up properly. It is not good enough that we do not have the technical people we need in business coming through. This is a failure of the whole system that needs to be addressed. [Interruption.] The hon. Lady chunters, but Sir John Rose is probably one of the most eminent chief executive officers in the country, he is running a company that is a great success story, and he is right to highlight the need to do better on technical education and skills.

Over the years, we have had a range of employment programmes that have not succeeded as well as we would have hoped. A few years ago, the Work and Pensions Committee looked into what contractors can achieve. We did a major report on how the Department for Work and Pensions commissions employment programmes and the role of prime contractors. We were encouraged by the international examples. We looked at what had happened in Australia and visited the Netherlands to look at what was being done there. That seemed to show that contractors were able to provide programmes more cheaply, but also to get better results. Professor Finn, who was advising the Committee, found that Australia was achieving, through “contractorisation”, an improvement of about 10% in job readiness and people’s ability to find placements. In the Netherlands, we were told very strongly that the people who ran these contractor companies were able to specialise provided that they were given enough flexibility in respect of the barriers to employment that there have been and still are.

Looking at the picture overall, I have reached the view that as soon as a person is not working, and we are aware of that, they must be interviewed to find out what the barriers to employment are that they face and start to tackle them. If somebody has basic skills problems, we need to get on to that at an early stage and tackle it—and equally, if somebody needs child care or has a problem with addiction. These are all areas where action is required. In relation to the work capability assessment for incapacity benefit, a lot of people have not been seen for many years, and the on-flow that has been examined so far seems to suggest that many of them are capable of doing some kinds of work, but not necessarily all kinds. Those people need considerable help.

If we are to help people who have the classic problems suffered by those on incapacity benefit—musculoskeletal problems such as back injuries, and mental health problems such as stress, and worse—it is very important to get in with an early intervention. More can be done by employers, the NHS and the system as a whole—including, perhaps, the companies that provide insurance for people who are unable to work—in getting together to see whether they can do more to get this help in quickly. It is not acceptable that somebody of working age who has a back injury and needs physiotherapy has to wait 10 weeks for an appointment whereas if they were seen quickly they could get back to work. I ask the Minister whether it is possible to have liaison and discussion with the NHS, employers and insurance companies to try to do better in getting involved more quickly and stopping some of these conditions becoming chronic in the first place. With back problems, that means physiotherapy; with mental health problems, it may mean talking therapies as well as the drug treatments for depression of the sort that are available these days.

Yesterday, I talked to people at the National Ankylosing Spondylitis Society, who said that all too often they have to wait a long time for the treatment they need to deal with their condition. For people of working age, we need to prioritise their health and have something amounting to a national occupational health approach so that we do not end up with a lot of people who become chronically ill. It is well known that someone who has been out of work with a disability for two years is very unlikely to work again.

I welcome the Work programme. The criticisms that have been made of it are a little unfair, if I may say so. The fact is that the economy has been put into a terrible situation by the previous Government. The future jobs fund is a scheme that has only just started, and it is not as though it is not being replaced by something that is probably better—namely, more apprenticeships. It is a bit disingenuous to describe it as a jobs fund, as though these are permanent jobs, when they are really job placements for six months.

[Tom Blenkinsop]

Speaking of disingenuous elements, the Government’s amendment refers to

“policies to stimulate private sector employment by reversing the damaging increase planned for employer national insurance contributions”,

which implies that that was a jobs tax. Is it not really the case, particularly for the north-east, as I have been advised by the North East chamber of commerce and the Federation of Small Businesses in the north-east, that the real jobs tax is the VAT increase that the Government have proposed?

[Mr Heald]

If the hon. Gentleman thinks about when we got 2.5 million extra jobs in our economy in a three-year period, he will recall that it was under the Conservatives in the 1980s. That was done by allowing businesses to have lower taxes and to be less regulated—by really giving them a boost. We need to do something similar to help business and to get off its back. We also need to provide the technical training that Sir John Rose talks about, together with a scheme that helps the workless—the people who have been left behind in the plethora of employment schemes that we have had for the past 30 years.

[Tom Blenkinsop]

What about 1979?

[Mr Heald]

If the hon. Gentleman looks back at the mess that this country was in when the Conservatives came into office in 1979 after the Labour years, he will see that it was not an easy period to be in government. He must accept, surely, that if we can improve on what has gone before, that is the best thing to do. We need to listen to somebody who is a thoughtful CEO saying that we need better technical training; to look at the idea of apprenticeships as good-quality training, which we all agree about really; to try to have internships so that our graduates are job-ready; and, on top of that, to have a Work programme that does not leave anyone behind, that is streamlined, and that involves contractors sooner rather than later. Surely that is the wisdom of our time.

