Economic Affairs and Work and Pensions

Debate between James Clappison and Anne McGuire

Tuesday 8th June 2010 Commons Chamber

[Mr James Clappison (Hertsmere) (Con)]

This is my first opportunity to make a contribution in this Parliament, and it is a pleasure, as always, to follow the right hon. Member for Holborn and St Pancras (Frank Dobson), although I will not go down the same route as him. I wish to say a little about the work and pensions side of this debate, but before I do so may I deal with a subject that is somewhat associated with it: the proposal in the Gracious Speech for a limit on economic migration from outside the European Union? I warmly welcome that sensible proposal. Strangely, it was part of the Opposition amendment to yesterday’s motion, although it was not mentioned in the speech of any Opposition Member, including the Front Benchers. One can only speculate as to the internal problems in the Opposition on that matter.

Although I welcome the proposal, I note that the coalition agreement says that it is to be subject to consultation on the “mechanism” by which the limit is achieved. I urge my hon. colleagues to bear in mind that an important consultation has just taken place; call me old-fashioned, Mr Deputy Speaker, but I think that the most important consultation takes place when the voter goes into the voting booth and puts his or her cross on the ballot paper. Therefore, I respectfully invite my right hon. and hon. Friends to take account of the considerable concern expressed about immigration during the campaign.

It is right to engage in some consultation about implementation and, doubtless, the Government will have a queue of employers come before them. When I served on the Select Committee on Home Affairs we examined this very question. We heard from restaurant owners, farmers and people involved in the IT industry, and they seemed to be under the impression that the resident working population of this country was incapable of working on a farm, in a restaurant or in the IT industry. I suggest to my hon. Friends that when they hear such submissions from employers they gently point those employers towards the unemployment statistics, particularly those relating to young people in this country.

Those statistics show one of the most baleful inheritances from the previous Government. Given the speeches that we have heard today, Labour Members seem totally oblivious of the plight that they have left so many young people facing. We have heard a lot about child trust funds, but we have not heard so much about the lack of opportunities for young people who are about to enter their working lives and find themselves facing the prospect of the dole queue. After 13 years of a Labour Government, almost 1 million young people are out of work and there is a structural problem of youth unemployment. I say that because the level of youth unemployment was rising long before the recession took hold. All that has occurred under a Government who had promised at their outset to reduce unemployment among young people by 250,000.

A further 1.5 million older workers are out of work, and standing behind them, although not of course recorded in the formal unemployment statistics, are the many millions of people of working age who languish on out-of-work benefits. We cannot expect some of them to work because of the nature of their condition, but many of them are capable of work and indeed want to work but under the current system they are not receiving the help that they need, be it medical help, encouragement or training, to enable them to work.

In many cases—this is an important part of the problem—such people also lack the incentives to work. We talk a lot about providing incentives for better-off people to work—I am all in favour of that, because I support enterprise and hard work, seeing it as the way forward, unlike some Labour Members, whose view is to rely on the state for everything. However, we must consider also providing incentives for poorer people on benefits to get into and remain in work. All too often, the poorer person on out-of-work benefits, who may not have many skills and may have a patchy previous employment record, can find only low-paid employment. Under the current system, a large part of their money—their housing benefit and council tax benefit—is withdrawn from them the moment they start work. The moment a poor person who has been on out-of-work benefits gets into work they, in effect, face a marginal tax rate of 80% or 90%. They then find that out of the meagre proceeds left for them they have to pay the normal costs involved in getting to work, being prepared for work, dressing for work and so on. In addition, they have the fear of not being able to rely on the benefits system in the future for housing and all their other needs.

[Mrs Anne McGuire (Stirling) (Lab)]

Will the hon. Gentleman recognise that the previous Government implemented a proposal that meant that people could move into work from receiving benefits and still retain for two years their right to move back to receiving benefits? He is misrepresenting the current situation.

[Mr Clappison]

I am not misrepresenting it in any way. Labour Members were prepared to have a system in which 80% or 90% of income was withdrawn from people who went into work, through the withdrawal of council tax and housing benefit, and not very much has been done about that. I recognise that some Labour Members were aware of the problem, including the right hon. Member for Birkenhead (Mr Field) and some who have now left the House such as James Purnell and John Hutton. They were aware of the problem, but I suspect that they were blocked when they wanted to do something about it. The result is that 2 million people now say that they want to work but are on out-of-work benefits and are not included in the formal unemployment statistics, which amount to 2.5 million.

Labour Members have presided over a welfare system that is incredibly effective at trapping people on benefits once they get on to them, and it is a challenge for my hon. and right hon. Friends to devise a better system that will get people off welfare and into work. They are having to undertake radical action on this front at a very unpropitious time, when we are facing, as we all know, the appalling deficit that has been inherited. I urge them to turn their hands to this task, because it is too important to fail or to put in the drawer marked “too difficult to undertake”. It has to be undertaken, particularly for the sake of the younger people who are languishing on out-of-work benefits and are formally recorded as unemployed. This is a challenge for the future for my right hon. and hon. Friends; it is a challenge that has been neglected by the Labour party and so left for us to take up. It will contribute to solving the problem of the deficit, but we have to take the bold action that has not been taken for far too long—for 13 years of wasted opportunities, which have led to wasted lives and people who have been left, after a Labour Government, languishing on unemployment and out-of-work benefits.