Unemployment: Young People

Lord Freud Excerpts

Wednesday 16th November 2011 Lords Chamber

[Lord Peston]

To ask Her Majesty’s Government when they expect the level of youth unemployment to begin to fall.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

The most recent forecast from the independent Office for Budget Responsibility is for unemployment to level out and then fall from the second half of 2012. There is no separate forecast for youth unemployment, but this would be expected to follow a broadly similar trend.

[Lord Peston]

Am I to understand, when thanking the Minister for that Answer, that the Treasury does not look specifically at youth unemployment when considering its policies? Is it the case that no Minister in the Treasury, no official and none of its excellent economists or statisticians has a view on when the rate of increase in unemployment, especially for young people, will become a rate of decrease?

[Lord Freud]

Well, my Lords, the forecasts have now gone to the Office for Budget Responsibility and are the basis for planning. Clearly, the forecast that I have just given noble Lords is somewhat out of date and we are looking to have another later this month. Clearly, the implication of what the Governor of the Bank of England has just said is that growth will, on his forecast, run at 1 per cent this year and next, and this will be built into those kinds of forecasts.

[Lord Roberts of Llandudno]

My Lords, faced with the tremendously high rate of youth unemployment, is it not time that both parties accept that under both of them youth unemployment has increased? Is it not time that we put by party differences and had a united effort to tackle the problem of youth unemployment?

[Lord Freud]

Yes, my Lords. It is very easy to get tied up with the tyranny of round numbers. The reality is that we have a genuine structural problem that has grown over the last decade and needs handling in a comprehensive way.

[Lord Howarth of Newport]

Is it not the case, particularly in old industrial areas, which have found it very hard to attract new private sector investment, that by withdrawing public sector expenditure too fast and abandoning regional development strategies, the Government are condemning young people to continuing unemployment?

[Lord Freud]

My Lords, of course we are not withdrawing regional support. We have put in a £1.4 billion growth fund and have a series of programmes designed to help young people. We have help in terms of work experience, the sector-based work academies and the work programme, which will together provide support for 350,000 youngsters over the next two years.

[The Lord Bishop of Blackburn]

My Lords, I am grateful to the Minister that he refused to adopt a false optimism in his reply. We all know from previous recessions that the impact on young people, particularly their morale and self-respect, lingers long after the recession is ended and creates ongoing social problems. Would the Minister agree that, instead of decimating youth services at this time, the Government should be seriously investing more in such work so that we have some chance of avoiding the loss of a whole generation to cynicism and hopelessness?

[Lord Freud]

My Lords, I was very impressed, as I am sure many noble Lords were, with the report by Professor Wolf on what has been going wrong for young people. Her conclusion was that there are four things that young people need: a job, proper educational qualifications, apprenticeships or work experience. This Government are trying to concentrate on really effective solutions for young people.

[Lord Knight of Weymouth]

My Lords, the Government inherited falling youth unemployment, yet this is the eighth consecutive monthly rise in unemployment and precedes the eurozone crisis. This crisis is down to this Government’s decisions to scrap the EMA, to cut post-16 education funding and to scrap the future jobs fund, and an austerity plan that has choked off growth. How bad will it get before the Government realise that you reduce the deficit by growing jobs, thereby cutting the cost of benefits and increasing tax receipts? When will we get a credible jobs plan, or will it take another million youngsters on the scrapheap before the Government finally get it?

[Lord Freud]

My Lords, let me assure you that we get it all right. We have inherited a really poor structural position of youth unemployment—

[Noble Lords]

Oh!

[Lord Freud]

No—let me tell you the real figures. The total number of unemployed and inactive youngsters went up from 1.4 million in 1997 to 1.45 million now and 1.39 million last year. That was an increase during the longest boom that this country has ever seen. Why did that happen? That was not cyclical, it was structural.

[Lord Roberts of Conwy]

My Lords, my noble friend will be well aware of the even higher youth unemployment rates in Europe, particularly in Spain. He will also be aware of the comparatively low youth unemployment rate in Germany. Is there not a great deal that we can learn from the Germans in this?

[Lord Freud]

Indeed, my Lords. The Germans have had a long tradition of apprenticeships and that is something that we need to copy and build on. We have put in money to fund an additional 250,000 apprenticeships over this spending review; we had 442,000 apprenticeships starting last year, an increase of 50,000; and we are putting in measures today to encourage smaller firms to take on apprentices.

[Lord Jones]

My Lords—

--- Later in debate ---

[Lord Martin of Springburn]

My Lords, apprenticeships and the initiatives that the Government are embarking on are good news for young apprentices. However, will these apprenticeship schemes be spread evenly throughout the country?

[Lord Freud]

My Lords, clearly our intention is to put support where it is most required. Therefore, the schemes will be widespread but naturally there will be an emphasis on the areas that need most support.

[Baroness Armstrong of Hill Top]

My Lords—