Youth Unemployment

Lord Collins of Highbury Excerpts

Thursday 14th June 2012 Lords Chamber

[Lord Collins of Highbury]

My Lords, I thank my noble friend Lord Adonis for initiating this debate. The only thing I am slightly surprised at is that we occasionally meet in the local greasy spoon and I am getting bigger and he is getting thinner. I do not know what I am doing wrong.

To be unemployed is horrific, whatever age you are. Clearly, we cannot separate the rise in youth unemployment today from the country’s overall economic performance. However, as my noble friend Lord Wood said, research studies have shown that youth unemployment has risen more steeply than all-age unemployment in this and recent recessions. That has not always been true. Up to 1970, unemployment rates for people under 20 were below those of all ages. According to Paul Bivand, in his piece for the TUC circulated by the Library on the youth labour market, Britain’s structural youth unemployment is rooted in the recessions of the 1980s and 1990s. The recoveries from those recessions never saw the return to the norm of young people leaving school at 16 and immediately going into a job or getting a job. Even when the economy was booming, approximately 7% to 9% of all young people were headed for long-term worklessness from the age of 16.

The costs of long-term youth unemployment, now and in the future, are enormous. As my noble friend Lady Prosser said, according to the ACEVO Commission report, chaired by David Miliband, the cost to the Exchequer in 2012 of youth unemployment will be £4.8 billion, which is more than the budget for further education for 16 to 19 year-olds and will cost the economy £10.7 billion in lost output.

What are the long-term costs to the individuals who start adult life as unemployed or in a job with little scope for development? Unfortunately, the experiences of young people who are in work are not always seen as a policy concern. While many people will progress from lower paid jobs into better work, some are at high risk of cycling between unemployment and low-paid work. Of those young people who have left education, 17% are in elementary work, while 13% are in sales and customer service occupations. Without support to progress into better jobs and build their qualifications, these young people face uncertain labour market futures. There are also very high rates of under-employment among employed young people who are not in education, with 9% of those who are not in education and are working part time doing so because they cannot find full-time employment.

Things will change only when society, government, families and employers alike see that the transition from school to work can and should be a positive pathway to developing skills and life-long learning. Through the debate, I have heard many noble Lords refer to the importance of ongoing training. I am very sad at the demise of the industrial training boards, which ensured that all employers took responsibility. As many other noble Lords have said, the path from school to university is well known and supported, but 50% of our young people do not head in that direction. In my family in the 1970s, three out of the four children went into long-term apprenticeships and training. Now the job destination has little in terms of opportunities, is too often ad hoc and low quality, and sometimes chaotic and wasteful of public money.

Schools need to improve their relationship with the world of work. That does not mean right at the last moment; it means that on an ongoing basis relationships with local employers are incredibly important. On the subject of term-time employment, from the age of 15 I took a Saturday job working in the Swan and Edgar department store in Piccadilly. It taught me a lot of lessons, including the importance of being on time, because my pay of 19 shillings and 6 pence would be docked if I was not. I agree with the noble Lord, Lord Roberts, and my noble friend Lady Prosser that what we need is to bring all aspects of government together in bearing on this issue. It cannot just be a matter of benefits. What steps will the Minister take to ensure that there is joined-up action by the Government?

Labour supports any step to help unemployed people back to work, but the measures in place and those recently announced provide no real guarantee of a job. Today, after nine months of unemployment, a young person will be referred to the Work Programme, where a young person can go for two years and fall out of the back of it with still no job, having been unemployed for 33 months. It was reckless to scrap the future jobs fund in May 2010 and, with the youth contract announcement, provide no help to young people until April this year. In effect we have had two years of inaction from the Government on this important issue. The 160,000 youth contract work subsidy placements over three years means just over 53,000 funded jobs every year, fewer than the future jobs fund, which provided 105,000 starts between October 2009 and March 2011. There is no guarantee that these jobs will be created, as it is merely an incentive rather than a guarantee. I repeat the question asked by many noble friends and noble Lords. How does the Minister think, in reviewing the scheme, that its scope and number can be advanced?

A central ambition of Ed Miliband and the next Labour Government will be to conquer long-term youth unemployment. As my noble friend Lord Adonis has already said, a policy towards meeting that objective was announced in March this year, which is a real jobs guarantee for young unemployed people out of work for more than a year. The scheme will ensure that after 12 months of unemployment, all young people aged between 18 and 24 will go on a six-month long paid job, preferably in the private sector. This would apply to at least 110,000 people. For that the Government will pay the wages directly to cover 25 hours of work per week at the minimum wage. In return—and again this is the responsibility issue—the employer would be expected to cover the training and development of the young person for a minimum of 10 hours per week.

The Government have a responsibility to provide opportunities for young people, employers have a responsibility to train them, and young people have a responsibility to make the most of those chances. I endorse what many noble Lords have said, including my noble friend Lady Sherlock. We need to give real hope and real opportunities to young people. Here I share the views of the right reverend Prelate the Bishop of Chester, who was right to stress the need to nurture young people, because it is a moral issue as well. It is in our interests as the older generation to do that for future generations.

In Spain I saw someone wearing a T-shirt on behalf of the Indignados. The T-shirt said: “Future of Youth—No job, no home, no pension, no fear!”.