Youth Unemployment (Mitcham and Morden)

Lord Grayling Excerpts

Wednesday 13th July 2011 Westminster Hall

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

It is a pleasure to serve under your chairmanship again, Mr Gray. It has been a frequent occurrence in recent times. I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this debate.

I will divide my remarks into two halves. First, I congratulate the hon. Lady on a project that is very big society, and exactly the kind of thing local MPs should be doing. She is right to describe our ability to open doors in constituencies, to secure involvement in community projects and to go places other individuals and groups perhaps cannot go. She has clearly done that in her constituency and I praise her for it. I will talk a bit more about that in a moment.

Much of the rest of what the hon. Lady said was complete hokum. She is rewriting history and misrepresenting some of the realities of our work. None the less, I praise her for her sincerity in calling this debate and for the work she is doing; it is absolutely right. I am delighted that Jobcentre Plus is working well with her, but that is no accident. It has specific instructions to do just that. In particular, she talks about the issue of two weeks versus eight. Under the previous Government, a jobseeker lost their benefits if they did work experience for more than two weeks. It was a crazy situation.

One of the first things I received on becoming a Minister was an e-mail from the mother of a young woman who said that her daughter had arranged a month’s work experience for herself with a local firm, but the Jobcentre Plus office had told her that if she did it she would lose her benefits. That is clearly a crazy situation, and one that we moved quickly to change. A jobseeker can now do work experience for up to eight weeks while on benefits. If they are moving from that eight weeks into employment or an apprenticeship, that programme can be extended to 12 weeks. Therefore, it is down to the policies of this Government that the hon. Lady can deliver her scheme. Under the previous Government, that would not have been the case. Those young people would have lost their benefits after two weeks.

[Siobhain McDonagh]

My scheme came about because the future jobs fund had been scrapped. The future jobs fund, for me, was the way forward. I was looking for an alternative and I came up with this idea; it does not replace the future jobs fund.

[Chris Grayling]

I will come back to that in a moment. The hon. Lady is right to say that it does not replace the future jobs fund; it is part of a package very different from what we had before. My point is that it would have been impossible for her to put together a scheme under the rules that operated under the previous Government. Her scheme is worth while and valuable and I commend her for it.

Let me give some context to the youth unemployment challenge. Youth unemployment today is lower than it was at the general election. The picture of youth unemployment has been building up over a decade. One of the myths is that it is a problem simply linked to recession. If we look at the trends in youth unemployment, we see that it began to rise in 2003 and the problem became more and more significant as the years went by. It was becoming a problem through good times as well as bad.

[Siobhain McDonagh]

Since the general election, youth unemployment in my constituency has risen, not fallen. The problems are greater now than they were before the general election.

--- Later in debate ---

[Chris Grayling]

The hon. Lady is right to say that; there are now 95 more young people on jobseeker’s allowance in her constituency than at the time of the general election. I accept that point and I accept that she has challenges in her constituency, but I am making a more general point. A number of her colleagues have said—although she has not—that they see youth unemployment as a crisis of the current Government. I am simply making the point that, happily, youth unemployment today is lower—not by a lot, but it is still lower—than at the time of the general election. It is a big challenge for us to bring youth unemployment down, and I regard it as a big problem that we must address, deal with and solve.

Of course, there are different challenges within the overall headline figure of 895,000 young unemployed people that the hon. Lady referred to. Some 300,000 are actually in full-time education, and they show up in the unemployment figures simply because they are looking for a part-time job. The actual figure for young people who are not in education or employment is around 650,000 at the moment. That figure is much too high, but the reality is that within it is a core of young people who represent a real challenge, and I suspect that among them are the young people in the hon. Lady’s constituency whom she described. To me, that core represents one of our biggest employment challenges.

The approach we have taken to tackling youth unemployment has three dimensions. I will walk the hon. Lady through them, step by step. To begin with, however, let me address head-on the issue of the future jobs fund. The future jobs fund was an extremely expensive scheme that provided work placement opportunities in the public and voluntary sectors, not in the private sector. It had virtually no private sector involvement at all. All of the jobs created in this country in the last 12 months—all of the increase in employment—have come in the private sector. The future jobs fund is some three or four times more expensive per job outcome than even the new deal for young people under the previous Government. So, the future jobs fund was an extremely expensive scheme that steered young people towards what I believe is the wrong part of the economy in terms of building experience. We took a view very early on that it was not the right solution for the future. The key step that we have taken to replace the future jobs fund is not work experience; it is a dramatic increase in the number of apprenticeships. That is the first part of our three-legged response to the youth unemployment challenge.

During the past 12 months, we have increased the number of apprenticeships available by the best part of 100,000. We introduced an extra 50,000 apprenticeships in the first year, we announced an additional 25,000 apprenticeships to follow, and we topped that up still further in this spring’s Budget with an extra block of 20,000 apprenticeships that specifically target young unemployed people. We think that increased numbers of apprenticeships are a better option than the future jobs fund. We have looked at the nature of the challenge in the labour market, and we believe that finding young people opportunities in private sector businesses over an extended period—an apprenticeship lasts one, two or three years—and where there is an ongoing training opportunity alongside that apprenticeship, provides a better foundation for a lasting career than a short-term placement of the kind that the future jobs fund offered. Of course, the future jobs fund was also massively more expensive than apprenticeships.

