Jobs and Social Security Debate
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Iain Duncan Smith
Main Page: Iain Duncan Smith (Conservative - Chingford and Woodford Green)Department Debates - View all Iain Duncan Smith's debates with the Department for Work and Pensions
(11 years, 5 months ago)
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Mr Byrne
I know this is of great concern to my hon. Friend. There are more than six people chasing every job in his constituency. What his constituents need is a back-to-work programme that actually works, pulling out all the stops to get people into jobs, but I am afraid the story he has told from his constituency has become all too common across the country.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I am sure the right hon. Gentleman wants to get the record straight. Will he now tell the House that in the last two years of his complacent Government, long-term unemployment rose by some 400,000?
Mr Byrne
I would be happy to trade arguments about our record with the Secretary of State, because while Labour was in office, the amount of money that we spent on out-of-work benefits fell by £7.5 billion. That is why his noble Friend Lord Freud described Labour’s record in getting people back to work as remarkable. It is a shame that he could not arrive at the same judgment about this Government’s programme, which is now in place.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Labour motion is one of the stupidest motions I have ever had to deal with. It says very little and nothing at all about what the Opposition would do if they were in office. It also lays yet more spending commitments on an Opposition whose programme is littered with huge cost increases.
I will take no lectures from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). I remind everyone again that he is the man who thought it was a joke to write a letter to the incoming Government saying there was no money left. [Interruption.] Opposition Members moan, but the reality is that the last Government bust this country, and we are having to pick up the mess. Furthermore, the right hon. Gentleman was hugely responsible for that mess, yet we have just got a lecture from him on the economy and on unemployment. The reality, however, is that unemployment is now lower than it was when he left office. We have higher employment. We have more women in work than ever before. We also have 1 million new private sector jobs. The reality is that he and his party left us with an utter mess, and we are having to take tough decisions to get ourselves out of it.
Mr Duncan Smith
I will take some interventions from the right hon. Gentleman after I have dealt with a few of the points that he made.
The right hon. Gentleman’s motion says that just
“two in every hundred people referred to the Work Programme in its first year have gone into work”.
That is complete nonsense. The Opposition have added, and then divided, the numbers in a very partial way, to come up with the worst possible figure, which is precisely what they wanted. They have added up all the total attachments, but taken into account only a small proportion of those for whom six-month job placements were found.
Mr Duncan Smith
As I have said, I will take some interventions after I have made a few rebuttal points.
If the Opposition had worked the figures out correctly, they would have noticed what my hon. Friend the Member for Enfield North (Nick de Bois) has pointed out: some 315,000 of the 837,000 people who were attached were not in a position to have a six-month outcome because they had not been on the programme for six months. The Opposition do not want to incorporate that fact into their figures, however. Those people will come through into the next set of figures that we produce.
Mr Duncan Smith
I will give way to the right hon. Gentleman after I have made this point. In fact, the total number in sustained job outcomes falls well within the target area that we were trying to achieve during the first year’s figures. If people want to gerrymander the figures, they should make sure that they gerrymander them all.
Mr Byrne
May I draw the Secretary of State’s attention back to the invitation to tender, which presumably he signed off? Under the heading of “Key Performance Measure”, which is in bold type and is the thing that we are interested in and debating, it says:
“Performance will be measured by comparing job outcomes…in the previous 12 months to referrals in the same period.”
The target for performance in the previous 12 months was 5%, and the Work programme statistics delivered yesterday showed that that target had been missed comprehensively.
Mr Duncan Smith
Yet again, the right hon. Gentleman has defeated the first point that he made. In other words, the figures that he has produced in the motion are wrong and he has just proved it. [Interruption.] If he wants to listen, he might learn something. No wonder he ended up as the man who told us there was no money left—with his kind of arithmetic, I am surprised that there was anything left at all. The reality is that in a year—if we want six-month referrals—a number of people will not have been in the programme for six months. So 315,000 people—[Interruption.] I am simply saying to him that the reality exists. This programme is on track; it is the best programme; and it will be putting some of the most difficult people back into work. Let me just deal with another point, which is the one about unemployment.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Member for Tottenham (Mr Lammy)knows that he cannot keep standing. I am sure that the Secretary of State has made a note and is going to give way shortly.
