Welfare Reform and Work Bill (Fourth sitting)
Stephen Timms Excerpts(8 years, 7 months ago)
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Kate Green
It is good to have your endorsement, Mr Streeter.
We also know that progress on tackling unemployment is not necessarily linear. Even if the Government’s programmes are entirely commendable, effective and produce very positive results—hon. Members will not be surprised to learn that we may have some questions about the efficacy of some of them—as we famously heard from our political forebears, events happen that can blow the finest ministerial plans off course. Looking at the recent history of employment figures, if we are prepared to accept that the definition of full unemployment is, let us say, an employment rate of 80%, we were nearly at full employment in 2008. Then, of course, there was a significant rise in unemployment as a result of the world financial crash.
Although we have begun to see the very preliminary shoots of recovery—it is notable that people tended to stay in work after the 2008 recession, compared with previous recessions—the progress has not been constant since the economy began to recover after the recession. The last two sets of unemployment figures we have seen—we expect some more tomorrow—show unemployment rising again, and there are particularly worrying trends in relation to youth unemployment, which has proven to be a particularly stubborn nut for the Government to crack.
Amendment 24, tabled by the hon. Member for Livingston, is really interesting. I hope the Minister will tell us why she thinks it is right to have a sunset clause. Is she trying to protect future Governments? It is very kind of her to think about protecting future Labour Governments, but we are ambitious about full employment. We were the first to speak about it 10 years ago.
Kate Green
Twenty, my right hon. Friend says; I am too young to remember.
We would be happy for an incoming Labour Government to be held to account for full employment. It is an ambition that goes to the heart of my party; indeed, it is embedded in our name. This is an interesting amendment. I want the Minister to explain to the Committee why the Government want to put a sunset clause in the Bill. I very much look forward to the debate we are going to have.
Stephen Timms
I beg to move amendment 1, in clause 1, page 1, line 4, leave out from ‘and’ to end of subsection and insert
‘for the purposes of this report “full employment” is defined as 80% of the working age population.’
To specify that the purpose of reporting on progress toward full employment, full employment is defined as 80% of the working population.
The Chair
With this it will be convenient to discuss the following:
Amendment 106, in clause 1, page 1, line 6, at end insert—
“(1A) The report in subsection (1) must include information about:
(a) the job quality of new jobs created, as set out in section [Definition of job quality] of this Act;
(b) the distribution of the quality of jobs by occupation, industry, sector and region; and
(c) the distribution of the quality of jobs by sex, race, disability and age.’
To require the report on progress towards full employment to also report on progress on quality of jobs, the distribution of those jobs and a breakdown of the employees in those jobs.
New clause 11—Definition of job quality—
‘(1) Within six months of section 1 of this Act coming into force, the Secretary of State must, by regulation, provide a definition of job quality.
(2) Before issuing regulations under this section the Secretary of State must carry out a public consultation.’
To require the Secretary of State to bring forward a definition of job quality and to ensure there is a consultation on defining job quality.
Stephen Timms
I welcome you to the Chair, Mr Streeter. We know that you will guide our deliberations with a firm but fair hand, and we look forward to benefiting from that.
Some 18 months ago, the Chancellor of the Exchequer explicitly repudiated a notorious statement made by one of his Conservative predecessors that unemployment was a price “well worth paying” to bring down inflation. I suspect that all members of the Committee would support the Chancellor in repudiating that remark, which was made in 1991 or 1992 by the then Conservative Chancellor, now Lord Lamont. By contrast, today’s Chancellor affirmed the goal set out in modern times, first by Gordon Brown.
My hon. Friend the Member for Stretford and Urmston said that 10 years ago—I persuaded her to say that it was 20 years ago; I think it was in 1993—Gordon Brown set out what was, at the time, a radical aspiration to achieve full employment. The Labour Government who were elected a few years later formally signed up to that goal and went on to explain what full employment meant to them. That is the point on which I want to press the Minister, through amendment 1.
I welcome the fact that the Chancellor has said he wants us to achieve full employment, but we need to know what the Government mean by that. The amendment would make that clear. The last Labour Government, of which I was a member, was committed to full employment and said that that meant a rate of employment of 80%, which is why that figure is included in the amendment.
I accept that other definitions of full employment could be used. The Chancellor has given the impression, from time to time, that the definition he would like to see would be that of the highest rate of employment in the G7. That is a reasonable alternative definition; it is not as good a definition, but one could run with it. The central point is that we need to know what definition of full employment the Government are using in setting out their goal. Otherwise the target, and the purpose of the report required under the clause, is meaningless.
