Jobs and Growth

David Miliband Excerpts

Thursday 17th May 2012 Commons Chamber

[David Miliband (South Shields) (Lab)]

I want to make two points in this debate. The first is about youth unemployment. I will present some figures showing the rising cost of the Government’s economic failure. The second is that the neglect in respect of youth unemployment is mirrored by a misguided response to the storms in the eurozone.

I do not think that we need to debate whether youth unemployment is a big problem; it is a massive problem. As the Chancellor and others have said in previous debates, long-term youth unemployment is the greatest danger to not only our economic future, but our social future. Today, according to the Government’s own figures, 260,000 young people have been unemployed for more than a year, which means long-term unemployment. Another 200,000 have been unemployed for more than six months. The interesting, depressing and worrying thing is that the situation is getting worse. As recently as 2008, 6,000 18 to 24-year-olds had been claiming jobseeker’s allowance for a year. By April last year that figure had tripled. Over the past year—just 12 months—it has tripled again, to 55,000. In my constituency, this time last year there were 15 18 to 24-year-olds who had been claiming jobseeker’s allowance for over a year, but now the number is 250, which is a 1,500% increase. The total figure for youth unemployment is 1.3 million or 1.4 million, which comes from the labour force survey, but these are JSA claimants, because that is a claimant count figure.

As for the costs, in February this year I chaired the Association of Chief Executives of Voluntary Organisations commission on youth unemployment. We costed the levels of youth unemployment on the basis of the figures for the first quarter of 2011, which showed a net present value cost of some £28 billion. I asked the university of Bristol to rerun the figures for the last quarter of 2011, which it has done, and the calculation now stands at £30 billion. In the space of 2011, the net present value cost has gone up by £2 billion. That seems to me to be 2 billion reasons for a greater degree of urgency and effectiveness in Government policy.

The Minister responsible for employment says that we should be pleased with stability, but stability in this policy field means that the problem is festering and getting worse. The deputy leader of the Lib Dems, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), said we should celebrate the “huge success” of Government policy. The wage subsidy that was introduced in April is at best unproven. The majority of jobs under the apprenticeship drive are the result of jobs for the over-25s being rebadged, not new apprenticeships for the under-25s. The expertise in the voluntary sector is being squeezed out by the Work programme. Some 20% of voluntary sector providers have stopped providing under the Work programme. There is a gaping hole in Government policy on transport costs for people to get to interviews, never mind getting to work.

I make no apology for repeating this very basic fact: the Work programme, which is the Government’s flagship programme, helps one in 10 of the youth unemployed. Its success rate is 20%, according to the Government’s own figures. That means that one in 50 of the young unemployed are getting a job as a result of Government interventions. I say to the Chancellor—I am grateful that he has stayed for the debate—that there are three steps that he could take now. First, he could require all public contracts over £1 million to offer apprenticeships to young people. In his autumn statement last year he announced infrastructure expenditure, which is a good thing, but where are the apprenticeships to go with it? Secondly, he could bring forward from 2014 money to raise the size of the wage subsidy or the number of young people helped. In 1995, when his predecessor, the right hon. and learned Member for Rushcliffe (Mr Clarke), tried a wage subsidy, it helped only 6,000 young people. He will have to boost the effort to get take-up. Thirdly, he should bite the bullet and recognise that every study anywhere in the world has shown that for the long-term unemployed only a part-time job guarantee can ensure that one year’s unemployment does not become three, four or five years’ unemployment.

[Mr Spencer]

The right hon. Gentleman is making a compelling case, and I know that he has worked very hard on this matter in the past, but surely he recognises that the best way to solve this is to increase the number of apprenticeships, which the Government are doing, and that his Government encouraged young people to try to aspire to university and many of them, when they did not meet that aspiration, found that deflating.

[David Miliband]

I am grateful to the hon. Gentleman, who makes a perfectly intelligent point. It seems to me to be a good thing to raise university participation levels up to international standards, which is between 45% and 50%, but it is crucial for those who do not go to university that we have high-quality options for them. High-quality apprenticeships are an important part of that.

[Dr Phillip Lee (Bracknell) (Con)]

Will the right hon. Gentleman clarify what he means by international standards?

[David Miliband]

The leading countries of the world for higher education are, first, the United States, which has a 55% participation rate, and, secondly, France, which most people would recognise as having an outstanding higher education system. It has 48% participation. Korea, one of the new countries growing up in the world, has 80% participation in higher education. By the way, Scotland already has over 50% participation in higher education, so I do not believe that somehow English or UK young people are unable to benefit from higher education in the way that people in other countries can.

The Robbins report of 1963 said that higher education should be open to anyone with the ability to benefit, and that seems to me to be the right test. For the 50% who do not go on to higher education, we of course need high-quality apprenticeships, but I say to the hon. Member for Sherwood (Mr Spencer) that he should work with us to raise the quality of apprenticeships, because too many apprenticeships are at too low a level and are not leading to the kinds of life chances that we want to see.

