Worklessness (Wales)

Lord Grayling Excerpts

Wednesday 13th July 2011 Westminster Hall

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

I congratulate the hon. Member for Arfon (Hywel Williams) on securing the debate. I will have to respond to him relatively briefly because I think I have only nine minutes in which to speak.

The hon. Gentleman made his points extensively and thoughtfully, but I do not recognise the degree of bleakness in the picture that he portrays. I recognise that unemployment remains a major challenge for us around the country—it is one of the most difficult parts of our inheritance. I accept that a number of areas of Wales, like a number of areas of England, Scotland and Northern Ireland, are affected by deep-rooted problems of worklessness. However, Wales has been one of the brighter spots in the labour market in recent times.

The hon. Gentleman talked about the private sector. In Wales in the past 12 months, the truth is that 31,000 net new jobs have been created. In reality, that represents a higher number of jobs in the private sector because the figure also takes into account job losses in the public sector. In the past year, Wales has proved that it is possible to grow private sector employment. Unemployment in Wales has fallen by 16,000. He asked where the jobs would come from. The truth is that in Jobcentre Plus in the past three months, nearly 48,000 vacancies have been taken in across Wales.

The total number of people on jobseeker’s allowance in Wales as a whole is 71,600. While I recognise that we have a challenge, and I particularly accept that we have a challenge in individual areas of Wales, the picture is not as bleak as the hon. Gentleman suggests. I certainly do not think that it is as bleak as is portrayed by the Sheffield Hallam research, which argues that, in the valleys alone, 70,000 more jobs would be needed. As the total JSA count for the whole of Wales is 71,000, I would have to say that its view is on the pessimistic side.

The hon. Gentleman is absolutely right—my hon. Friend the Member for Aberconwy (Guto Bebb) is also right—to say that we really need to support the growth of self-employment in Wales. A central part of the task of encouraging and fostering economic and employment growth in Wales is supporting the self-employed. That is why I am committed to the success of the new enterprise allowance in Wales, which will help people off benefits and into self-employment, and it is why I hope that the new Administration in Cardiff will make self-employment a particular focus of its work with business.

If I was replying to a debate about an English region, I would be setting out a number of other areas in which the Government are taking steps to try and deal with the unemployment and worklessness challenge, including through apprenticeships, which are an essential part of our strategy. Particularly for the young unemployed, apprenticeships are a much more cost-effective way of delivering support and opportunity than the extremely expensive future jobs fund, which provided six-month placements in public and voluntary sector organisations at a time when the best job opportunities were arising in the private sector. The cost of that scheme was three to four times more than even the new deal for young people under the previous Government. The scheme was not affordable and did not deliver clearly improved results on either value or outcomes in comparison with other schemes. Investment in apprenticeships delivers a much better alternative, so I hope that the new Administration in Cardiff will pursue that route.

It is also important that the new Administration in Cardiff do a good job on economic development. If we were talking about another part of the UK, I would be talking to the hon. Gentleman about the importance of the regional growth fund to invest in manufacturing, and research and development facilities, in those areas of the country that have lower levels of private sector employment and bigger employment challenges. Again, I hope that the new Administration in Cardiff will take the lead set by the coalition Government in Westminster to set up a similar mechanism to the regional growth fund to invest in precisely the kind of opportunities that he rightly says that Wales needs.

We are taking clear steps to try and deal with the issue of worklessness in Wales. Alongside the introduction of the new enterprise allowance, that is being done through two particular schemes. The first is our work experience scheme, which is designed to address the challenge that young people face to get a first foothold in the workplace. All too often, they face the challenge of not having the experience to get a job, and not being able to get such experience without a job. One thing I learned quickly on becoming a Minister was that the previous Government’s rules said that if people did more than two weeks’ work experience, they lost their benefits. That was crazy. We have now changed that rule and it is possible to do up to eight weeks on benefits while doing work experience.

In addition, we have turned the whole system on its head and are now actively looking for work experience opportunities for young people across England, Scotland and Wales in an approach that will give young people an opportunity to gain initial experience in the workplace and show potential employers what they can do. I hope that that will prove to be a route into apprenticeships. Again, I hope that the Government in Cardiff will work with us to ensure that there is a clear link between the work experience opportunities for which we are looking through Jobcentre Plus, those first few weeks in the workplace, and an opportunity for those young people to move into an apprenticeship.

The other part of our strategy to help the long-term unemployed is the Work programme, which is now operating throughout the whole country. In Wales, we have two providers: Working Links and Rehab Group. Rehab Group is one of our two part-voluntary sector prime contractor groups. Alongside those two prime contractors, there is a network of different organisations around Wales helping to provide specialist support for the long-term unemployed. What makes the Work programme different is that it is all about delivering much more personalised and tailored support to the long-term unemployed and those who are moving off incapacity benefit.

I would take another issue with the Sheffield Hallam report. As a result of the changes we are making to incapacity benefit, no one will lose benefits except those who are currently in receipt of contributory employment and support allowance, which will be time-limited, and those who have other financial means. If people do not have an alternative form of support, they are not suddenly going to be cast on to the streets, but that is a point about which the report gives a slightly misleading impression.

I describe the Work programme as a giant employment dating service. It is about matching individuals to the right job opportunity, and a job opportunity in which they are likely to stay. It is important to the providers that they deliver because we do not pay them unless they get people into sustained long-term employment. They cannot earn their full fees for a conventional jobseeker for 18 months after that person has entered work, so if someone ends up in the wrong job and is likely to drop out, the provider will inevitably lose out financially. The providers therefore have every incentive to ensure that they match individuals to the right job opportunity in which they have the best chance of staying.

The Work programme will deliver a much better support than has previously been the case. It unleashes best practice. It will succeed the most if it delivers what works the best. There are no diktats from Whitehall—no instructions about how to do this—because it is all about delivering what works for individuals. I am confident that the Work programme will take back-to-work support to a new level and help many of those people who are trapped in pockets of long-term unemployment in Wales to find and move into opportunities that arise.

I am confident that we will see economic growth across the country. The independent Office for Budget Responsibility is forecasting significant growth in private sector employment in the next few years, and that has already been happening in Wales. The key is to ensure—this was not happening under the schemes that we inherited from the previous Government—that those who are trapped on JSA and other benefits have, when possible, the opportunity to take advantage of vacancies when they arrive. Our reforms are all about making work pay, supporting people into work and trying to create an environment across the UK in which business can flourish, grow and develop. In Wales, with the additional contributions that I hope will come from Cardiff to work with us on economic development and creating opportunities for business to grow and develop, I hope that that will provide a solution to the very real challenges of worklessness in Wales that the hon. Gentleman rightly identified.

Question put and agreed to.