G7 employment rates in July were 74% in Germany, 73% in Japan, 72.6% in Canada and the UK, 68.7% in the US, 63.8% in France and 56% in Italy, so on the most recent figures the UK’s employment rate is squarely in the middle. I think we would all agree we should be doing significantly better than that. I think Bill Clinton said:
“I do not believe we can repair the basic fabric of society until people who are willing to work have work.”
All of us would sign up to that sentiment, but what exactly are the Government setting out to achieve in clause 1 and the required report?
A couple of years ago, the TUC carried out research on employment rates across the OECD—so beyond the G7. At that point the highest rates of employment were 84.1% in Iceland and 80.4% in Switzerland, so if the definition used was to be the highest rate of employment in the OECD aside from very small countries such as Iceland, that would also get us to a figure close to the one of 80% that we use in the amendment. I hope the Minister will agree that that is where we should aim.
Of course, that is a challenging goal. There is no question about it. I am not for a moment suggesting that an 80% rate of employment will be delivered readily or in a short time. I suspect that it will take some time, and I think that strengthens the case for the proposal in amendment 24 that there should not be a sunset clause. We are going to have to go some to reach an 80% employment rate by 2020. It would mean an extra 2.5 million jobs—an additional 9% on the UK jobs total—but aiming for anything less would be short-changing Britain’s jobseekers.
My hon. Friend the Member for Stretford and Urmston will move an amendment later relating to the Government’s equally welcome commitment to halve the currently very large disability employment gap. The fact is, it will not be possible to achieve an 80% overall employment rate without making significant progress in reducing the current disadvantage that people with disabilities, and other disadvantaged jobseekers, face—or indeed without making progress in localities where the employment rate is exceptionally low. We need the full employment target to deliver improvements for disadvantaged groups, as well as to others, so that everyone benefits from the achievement of that aspiration and large numbers of people are not left behind.
Of course, others have argued for other definitions of full employment, and I entirely accept that the Minister might want to do that, although I suspect that if she signs up to a definition it will be one of those that I have suggested. For 25 years after the second world war, everyone agreed that we should have full employment and, by and large, we did. Between 1950 and 1973 the average rate of unemployment was 2%. It was always less than 1 million. In 1955 the unemployment rate actually fell to 1%.
Of course, full employment never meant zero unemployment. William Beveridge, the architect of the post-war welfare state, said that full employment meant an unemployment rate of less than 3%. Milton Friedman referred to a natural rate of unemployment, whereby no one stays out of work for very long; unemployment would fluctuate, he suggested, between 5% and 6%. On top of that, of course, there will always be some people who are prevented from working by ill health—a number that seems to be rising quite significantly in the UK.
I entirely accept that different definitions of full employment can reasonably be adopted. I think that the best definition is an 80% rate of employment. I accept that the case could be made for others, but we need to know what the Government’s definition is. Otherwise, the aspiration that has been set out is a pretty meaningless one. I hope that this afternoon the Minister will tell us what the Chancellor means by full employment, because there is not much point in having a commitment to it—indeed, there is an obligation in this clause on Ministers to report on progress towards it—if we have no idea what Ministers actually mean by the term, as is currently the case.
I am looking forward to hearing in a moment the case for the SNP amendments that have been grouped with amendment 1. Of course, they raise an entirely reasonable point about the quality of the work being undertaken, and I will say a couple of words about them. A number of our witnesses commented on that issue, and what Julia Unwin from the Joseph Rowntree Foundation said about it this morning was interesting. Her written evidence to us makes the point that
“work also now offers less of a guarantee of a decent living standard than it did in the past. This suggests a need to look more closely at both the amount and type of work available to each household, as both these will influence whether people can reach an acceptable living standard through earned income. Specifically, one of the significant trends underneath the long term picture of jobs growth over the past five years has been the increase in self-employment, especially part-time self-employment.”
We know—we discussed this with our witnesses as well—that a significant majority of almost two thirds of children living in poverty are now living in a household where somebody is in employment. Julia Unwin suggested today that the report that clause 1 requires ought to say something about progression in work as well as the actual proportion of people in employment. I would be interested to know what the Minister thinks about that idea.