Mr Duncan Smith
I just want to pick up on one point and then I will happily give way to the right hon. Gentleman.
The same scant regard for general facts is apparent throughout the motion. The Opposition claim that long-term unemployment is now soaring, yet long-term unemployment nearly doubled in the two years before Labour left office, going from 396,000 to 783,000 in 2010. By the way, just so that the record is absolutely straight, the right hon. Member for Birmingham, Hodge Hill says that Labour had got spending down, but welfare spending rose by 60% under the previous Government.
Mr Duncan Smith
I will give way in a moment, but I said that I was going to make these points.
Labour’s policies then went on to try to hide the true scale of the problem, by automatically moving people off jobseeker’s allowance into training allowances or short-term jobs, thus breaking their claim just before they reached the 12-month point. The Opposition claim today that long-term unemployment is up by more than 200,000 since the Work programme began, but in actual fact, comparing like for like, which means counting all those who were previously hidden on training allowances and other support, the total number on jobseeker’s allowance is about the same as it was at the start of the Work programme, so that point is complete nonsense.
Mr Duncan Smith
No, the figures we stand by are those we published yesterday. The point that I was making today to the right hon. Member for Birmingham, Hodge Hill—[Interruption.] No, actually the figure would be more than 5%, but I am not claiming that. What I am saying is that we stand by the figures that we published yesterday, and I believe we are on track. The point I was making, legitimately, is that the right hon. Gentleman spent his time deducting some numbers from one bit and adding them into another to create some bogus figure that two in every 100 people were found sustainable jobs. That is complete nonsense.
Mr Duncan Smith
I will give way to the right hon. Member for Birmingham, Hodge Hill in a moment, but some of his colleagues behind him want to intervene.
Geraint Davies
Today, at that Dispatch Box, the Prime Minister said that 19,000 people out of 800,000 had gone into full-time work. I make that 2.3%, so the Secretary of State is saying that the Prime Minister is talking complete rubbish.
Mr Duncan Smith
I stand by the figures that we published yesterday—3.5% is exactly correct. The reality is that what I have said today is what we said yesterday. The point that I want to make is that the thing that has gone missing in all this is that, without the Work programme, some 207,000 people who had been long-term unemployed would not be in work today—they are. Now, we work with those 207,000 people, many of whom have serious problems and difficulties, to make them longer-term employed, which is the key. The Work programme is all about resolving that.
Mr Byrne
I am grateful to the Secretary of State, who is being characteristically generous in giving way. Broadly speaking, about 800,000 people were referred to the Work programme in the 14 months to which he extended the reporting period to flatter the figures, and 5% of 800,000 is 40,000. According to his figures, only just over 30,000 got into sustained jobs, so 10,000 more people would have got into jobs if the Government had done nothing. That cannot be a record of which he is proud; surely, he can admit that to the House.
Mr Duncan Smith
That is simply not true. I do not want to spend any longer on this, but the point that I made earlier about the right hon. Gentleman’s figures was that, when he concocted the figure of 200,000, he stripped out of his achievement figures the numbers for those who had been on employment and support allowance and so on and divided the total that was left, but those figures were in the other total. The Opposition have made a mistake and need to reckon that their adding up is wrong. The truth is that we have a programme that is helping people who are long-term unemployed.
Margot James (Stourbridge) (Con)
I visited EOS, our local provider in the black country, which gave me data to show far in excess of 5% getting back into work. Those data were more recent than the statistics that are being publicised, and I am very encouraged by what the Work programme is doing for people in the black country. Before 2009, the number of people on JSA in my constituency rose by 205%, which was a scandal. That figure is much reduced now.