[Tom Blenkinsop]

Interestingly, the majority of men and women on site in the steel and chemical industries in my area are in either their late teens or early 20s, or in their late 40s or early 50s, which suggests an 18-year period when apprentices were not taken on.

[Mr Heald]

The hon. Gentleman is right that in periods of our history, both sides of industry have not distinguished themselves in supporting apprenticeships adequately. I do not know whether he agrees with that, but now is the time to do the right thing, and to support apprenticeships and technical education. We need a scheme that works on the Work programme side, and hopefully this country can come roaring back from the mess it was left in by the Labour Government.

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I begin by congratulating the hon. Member for Mid Norfolk (George Freeman) on making a most amusing maiden speech. As far as I could tell, its gist was that Mid Norfolk was really big in the middle of the 18th century. I looked at “Dod’s” to find out a little more about him, and one of his recreations is hill walking, which is a shame: he will not get many opportunities to do that in Mid Norfolk.

I am proud to have belonged to a Government who decided to support young people through the recession, to have confidence in them, to invest in them and to back them. We knew that unemployment was not a price worth paying. We knew from our experience of the 1980s and 1990s what a scarring effect unemployment has and how the young are worst affected. However, it seems that this Government have learned nothing. Not only are they introducing huge cuts to public expenditure, with massive knock-on effects on private sector jobs, but they are freezing recruitment to the public sector, cutting the number of university places and now abolishing the future jobs fund.

The Tories and the Liberals said in the run-up to the general election that they were backing the future jobs fund and that they would continue with it, so I am sure that many voters will be extremely disappointed by the decision to abolish it. It is notable that not one Liberal Democrat has spoken in the debate. I assume that they are getting rather weary of their role as fig leaf to the Government. I am glad to see the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) in his place at last, but it is significant that the Liberal Democrats have been unable to face defending the amendment that the Government have tabled.

The Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling) began without any acknowledgement of the fact that we faced the largest global recession since the second world war. He went on to talk about the proposals for the new Work programme, but there remain a huge number of practical questions, which he was completely unable to answer. What will happen in the gap between the time when no more people can be taken on by the future jobs fund and the time when the new scheme is introduced? What will happen to those people whose skills atrophy if they are unemployed? We are talking not just about people’s technical skills, but about their social skills, which are important if people are to maintain their morale and get another job.

My hon. Friend the Member for Wakefield (Mary Creagh) spoke about the importance of the private sector retaining its confidence and about the work that the future jobs fund has done in Wakefield, by creating 700 places for young people. She spoke about environmental projects, green businesses, young people learning to make honey and the skills that they were gaining. She pointed out the importance of apprenticeships. The Government keep telling us about the number of apprenticeships that they are creating, while conveniently forgetting that we trebled the number of apprenticeships in the past 13 years. My hon. Friend asked how the national contracts would work and how the providers would bear the risks. They are good questions, and more questions that the Minister was completely incapable of answering.

The hon. Member for North East Hertfordshire (Mr Heald) spoke about the problem of worklessness, the need for greater private sector employment and the importance of technological skills. He did not seem to be able to take into account the fact that the number of people on inactive benefits has fallen by 350,000 in the past 12 years. He did not seem to be aware of the fact that the Office for Budget Responsibility’s forecast shows that private sector employment will be lower in each of the next five years than was forecast before the Chancellor’s Budget.

The hon. Gentleman went on to talk about the importance of education and technology. I hope sincerely that he has a word with the Secretary of State for Education—he will have an opportunity to do so shortly—about the dire mistake that has been made in the cuts to the Building Schools for the Future programme that were announced earlier this week.

My hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) spoke about the importance of the construction industry. He has a great deal of experience of that, and he talked about how it was a driver for the economy.

[Mr Heald]

rose—

[Helen Goodman]

I am sorry, but I have to respond to 22 Members and I do not have much time.

The hon. Member for South West Norfolk (Elizabeth Truss) spoke about the importance of infrastructure and education spending, and about the great returns that there are from that. I hope that she will have a conversation with her right hon. Friend the Chancellor of the Exchequer and press on him the need to maintain spending on some of those.

My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) spoke about the issues in her constituency. She reminded the House that during the general election the Prime Minister said that he wanted to see cuts in the north. She was absolutely right. It was quite clear that if someone voted Cameron they would get cuts, and if someone voted Clegg they would get Cameron. She pointed out that a third of the workers in the north-east worked in the public sector, and that its efficiency can be improved by having more workers in low-cost areas.

The hon. Member for Wirral West (Esther McVey) spoke about the problem of NEETs and what needed to be done to increase apprenticeships. She spoke about a public-private partnership, which was picked up by my hon. Friend the Member for Wirral South (Alison McGovern), who pointed out that if spending in local authorities is maintained, it might be possible to continue with that.

