Finance (No. 3) Bill

Stephen Timms Excerpts

Tuesday 5th July 2011 Commons Chamber

I am pleased that I caught your eye, Mr Deputy Speaker, and I hope that there is still time for many other Members to speak on this important issue. We only wish that the Government would find some guts.

[Stephen Timms (East Ham) (Lab)]

I very much welcome the telling case made by my hon. Friend the Member for Hayes and Harlington (John McDonnell) for a bank financial transaction tax, but I wish to focus my remarks on how the proceeds from the bank payroll tax suggested in amendment 13 should be used to create new jobs and tackle unemployment.

We have argued that £600 million of the proceeds should be used to establish a fund to create 90,000 good jobs for young people. That would not be identical to the future jobs fund, but it would certainly have striking similarities to it, so it is important to consider the lessons from the future jobs fund.

As my hon. Friends have pointed out, the scrapping of the future jobs fund was announced in the emergency Budget just after the general election. In opposition, the then shadow Secretary of State for Work and Pensions, the current Home Secretary, whose assurances ought to carry some weight, promised that it would not be scrapped. She wrote to the chief executive of the Association of Chief Executives of Voluntary Organisations on 28 April, just a few days before the general election, to say that the future jobs fund would be reviewed to ensure that it delivered long-term, sustainable work. She stated:

“I welcome this opportunity to clarify the Conservative position on the Future Jobs Fund, which I feel has been misrepresented by certain groups in the media.”

Unfortunately, far from misrepresenting the position, those certain groups in the media were right. The fund was scrapped, without even the pretence of a review, which was a terrible mistake.

The future jobs fund was a £1 billion fund, set up to get 100,000 18 to 24-year-olds into work. It was set up quickly—certainly—to minimise the scarring of long-term worklessness on young people in the wake of the global crisis. We saw serious scarring during the recession of the 1980s, and we are still paying the price for that in today’s labour market, almost 30 years later. Rightly, the previous Government wanted to ensure that there was no repeat.

It is worth reflecting on anecdotal evidence on the future jobs fund. A strikingly large number of people, with a lot of experience in such matters, have made the point that in their view the future jobs fund was the most successful welfare-to-work programme in which they had ever been involved. I noticed the remarks made about the programme to the Select Committee on Work and Pensions by Jackie Mould of Birmingham city council. She said:

“The benefits that they have identified are about the fact that they’ve had a job. I can’t say that enough; it’s come out in every interview that we’ve done, with every single person. Some of them didn’t even know they were on a programme; they just thought they’d got a job. The other benefits have been the confidence and self-esteem that people get from having a job, from feeling valued—that they’ve got something to offer and that they can do it.”

We can all understand how big a breakthrough it is for a young person who has been out of work for some time to get a job. The price of keeping that young person out of work for a long period is huge. It is in that context that the costs of the fund proposed in amendment 13 need to be assessed.

The future jobs fund provided proper jobs when they would otherwise not have been available. My right hon. Friend the Member for Birkenhead (Mr Field), who is currently the Government’s adviser on child poverty, said that the future jobs fund was

“one of the most precious things the last government was involved in, a lifeline”.

Ministers in the present Government have criticised the future jobs fund essentially on two grounds. In considering amendment 13, their criticisms need to be addressed. The first ground is value for money, and the second is that the jobs created were largely in the public sector.

First, on value for money, the maximum price per job offered to bidders to the future jobs fund was £6,500. That is a higher cost per job than most welfare-to-work schemes, but—this crucial difference is often overlooked—unlike other schemes, participants in the future jobs fund came off benefits and were paid a wage. We therefore no longer incurred the cost of benefits to support them. That is not always reflected in cost comparisons, but once it is taken into account, the difference between the Work programme approach and the future jobs fund is much less than is frequently stated.

The Department for Work and Pensions produced statistics showing that of the people starting the future jobs fund between October and November 2009, just over 50% were not claiming benefits one year later—well after their placement on the future jobs fund had finished. The Prime Minister used that figure to criticise the future jobs fund, saying that 50% is not a large proportion, but that comparison is not a valid one, because the young people whom the future jobs fund helped were precisely those who were furthest from the labour market, and therefore most in need of support to get back into work.