Mr Duncan Smith
The truth is that the previous Government did next to nothing for the seriously long-term unemployed, and as I have said, we saw the figure rise by nearly 400,000. I want to come to that point in a second, but let me first deal with another comment made by the right hon. Member for Birmingham, Hodge Hill during his speech. He said that Labour’s unemployment scheme was a roaring success. I noticed that in Prime Minister’s questions today—I do not know whether I have got this wrong—the Opposition quoted a report that they said had been done by the DWP.
Let us deal with that point now: both the future jobs fund and the flexible new deal were rushed through just before the election. After all the years for which Labour had been in government, it suddenly discovered an urgent need to start to spend money on some programmes. Let us deal with them one at a time, and with the future jobs fund first. The Leader of the Opposition quoted a DWP report earlier and said that that scheme had a net benefit to society of £7,750. What he did not say—I suspect that he needs to speak to the right hon. Member for Birmingham, Hodge Hill next time he gives him something to say at Prime Minister’s questions—was that the report goes on to state that
“these estimates exclude the cost of administering the programme and the cost of hiring and training participants.”
I wonder why he did not quote that.
Using any one of the more conservative estimates, as used in the report in table 5.3 on page 62, puts the benefits at £4,650, less than the £6,500 that it cost to place people in those jobs. So the right hon. Member for Birmingham, Hodge Hill and the Leader of the Opposition unwittingly misled the House and the future jobs fund lost money, rather than rescuing the situation. The report goes on to state that
“it is notable that under all of the scenarios considered in this analysis, the programme is estimated to result in a net cost to the Exchequer”
and
“depending on the rate of decay there might never be an estimated net benefit to the Exchequer.”
What the Opposition are saying is fundamentally wrong: their scheme cost money and did not as a net benefit get anything back to constituents.
Bill Esterson
The Secretary of State is talking about a completely different world that is divorced from the reality for my constituents. My constituents who were on the future jobs fund had real jobs at the end because the programme worked. They are now missing a programme that works, because the Work programme is designed wrong and because the jobs are not being created. He needs to talk to his friend the Chancellor and get the jobs created, as well as getting the Work programme right. Is that not the reality of what is needed?
Mr Duncan Smith
Of course it was a different world—it was a world in which the previous Government thought that every problem could be solved by chucking shed-loads of taxpayers’ money at it without caring what the outcomes were. That is exactly the point I am making. We have had to clear that mess up.
Mr Duncan Smith
I will give way, but I ought to deal with the other programme first, as the right hon. Gentleman might want to ask some questions about that, too. The other programme that the Opposition cited was the flexible new deal. If that was such a brilliant programme, surely it would have been rolled out nationally; it never was. When Labour left office, it was only just up to running across half of the UK.
Over an equivalent period and claimant cohort, the Work programme has got more people into work for six months or more—19,000—compared with 15,000 under FND, and it delivers better value for money. The £14,000 per outcome figure thrown around by Labour ignores the start-up costs of the Work programme, which covers five to seven years. An independent cost comparison by the Employment Related Services Association shows a figure of £2,000 per job under the Work programme, compared with £7,500 under FND which, just like other programmes, ultimately cost money and did not succeed in helping to get people into work.
Mr Byrne
This is an important point for us to debate. I do not know whether the Secretary of State has seen the analysis that was published yesterday by Inclusion, but it is pretty clear on this question. The proportion of people flowing into sustained jobs from the flexible new deal was 5%, which is much higher than the figures for the Work programme. The flexible new deal was more expensive. Inclusion calculates that the cost per job outcome under the Work programme is £14,000. The flexible new deal was 9.5% more expensive, but the Secretary of State is failing to be level with the House about the fact that doing nothing costs his Department less, but it costs the country more, because the welfare bill goes up. A payment-by-results programme is cheaper if there are no results. That is the problem that we have to fix, and that is why the Chancellor is so cross.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Many Members wish to speak in the debate, so we must have shorter interventions and replies.
Mr Duncan Smith
Guided by you, Mr Deputy Speaker, I shall simply tell the right hon. Member for Birmingham, Hodge Hill that he is wrong. I do not agree with his figures, and anyway, he served in government while the bill for welfare rose by 60% in real terms over the lifetime of that Government. Enough said: we took on a massive problem, and we have to deal with it.
