Amendment of the Law

Stephen Timms Excerpts

Thursday 20th March 2014 Commons Chamber

[Vince Cable]

The hon. Gentleman’s analysis is spot on. Of course that is what has happened. We have managed to avoid mass unemployment, but the average productivity level has fallen. If we are to grow, and if living standards are to grow—that seems to be the focus of the debate—productivity must rise, which prompts the question of how we do it. We are currently doing it in an environment that is severely constrained. We must remember—and I think that the shadow Chancellor often forgets this—that one of the massive legacies of the crisis was the structural deficit. A deficit of that kind does not go away when growth increases; it is there, it is structural, and it will have to be dealt with. The structural deficit, defined as we defined it when we formed the coalition, has fallen from about 5.4% of GDP to 2.7%. We are nearly halfway, but we have to continue the job, and the next Government will have to continue the job. In that context, we must proceed with an agenda of raising productivity and growth.

[Stephen Timms (East Ham) (Lab)]

Does the Secretary of State acknowledge that a particularly serious problem is long-term unemployment among both young and older people, which, according to the figures released yesterday, has increased? Does not more need to be done to tackle that problem?

[Vince Cable]

It does, but the figures produced over the last year suggest that long-term unemployment is falling, along with unemployment in general.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

At the start of his speech yesterday the Chancellor drew attention, naturally enough, to the fall in unemployment announced yesterday morning. That is unequivocally good news, but it has been a very long time coming. We were told after the general election that the new Government’s policies would lead to steady growth and falling unemployment. In fact, for three years there was hardly any growth, unemployment remained high, and only now are we finally starting to see unemployment coming down.

That three-year delay has meant that the promise to eliminate the deficit within this Parliament will not be delivered either, and an important part of the legacy of that three-year failure will be in the labour market. Because the economy did not grow for three years, a large number of people are now long-term unemployed, and those long-term unemployed will not be the ones who move into the new jobs finally now being created. The long-term unemployed face much higher barriers to getting into work than others.

A striking detail in the labour market statistics yesterday, which I mentioned in my intervention on the Secretary of State, is that the number of people out of work long term—more than two years—went up. In his response a moment ago, the Secretary of State said that overall, long-term unemployment is coming down. In fact, it went up yesterday to exactly the same figure as a year ago, namely 450,000. That is the central challenge for labour market policy in the next few years: how do we bring people who have been out of work for a long time, and who have the biggest barriers to contend with, into productive employment?

[Lyn Brown (West Ham) (Lab)]

We have noticed the thirst for work in the job fairs that we hold collectively in our constituencies. Does my right hon. Friend agree that the Government are simply not meeting that thirst for work?

[Stephen Timms]

My hon. Friend is absolutely right. There is huge enthusiasm for getting back into work in our area and across the country. It is absolutely clear that the answer to long-term unemployment is not the Work programme. The Chancellor rightly identified in his spending review statement last summer that it falls into the category of “underperforming programmes” in the Department for Work and Pensions. Figures today show that the Work programme’s performance has got worse.

I want to talk about the compulsory jobs guarantee, which my right hon. Friend the Member for Morley and Outwood (Ed Balls) has referred to and which he and the leader of our party set out at the beginning of last week. The proposition is for every young person who has been out of work for more than a year, and every older unemployed person who has been out of work for more than two years, to be guaranteed the offer of a choice of jobs. In some cases, a training place will be one of those offers. The jobs will consist of at least 25 hours a week for at least six months, and will pay at least the national minimum wage. The way in which we will deliver the guarantee, as in the future jobs fund before the election, is that the Government will pay the wages.

A fortnight ago, the shadow Secretary of State for Work and Pensions and I visited a software company in Cardiff, which employs 150 people. The company is growing fast and things are going well. It recruited 12 young people under the jobs growth Wales programme, which works on the basis that I have described. The Secretary of State commented in the House a few weeks ago on the fact that labour market performance was better in Wales compared with the rest of the UK. He is right, and jobs growth Wales is an important part of the reason for that. The company that my hon. Friend and I visited told us that it would never have been able to take the risk of taking on those 12 young people had it not been for the support of jobs growth Wales. That is why the Federation of Small Businesses in Wales is a champion of the programme. The subsidy for those 12 young people is long since finished, and they have been in their jobs for a year or so. Of the 12 young people who were taken on, 11 are now in permanent jobs with that company. The twelfth was not kept on by that company but has a job in a different company not far away. That is the kind of success that we can deliver with the approach that we are describing. We want to see the job guarantee delivering right across the country.

What a contrast that is to the wage subsidies under the Government’s youth contract, which has been a complete damp squib. We are about 60% of the way through the three-year programme, and only 7% of the budget has been taken up. More than 900,000 young people—nearly 20% of young people—are still out of work. We must do a great deal better than that.

On Wednesday evening, at the invitation of Colin Crooks, the social entrepreneur in residence at the London borough of Lambeth, I attended a reception at Brixton East for a couple of dozen start-up enterprises in Lambeth that were being mentored, with support provided by the Department for Business, Innovation and Skills, by Tree Shepherd, the organisation that Colin leads. It was a great evening with a tremendous buzz as imaginative and creative people presented their products, food, crafts and fashion. There are now opportunities for people to take the risk of starting up new enterprises. The Government must get behind them and support them particularly at the key moment when they take on their first employee. That is one of the key things that our guarantee will do, and I urge the Secretary of State to support it.