In evidence to the Work and Pensions Committee, Tracy Fishwick of the Centre for Economic and Social Inclusion described participants in the future jobs in this way:

“the vast majority of people who are coming forward for Future Jobs Fund are the young people who have less than an NVQ level 2, and sometimes no formal qualification at all.”

In that context, having more than half of such people still in work a year after their placement with the future jobs fund ended is no mean feat. I think that the assessment we are expecting of the fund will show that it provided good value for money by avoiding unemployment.

The second criticism is that none of the jobs created were in the private sector. In fact, that was not the case. It is true that only a small proportion of the jobs were in the private sector. There was an issue about the state aid rules making it harder for private firms to benefit, but with a little more time to plan next time and with the benefit of the report proposed by my right hon. Friend the Member for Morley and Outwood (Ed Balls) in amendment 13, we could increase that proportion. I noticed that Neil Carberry from the CBI told the Work and Pensions Committee:

“I suspect that the speed of the timetable greatly restricted the number of private sector companies that could get involved”.

I think that he was probably right. This was an emergency response to avoid what otherwise would have been a rapid escalation in youth unemployment.

Having said that, there were examples of private firms benefiting from the fund. In Oxfordshire, 33% of the jobs under the county council’s future jobs fund programme were in the private sector, and the council pointed out in its evidence to the Select Committee that it had been disadvantaged by the loss of the future jobs fund—that is the county council for the Prime Minister’s constituency. Other councils reported a smaller but nevertheless still significant proportion of jobs in the private sector. The Select Committee is right that this issue needs to be tackled in the report. Amendment 13 proposes that care should be taken next time to ensure that private firms can benefit from the new programme when it is introduced.

It is not the case, as Ministers have sometimes carelessly asserted, that all the jobs were in the public sector—many were in the voluntary sector—so when the Secretary of State for Work and Pensions appeared on the “Today” programme on 12 May to claim that the

“Future Jobs Scheme created only jobs in the public sector and once the money ended those poor young people crashed out of work straight away”,

it was clearly untrue. Indeed, Dr Peter Kyle, the acting chief executive of the Association of Chief Executives of Voluntary Organisations, which represents more than 2,000 third sector organisations, wrote to the Secretary of State that day to reply:

“I feel obliged to point out that within the voluntary sector it has been widely perceived as a success in delivering vital vocational skills to potentially vulnerable people whilst unlocking potential within non-governmental organisations.”

Later that same day, the Secretary of State claimed:

“The Future Jobs Fund was six times more expensive than anything else that they were doing and actually created jobs only in the public sector”.

That was simply untrue, as Martin Sime, the chief executive of the Scottish Council for Voluntary Organisations, pointed out. There are lessons to be learned from the future jobs fund about how to ensure maximum private sector participation from this approach to creating jobs for young people at a time when those jobs are desperately needed, which they most certainly are at the moment. The value of voluntary sector participation—the contribution and enthusiastic support of those whom Ministers want to be their partners in the big society—must not be overlooked.

The Opposition’s amendment would put back in place the support that the future jobs fund provided with lessons learned through the proposed report to improve the programme further. It is important that Ministers, when evaluating the proposal in amendment 13, reflect on what people have widely said about the future jobs fund and on the enthusiastic response from local authorities, businesses and participants. A young woman from Rochdale told the Select Committee how her time with the future jobs fund opened up many avenues for her, boosting her confidence in the workplace, providing her with training and supporting her with her interviews. She said that being in employment with the future jobs fund helped to get her full-time employment subsequently.

As the hon. Member for Bristol West (Stephen Williams) acknowledged, youth unemployment remains unacceptably high. The Government cannot simply point to the Work programme. We wish it every success of course, but the future jobs fund created jobs where none would otherwise have existed. Given the long-term damage of extended youth unemployment, for both young jobseekers and the economy more widely, it was undoubtedly an investment worth making. Indeed, it is an investment that we should make again. I hope that the House will agree to amendment 13, as moved by my hon. Friend the Member for Nottingham East (Chris Leslie).