Mr Duncan Smith
I shall make some progress, but I promise to give way to the hon. Lady.
Let us deal with the final point made by the right hon. Gentleman in the motion: that somehow all this could be solved if only we did not cut, change or reform anything and implemented a bank bonus tax to fund a real jobs guarantee. Such a one-off tax would be worth £3.5 million. However, we have introduced an annual bank levy, which raises much more money over the period. The Opposition did not introduce such a levy when they were in power.
Let us look at the bank bonus tax that they propose. I love the fact that that tax is wheeled out whenever they are in a corner. It has already been used to cover the spending of £13.5 billion that they committed to make when reversing the VAT increase. It has been used for more capital spending—£5.8 billion—and again to reverse tax credit savings of £5.5 billion. It was used to build 25,000 extra homes—£1.2 billion. It was used again to reverse child benefit savings of £1.7 billion, and more and more.
It is a joke to keep wheeling out that ridiculous programme as an excuse for what the Opposition should be doing, which, as my right hon. Friend the Member for Wokingham (Mr Redwood) said earlier, is telling us what they would do instead, where they would make the necessary savings and how they would reform welfare. That is the main issue.
Kate Green
The debate has moved on, but I wanted to say that the rise in social security spending under the Labour Administration was not all in relation to out-of-work benefits. A large proportion related to better payments for children and working tax credit, which subsidised low pay.
Mr Duncan Smith
I agree. The only way to look at these things is to consider the overall state of welfare spending. That is exactly how I look at it. As for the point about tax credit, much of it had nothing to do with going back to work, but it supported families for other reasons. The Opposition cannot separate what suits them from the other bits. We have a welfare budget, and they must own up to the fact that it rose by 60%.
Let me deal with what the Work programme really is. It supports 800,000 people—more than any previous programme—and data published yesterday show that it is successfully moving claimants off welfare rolls into jobs, so generating savings in the process. More than half those referred to the programme in June 2011 have since come off benefits, and about a third have spent the past three months off benefit, and a fifth have spent six months off benefit. Independent statistics published on Monday show that 207,000 people, as I have said, have been in work—a fifth of everyone on the programme. What is more, job entries are rising month on month. The figures that we published yesterday showed that in the past two months there was a 40% increase in attachments lasting six months.
We have rejected the old tendency that the right hon. Member for Birmingham, Hodge Hill keeps coming back to—chucking money at programmes in the hope that people will say we are doing something because we are spending money. With the FND, Labour paid out 40% of the fee up front just for signing up someone. Firms never had to do much at all. Under the flexible new deal, the average up-front attachment fee was more than £1,500. More than £500 million was paid out in total, without any assurance of success at all.
Mr Bain
In my constituency, just 70 people have been placed through the Work programme into sustainable employment, but the Employment Related Services Association says that providers of the Work programme have received £436 million in public money already, as at September 2012. Can the Secretary of State update the House with the most recent figures? Does he really believe that constitutes value for money?
Mr Duncan Smith
The figures have been published. This is about start-up costs and the money that is paid for every job. If the hon. Gentleman wants to do the mathematics, he will find that it adds up quite well.
Under the Work programme, companies are paid only if they keep people in work for six months for the most part, and for some 13 weeks. Under Labour’s programme, 40% of the total budget or about £500 million, as I said earlier, was paid just to sign up people. That is the difference. We save the taxpayer the money, and we will produce a programme that gets people into work. It transfers the risk. In future, we should be able to shift market share from those who do not succeed to those who succeed.
Many of the same companies are used as were used under the previous Government, but the difference is that they are now being examined to show how successful their programmes are. Whereas under the previous Government they could simply sign up people, now they have to get them into work and sustain them in work, or they do not get paid.
Steve McCabe (Birmingham, Selly Oak) (Lab)
If I accept the Secretary of State’s proposition and that of the Minister of State, the hon. Member for Fareham (Mr Hoban) in his letter yesterday that it is a bit early to judge the programme, when is it reasonable to judge it? Can we expect to see a substantial improvement in the figures next year? If we do not, will the Secretary of State admit then that he has failed?