My right hon. Friend the Member for Tottenham (Mr Lammy) gave a passionate speech about the importance of human dignity in considering all these issues. He also asked a number of questions, to which it would be interesting to hear the answers when the Minister replies—in particular, how many placements has the Minister succeeded in getting for the apprenticeships that Government Members keep trumpeting? My right hon. Friend also spoke about the connection between young people being able to work and the importance of keeping down antisocial behaviour and crime. He pointed to the huge gap between the reality and the Government’s rhetoric. We heard it even today in Prime Minister’s questions, when the Prime Minister said, in answer to a question from my hon. Friend the Member for Streatham (Mr Umunna), that he wanted a long-term strategy to engage young people. If he wants that, why is he abolishing the future jobs fund?

The hon. Member for Richmond Park (Zac Goldsmith) spoke extremely interestingly about the importance of moving to a low-carbon green economy, and he talked about how that should be done, but he left out one key thing, which is that one of the major barriers is a skills shortage. The future jobs fund had a green strand. Will he please press Ministers to have a green strand in their work?

My hon. Friend the Member for Birmingham, Erdington (Jack Dromey) spoke with huge passion about his constituency and the role of the RDA in the west midlands. I can recall being in Birmingham and finding out about the partnerships that the DWP had with the RDA to build employment in that region. I hope that the Minister will be able to inform the House of what she said about the loss of that partner when her colleagues in the Department of Communities and Local Government came up with the proposal to abolish the RDA.

The hon. Member for York Outer (Julian Sturdy) spoke about the importance of the private sector and the need to see SMEs grow, and I think that the House would agree with that.

My hon. Friend the Member for Blaenau Gwent (Nick Smith) spoke about the need for new jobs in former mining areas. He spoke about the 50th anniversary of the Six Bells tragedy and the huge impact that mining still has on many communities. Hon. Members can come to the miners’ gala in Durham on Saturday, where they can enjoy the culture that flowed from the mining communities.

The hon. Member for Truro and Falmouth (Sarah Newton)—she does not seem to be in her place now— spoke about the importance of work and the Marmot report. I hope that Ministers listened to her and will appreciate the severe consequences for people’s health and mental health of soaring unemployment.

My hon. Friend the Member for Islwyn (Chris Evans) made a passionate speech about how the Tories treated his constituency in the 1980s and pointed out the great significance of Train to Gain, which is the programme being cut to finance the much trumpeted apprenticeships. The hon. Member for Stourbridge (Margot James) took us back to the 1960s and talked about what she perceived to be the waste in the contracting process. I hope that such waste will be reduced and less money will be spent on contractors in the new scheme that the Government will introduce. My hon. Friend the Member for Wirral South made a wide-ranging speech displaying a great understanding of the constituency she represents. She also spoke about the good work being done by Jobcentre Plus and the threat to the jobs of its staff. She mentioned how foolish that is at a time when these workers are most needed.

The hon. Member for Stratford-on-Avon (Nadhim Zahawi) said that business needs to be freed up. My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) spoke about the imbalance between the number of jobs and the number of vacancies, and pointed to the scale of the problems we face. My hon. Friend the Member for Edinburgh East (Sheila Gilmore) made a myth-busting speech pointing out, in particular, that tax credits go to those in work, and help people to finance child care and take jobs. The hon. Member for Henley (John Howell) spoke about the regional development agencies and revealed, I am sorry to say, the complete ignorance of the Conservative party about some of the regions in the north and the significance of the RDAs, and its really foolish decision to take the same approach to the south of the country as to the north.

My hon. Friend the Member for Blaydon (Mr Anderson) made a passionate speech and pointed out that the question of unemployment is not a theoretical one, but about real people and real lives. The hon. Member for Hastings and Rye (Amber Rudd) began her speech with a story about a 16-year-old having a baby and her concerns about it. I wonder whether she has addressed with her hon. Friends the fact that the programmes to reduce teenage pregnancy are being cut. She then talked about her vision and spoke about what she wanted to see—it sounded rather as if she wanted a version of the youth guarantee, albeit a rather bureaucratic version. I point out to her that her hon. Friends have just abolished it. My hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) also spoke about the great importance of a sensible approach to tackling this problem.

What the Government have done is totally unjust. They are pulling away support precisely at the time of maximum need. Today, we have had a statement from the OECD stating that this is the moment in the recession when it is most important to have properly funded support. That is in addition to statements from local authorities, young people and the voluntary sector. We are seeing the wanton destruction of people’s lives. These are not numbers. The abolition of the youth guarantee and the future jobs fund demonstrates how little the Government care. They do not care about the young man and his partner who want to do their best for their new baby; they do not care about the mother anxious about what is going to happen to her children when they leave school; and they do not even care about the ex-soldier who wants some hope in his life. All those people currently benefit from the future jobs fund. This is why I urge all hon. Members to vote for the motion tonight and to reject the Government’s amendment.