It is true that our levels of youth unemployment are not the levels of Spain and Greece—thank God for that —but in 600 wards in this country one in three young people are not in education, employment or training. It is not the 50% or 55% of the Greeks or the Spanish, but one in three. I do not believe that Europe should be the benchmark for levels of youth unemployment.

I also say to the Chancellor that Europe cannot be the alibi for the collapse of our economy at home over the past 18 months. If we look at the growth measures since his first spending review in the autumn of 2010, we will see that we are actually doing worse than comparator countries, and I do not just mean Germany. In the 18 months since the 2010 spending review, we have had worse growth than France, Poland, Sweden, Austria and Slovakia. I will compute the Spanish figures announced today, but until those figures were announced we even had lower growth than Spain. Our growth was worse than the EU 27 average, the eurozone average and the G7 average.

The Chancellor’s claim about the problem that the eurozone mess is causing for our economy is actually undermining his own promise to rotate our economy from domestic demand to external demand. The question is: what should we do about that? He says that the lesson is to stay the course. I say that when the external environment changes, we should change course. The storm in Europe is not a reason for us to stick to plan A; it is a reason to shift to plan B. There is a warning in the travails of the eurozone, but not the one that the Government claim there is. Debts are rising today in Spain, Portugal, Italy and Ireland because fiscal policy is exacerbating the downturn in the economic cycle. The Prime Minister said in his speech today that we are “on track”, but Conservative austerity is not working at home and collective austerity is not working in Europe.

I believe that our absolute requirement in the light of the real and serious risks we face is to pitch policy—fiscal policy, monetary policy, industrial policy and banking policy—against the tide of the economic cycle. We need to argue for that abroad and at home. We heard a shift today from the Chancellor about what should happen abroad. We should be embracing President Hollande, not snubbing him. We should be anti-austerity and pro-reform. That is the right position for Europe and the right position for Britain, because there are no islands in the modern economy. It is not ideology; it is maths. And judging by the Gracious Address, it is time for the Government to go back to the classroom.

--- Later in debate ---

[Mr Duncan Smith]

Labour gerrymandered the figures, and that was a long suicide note about what they tried to do to change those figures. The hon. Lady can try as much as she likes but the truth is that the previous Government set in place every single mechanism to ensure that they did not count young unemployed people.

[David Miliband]

The figures that the right hon. Gentleman’s Department have put out show that in the past year—under his Government—long-term jobseeker’s allowance claimant figures have gone up threefold to 55,000. How does he explain that?

[Mr Duncan Smith]

As I said to the right hon. Gentleman—his point was about youth unemployment—the reality is that the figures I have given today are correct. His Government created a major crisis by putting us into a great big slump. That is what they did. Whatever else he wants to say in an attempt to defend the Labour Government, we are having to dig them out of a hole and we are the ones producing better youth programmes such as the youth contract. Those unemployment figures are very simple. When you add all the details together, you find that unemployment among young people was higher when we took office than it is now.

I want to move on to what other hon. Members said. The hon. Member for Leeds East (Mr Mudie) said that he wanted to see the right hon. Member for South Shields on the Front Bench. I wonder what role he would see the right hon. Gentleman in if he got him there. I congratulate my hon. Friend the Member for Bournemouth East (Mr Ellwood) on his speech. He reminded us that we had some great news the other day because Boris won again in London. That is very good news for all of us. [Interruption.] I wonder what Opposition Members are saying. The reality is that their candidate, Ken Livingstone, failed, and I note that a lot of them did not even bother to turn up to support him.

The hon. Member for Redcar (Ian Swales) attacked Labour very effectively. I should like to pick up a point made by the right hon. Member for Barking (Margaret Hodge), the Chairman of the Public Accounts Committee, who said that the welfare-to-work programme is unlikely to be good value for money. I differ from her on that. The big difference with the welfare-to-work programme is that we will not pay the providers unless they get someone into work. Under the future jobs fund and everything else that was going on under the previous Government they threw money at providers ahead of any kind of outcome, caring only to tick the boxes to say that they had done something rather than that they had done something reasonable.

A large number of people spoke in the debate, including my hon. Friend the Member for Warwick and Leamington (Chris White), the right hon. Member for East Ham (Stephen Timms) and my hon. Friends the Members for Bedford (Richard Fuller) and for North East Cambridgeshire (Stephen Barclay). The hon. Member for Liverpool, Walton (Steve Rotheram) made an interesting speech. I notice that he wants to put his name forward to be manager of Liverpool. I wish him the best of luck in that endeavour. As a Tottenham supporter, I am looking forward to him running Liverpool next season.

The Opposition approached this debate believing that they had the right to criticise our Government for what they call our failures, yet not once have they ever apologised for putting the economy in the worst possible state—the biggest bust. They try to compare themselves to other countries. It is worth noticing that the US economy is set to fall faster—