Mr Duncan Smith
I happen to believe that the people who will admit that they failed are the Opposition. I hope that within a few months they will be eating their words over all this. Over many years, while the hon. Gentleman’s party was in government, we saw welfare bills soaring. By the time that Labour left office, there were 5 million on out-of-work benefits, one in every five households had no one working, 2 million or so children were living in those workless households with no chance that they would ever see anyone go back to work, and youth unemployment was up by 40%. Unemployment was at 7.9% and inactivity at 23.5%.
What a contrast with the situation now. In recent months, there have been more women and more people overall in work than ever before, up 734,000 since the election. There are 1 million more jobs in the private sector. We have seen four consecutive quarters of rising jobs growth and three consecutive quarters of falling unemployment. Not one word about that from the Opposition; not one congratulation to those who have found jobs. Excluding students, youth unemployment is down 65,000 on the latest quarter and 15,000 since May 2010. There are now 190,000 fewer people claiming the main out-of-work benefit and the inactivity rate is close to the lowest in a generation.
Thirteen months after coming into office, this Government introduced the biggest payment-by-results programme that the UK has ever seen. It is succeeding. It will succeed. We have heard nothing from the Opposition today. It is a pathetic motion from a pathetic Front Bench team and I will oppose it tonight.
Mr Sheerman
My hon. Friend will forgive me for knowing less about the situation in Scotland than I do about the situation in Yorkshire and England, but I am sure that she is right. There are many local differences, as I am finding in my area.
That is why I asked for the Freudian analysis earlier. Lord Freud, before he became a Member of the upper House, was asked by Tony Blair to evaluate which programmes worldwide had actually worked and addressed the structural problem of how to get people into work so that they can be full citizens. He looked right across the piece to identify which programmes had been successful. By requesting the Freudian analysis, I was asking whether it was good information. It was the whole basis of the policy that influenced our Labour Government’s policy and also that of the Conservative party. Freud is very important to these discussions, however he has been interpreted, and we should not forget that he was trying to look at that central problem we all face.
Mr Duncan Smith
Given that the hon. Gentleman has asked about my noble friend, who is an excellent addition to our team—whichever party he represented previously, he is a very good man and is doing very well—I may say that the Australian system, which is the basis of the Work programme, has shown some of the best results, which occur once companies are geared up and focused on getting people back into long-term, sustained employment. The system is working very well and says that it is on track.
Mr Sheerman
I thank the Secretary of State for that intervention, and I accept what he says. He knows that what I am getting at in this short contribution is that we play this game of blaming each other all the time, but the problem is international and global and we will have to sometimes forget party differences and work together on it. I want to make a couple of suggestions as to how we might do that.
Let us face it: all Governments throughout Europe, the United States and beyond have a long history of failure. Modern industrial democracies have this problem of skilling the work force. Indeed, I have never heard such castigation of our country’s further education system as that in yesterday’s annual report by the chief inspector of Ofsted, who said how poorly further education was performing in our country. All the evidence shows that further education is where young people get skills for the good life. It is where they get high skills to get good jobs to be the full citizens that I am after.
I have never heard of the chief inspector picking on one town in particular. I do not know what he has against Hastings, but he said that early years and primary schools are a failure for the children of Hastings and that they also fail when they go on to secondary school and further education. I was astonished. Thank God he was not talking about Huddersfield. It comes down to the fact that a significant percentage of people in our country have inadequate training and skills, and we need to work across parties to do something about that.
I want to share some of my experiences. One of my last reports when I chaired the Children, Schools and Families Committee looked at the problem of those not in education, employment or training. We found that intelligent programmes on the ground which represented a positive response from local authorities that understood their local communities, and which also had good local skills training and good employers, could make a significant difference to the number of people gaining skills and getting into work. There are good exemplars in this country, but some towns are more fortunate than others in retaining their manufacturing and employment base.