Incapacity Benefit (North-East)

Ian Swales Excerpts

Tuesday 22nd November 2011 Westminster Hall

[Grahame M. Morris]

I am grateful for that intervention, which reinforces the point that I was trying to make. It is absolutely essential that we tackle joblessness; the Government have a responsibility to do that. I am concerned about the complete failure of regional policy; I am not convinced that we have an effective regional policy. We lost our regional development agency, One North East, and our regional Minister. It cost nothing to have an advocate at the top table of government, arguing the case for business, as well as for the regeneration of the whole region. It seems perverse that the coalition should abandon that, particularly when the region is doing so badly.

[Ian Swales (Redcar) (LD)]

I congratulate the hon. Gentleman on securing a debate that is very important for the region. Does he agree that the current process of checking who should claim incapacity benefit follows a system—work capability assessment—introduced by the previous Government? Does he further agree that that system is flawed and broken? Will he congratulate this Government on trying to do something about it?

[Grahame M. Morris]

I certainly would not like to do any of those things. However, there are some positive things that the Government could do to address a dire and worsening situation that many people are not aware is going to hit them in the next 12 or 24 months. There are things that the Government could and should do. Sheffield Hallam’s recommendations were clear:

“government should resist penalising the older generation, who, not unexpectedly, are suffering from ill-health.”

Instead, efforts should be concentrated on

“creating opportunities for work”

for this younger generation, this lost generation, which could prevent the problem that we have experienced with young people

“falling into a cycle of ”

dependency and

“economic inactivity”.

That often relates to mental health issues, a lack of self-esteem and a lack of aspiration, which eventually leads to

“disability and incapacity.”

We should have an early intervention to tackle this huge problem. There are lessons for Government to apply not only in the north-east, but for other former industrial areas. This is a big issue in the north-west, in parts of Scotland, in Merseyside and in the former mining communities of Wales. Claimants of incapacity benefit are usually concentrated in the same disadvantaged communities that have weak local economies with little chance of finding work. The Government must recognise that.

The authors of the Sheffield Hallam report, Christina Beatty and Steve Fothergill, are also damning of the reforms, saying that there is little reason to suppose that changes will lead to significant increases in employment. Without creating the jobs first, it seems like a double punishment on the thousands of people who will be adversely affected: 35,000 in our region and more than 4,000 in my constituency.

I want to give the Minister an opportunity to respond, but first I want to say a few words about the Government’s workfare programme, which seems like cynical exploitation by a Government that have already put thousands of people out of work. I want to place on the record my opposition to an extension of workfare. Where will the jobs for the long-term unemployed come from? If such jobs exist, why are they not being offered as real jobs with real wages, as opposed to benefits that carry the threat of withdrawal of benefit if individuals are unable or unwilling to take up offers?

The effects of such changes will not hurt the affluent south, but will be a body blow to the poorest areas, particularly in the north-east. At the same time as the Government are retrenching on any support for jobs and growth in the north-east, they are quick to pull the rug from underneath the sick, disabled and worst-off in society. I want to focus on the loss that that represents to the north-east regional economy and what the Government could do to limit the damaging effects.

I want to pose some specific questions, and I look forward to the Minister’s response. Can the Minister confirm that the north-east has seen a decline in private sector employment over the last year? Does he have an estimate of what the financial loss will be to the north-east economy owing to changes in incapacity benefit? Can he confirm the figure of £170 million? Will he consider how money lost to the north-east could be ring-fenced and reinvested in the region to support job creation?

I will give the Minister a few helpful suggestions from the IPPR:

“The government should offer a guaranteed job, paid at the minimum wage or above to anyone who has been unemployed and claiming JSA for more than 12 consecutive months. The guarantee should be matched by an obligation”

because there are rights and responsibilities. If the Government give somebody a right to a guaranteed job, the individual should be obliged to take up the offer of employment

“or to find an alternative that does not involve claiming JSA.”

Will the Minister look at this proposal and whether it could be targeted as a jobs guarantee for the north-east? A jobs guarantee could be implemented in areas of the north-east where long-term unemployment meets a certain critical level or where the job density ratio falls below an agreed threshold.

The IPPR believes that these recommendations could be afforded if the proposed reduction in corporation tax was abandoned. All the evidence suggests that the reduction in corporation tax is unlikely to increase employment and it significantly benefits large finance companies, particularly banks, and companies employing fewer staff. If the Government are serious about getting people back to work—I will conclude on this point, so that the Minister has a chance to respond—they should commit to supporting our regional economy and reinvesting any money saved from changes to incapacity benefit back into the north-east directly, to support jobs and create growth.