We have taken that decision. I know that Opposition Members do not agree with it, but it is a clear strategy that says, “We think apprenticeships are better than the placements the future jobs fund offered, and they are also much more affordable, given the very straitened financial circumstances we inherited.”

I am very pleased that my colleagues in the Department for Business, Innovation and Skills have been as successful as they have in securing employer participation in the apprenticeship programme, and that they have met their goals for getting employers to provide apprenticeship places, which did not happen under the previous Government. Apprenticeships are a really powerful tool that will make a big difference in the years ahead.

Alongside that approach, we are dealing with what I have described as shorter-term youth unemployment. The reality is that the vast majority of young people who are unemployed move off JSA within nine months; there is a pretty steady off-flow and after nine months there is a much smaller core of young people who are struggling to get into employment. First and foremost, I want to see that shorter-term group move into employment more quickly, because even a few months without employment is too long in my view. So we designed the work experience scheme to provide a bridge for young people who did not have previous experience in the labour market or the workplace, to get them into the workplace and give them an extended period of working opportunity of up to eight weeks. The hon. Lady and I are absolutely of like mind about the need to give people an extended opportunity in the workplace and a chance to demonstrate to employers what they can do, so that hopefully—at least in some cases—those employers can offer them jobs. That has certainly happened in many parts of the country.

The hon. Lady is not right about the nature of the rules for the work experience scheme. The scheme is voluntary. The “bureaucracy” that she described is on one sheet of A4 paper. It simply involves signing a piece of paper that says, “I will treat this person responsibly, in the way that I treat my own employees”. That is important, because we do not want excessive bureaucracy. I have been through those forms personally and I can assure her that that is the case.

There will be contact between a Jobcentre Plus employment team member and the employer because that is what the team member is there to do. We have tasked Jobcentre Plus staff not only with changing the rules about the number of weeks someone can do work experience without losing benefits, but with finding work experience opportunities. That is why I am really pleased that the Jobcentre Plus staff in Mitcham and Morden are working in partnership with the hon. Lady. I expect and want our Jobcentre Plus staff to continue to provide her with every support they can provide, because having an engaged local MP working with local employers to increase the number of work experience opportunities is hugely valuable. I commend her for the work she is doing, and I hope it continues and that the Jobcentre Plus staff will be there to work with her to help ensure that the work experience scheme is happening.

Around the country, Jobcentre Plus staff are looking for opportunities. There are now some 35,000 committed work experience places for young people, and thousands of young people are in work experience placements as we speak. Many have succeeded in going into apprenticeships or full-time employment, and I hope that the number doing so will increase as the months go by. We hope to build the work experience scheme over the next two years, so that we provide 100,000 places to deliver the kind of benefits the hon. Lady has rightly described today.

Then, there is the third leg of our stool. The hon. Lady rightly mentioned the challenges that some young people face. There are many young people who have grown up in difficult circumstances and have been on benefits for a long time, and for whom getting into the workplace is a bigger challenge than for other young people. Perhaps they also lack the right qualifications, motivation and experience, and the knowledge of how to get into the workplace. That is where the work programme comes in. It is designed to deliver much more specialised, personalised and tailored support than has been provided in the past.

Young people who do not have significant issues in their lives will enter the work programme after nine months, which is sooner than under the previous, and much less substantial, new deal programmes. However, young people with particular challenges will enter the work programme after three months and will receive personalised support to help them identify the right opportunities: providers who will secure placements for them, work trials, work experience, training courses and other things that will better equip them to enter the workplace.

Of course, the great benefit of the work programme is that we do not seek to design it from the centre. The hon. Lady talked about bureaucracy earlier, but the whole point about the work programme is that bureaucracy is not there. We are saying to the providers, “You do what you think is best. You develop the right programmes to support these young people and others into the workplace. We’ll pay you when you’re successful.” In each area up and down the country, there are teams of specialists led by prime contractors, including organisations that have real expertise in working with young people, such as the Prince’s Trust.

[Siobhain McDonagh]

From my experience of my own constituency and of London as a whole, those contracts are so large that many of the small local organisations, such as the Commonside Community Development Trust, have been unable to get involved in the work programme, and yet they have the experience on the ground. What can the Minister do to ensure that those small local organisations get a look-in with that programme?

[Chris Grayling]

Of course, the whole structure of the work programme is designed to reward excellence. Any organisation that is really good at its job of getting people into work will find a willing entrée with the providers. A whole mix of organisations is involved—from the largest voluntary sector organisations, such as the Prince’s Trust, through to a walled garden project in Yorkshire. We have a whole mix of different organisations providing the support. What matters is what works and that we have solutions that deliver real options for young people, getting those who are unemployed—particularly the long-term unemployed—into the workplace. For me, that is the challenge.

I accept the hon. Lady’s analysis: that we have a problem, in that many young people are stranded and struggling and need to be given a helping hand into the workplace. I hope and believe that the mix of programmes we have put in place—increased numbers of apprenticeships and the work experience scheme, helped by big society projects such as hers, and the intense support provided through the work programme—will start to make a difference, and in a way that I must say is much more affordable to Government than the future jobs fund was. In addition, those programmes will steer young people to where the jobs really are: in the private sector businesses that represent our employment hope for the future.

I believe that that is the right approach. The hon. Lady and I share a commitment to tackling the problem of youth unemployment. We may not agree on all the solutions, but she should know that the Government are committed to solving that problem.