We used to think that being in work was the way to get out of poverty. Today, that on its own is clearly not enough. Low pay, low hours, insecure work and the proliferation of zero-hours contracts over the past few years have all undermined the reliability of work as a way out of poverty. Oxfam’s evidence to the Committee makes the point that
“people place high value on satisfying, secure and suitable work as well as jobs which provide a sufficient income”.
The concept of decent work has been debated in recent years. It has been defined by the International Labour Organisation, the Adam Smith Institute and others as including
“fair pay, job security, mental health, recognition of overtime, work-life balance, job satisfaction and autonomy, safety, achievable work, skills development, and effective management”.
What I am unsure about is the practical potential for measuring those things across the economy in the way that SNP Members suggest in amendment 106. I will be interested to hear the arguments they make about that. Certainly, that was precisely what some of our witnesses called for, such as Oxfam in its written evidence, but I am not sure how practical it is. Of course, we could also look at issues of equality in work such as whether opportunities are open equally to all and why all too often they are not. Those issues would come under the amendment as well.
Coming back to my amendment 1, I hope that the Minister will be able to satisfy us on this question of the definition of full employment that the Government are using. It is time for people who have seen the commitment to full employment in the Conservative party manifesto, and heard the Chancellor’s commitments over the past 18 months, to know what Ministers mean by that term. I hope the Minister will accept amendment 1, which would finally make the position clear.
Priti Patel
We were about to discuss the progress towards full employment. As I said on the previous clause, the Government set out in our manifesto our aspirations for the UK to be the best place in the world to start a business and to achieve the highest level of employment in the G7. The right hon. Member for East Ham pointed out that landing on a single definition is difficult, as many definitions are used around the world. Our pursuit of full employment is important, because sustained economic growth depends on having a flexible work force. Some Opposition Members commented on changes to the labour market. The fact that our employment market has evolved benefits individuals and changes lives, which means that sustained employment gives people new opportunities. In addition to the overall benefit of driving down welfare spending, we are enabling people to aspire to live different lives and have sustained employment.
We now have one of the highest employment rates in the developed world and the second-lowest unemployment rate in the EU. We have already exceeded the full employment goal set out in the Europe 2020 strategy of securing a 75% employment rate for men and women aged 20 to 64 by 2020. As I said earlier, that was achieved by supporting people who require help and assistance in accessing the labour market.
Stephen Timms
To be clear, is the Minister saying that the aim for full employment is to achieve the highest employment rate in the G7? Is that what the aspiration means?
Priti Patel
I thank the right hon. Gentleman for that question. We set out in our manifesto our aspirations for the UK to be the best place in the world to start a business and, in particular, to achieve the highest level of employment in the G7. We are focusing on putting measures in place. It will not happen through one target or one measure; it is about having a combination of policies across Government.
Stephen Timms
The Minister has clarified the point. Just so it is absolutely clear, can she confirm that the report required in clause 1(1) will be about progress towards the highest rate of employment in the G7?
Priti Patel
The report, which, as clause 1 outlines, must be produced annually, is to illustrate progress towards full employment across the UK. It demonstrates the Government’s clear aspirations and ambition to achieve the highest level of employment in the G7.
Priti Patel
No, I do not agree with the hon. Lady. In addition to having work, being in a job and being in employment, it is about the quality of life that that job gives. That means different things to different people. For some, it could be about salaries but it is also about self-confidence, self-worth and self-esteem. It may be the opportunity to work for the first time if they have not had the opportunity to do so and have now had skills training, or for a variety of reasons.
We will consider what further analysis can be included in the annual report including how the level, distribution and composition of employment have evolved over time. We feel that that is a more transparent approach, rather than trying to summarise a varied and complex picture into a simple measure of a definition of job, work or job quality.
Since 2010, two thirds of the increase in employment has been across a range of sectors, in particular managerial, professional and associate professional occupations, which command greater salaries. The growth in employment has been dominated by full-time employment, accounting for nearly all of the annual rise in the number of people in work. There are a variety of factors, which we will consider through further analysis in the annual report so that we have a better picture, rather than just one measure. The UK has one of the lowest proportions of temporary workers in the EU. The proportion is less than half the EU average and is lower than that of Germany, France and Denmark. We are talking about employment and how we work across Government to achieve full employment, but we are also working with employers, schools and colleges. Employers communicate with Members of Parliament on a regular basis, and they all tell us that it is about individuals having a range of soft skills and how we work to support individuals in enhancing their skills, be they soft skills, technical skills or vocational skills. That particularly applies in the case of younger workers. My Department, as I have highlighted many times, is working across Government, not just with the Department for Business, Innovation and Skills on apprenticeships but with the Department for Education, to focus on training and engaging young people in particular so that we can all work collectively to achieve the objective of full employment.
I urge the right hon. Member for East Ham to withdraw his amendment.
Stephen Timms
I am grateful to the Minister for her response, because at least we now have a definition. She is clearly saying that the Government’s definition of full employment is the highest rate of employment in the G7, and it is helpful to have that on the record. I do not think it is a very good definition of full employment. As I said in my earlier remarks, the highest rate of employment in the OECD, even if we miss out Iceland, which is perhaps an exceptional case, is that of Switzerland, at 80%. We ought to be aiming for better than 74%, which is currently the highest rate of employment in the G7—it is the rate of employment in Germany.
I will press amendment 1 to a vote, which I hope the Committee will support.
Neil Coyle
The Minister, who unfortunately did not give way, referred to two things during her speech—one was Jobcentre Plus and the other was universal credit. Should the Government provide more information and documentation on the role Jobcentre Plus will have during this Parliament and on how many people are expected to be receiving universal credit by the end of this Parliament? We need those answers if the measurements are to have any validity, particularly in the context of the changes to Jobcentre Plus. If that support is meant to be available, hopefully the Government will ensure that it is available throughout the course of this Parliament.
Stephen Timms
My hon. Friend is absolutely right. We need to know more about what is proposed for Jobcentre Plus. We certainly need to know more about what is going on with universal credit. As far as I can tell, universal credit is running about four years late. We were told initially that 1 million people would be receiving universal credit by April 2014, and the last figure I saw was about 60,000.
Stephen Timms
Indeed. The Minister referred to universal credit as a tool for getting people into employment and for delivering full employment. We certainly hope it will be one day, but there will be a rather large period before we are anywhere near that stage. I hope the Committee supports amendment 1.
Question put, That the amendment be made.
The Chair
It is my opinion that we have had a good old debate about the clause, so I do not propose to allow a stand part debate.
Clause 1 ordered to stand part of the Bill.
Clause 2
Apprenticeships reporting obligation
Stephen Timms
I beg to move amendment 75, in clause 2, page 1, line 16, at end insert—
‘(aa) information about the uptake of apprenticeships broken down by region, gender, age, ethnicity, disability, sector, qualification and level,
(ab) a report by the UK Commission on Employment and Skills on the quality of apprenticeship being provided, and’.
To specify additional information that must be included in the Secretary of State’s report progress towards meeting the apprenticeship target.
The Chair
With this it will be convenient to discuss amendment 102, in clause 2, page 1, line 16, at end insert—
‘(aa) information about the number of people with special educational needs and disabilities entering into apprenticeships; and
(ab) information about the number of people with Education Health and Care plans entering into apprenticeships.’
To require the Secretary of State to report on the number of people with special educational needs and disabilities entering into apprenticeships.
Stephen Timms
We come to the part of the Bill that deals with apprenticeships, and we are keen to get on to the second group of amendments on the clause, so I will get a move on.
We welcome the target set out for England in the Bill. I think it is rather unusual that there should be 3 million apprenticeship starts in the period 2015 to 2020—the target is ambitious and one that we support and welcome.
However, we heard in our evidence sessions that there is a danger. Rebecca Plant, the head of apprentices and graduates for Capp, told us on Thursday that she thinks the only way the target can be achieved is by sacrificing quality. She told us of
“myriad examples, such as apprenticeship barman and of apprenticeships in really low skills.”
She asked:
“How is that an apprenticeship?”,
and went on to say,
“people are just turning a job role into an apprenticeship…That is not right.”
She argued that the 3 million target
“should be broken down into levels of skills, so that higher level—level 4—degree apprenticeships should be broken out and there should be clarity.”
She continued:
“I would break it down and give transparency. What is a level 2 apprenticeship? What are people signing up to? Badging level 2 programmes as an apprenticeship is fundamentally wrong.”
She gave an impressive account of her thinking. In the middle she said,
“I am sorry…I am not very good at this”,
but actually she gave us valuable evidence. She also said that
“traineeships should not count towards that 3 million at all.”––[Official Report, Welfare Reform and Work Public Bill Committee, 10 September 2015; c.8-9, Q8-9.]
I do not imagine that traineeships will count towards the 3 million target, but I would be grateful if the Minister could confirm that.
The concerns raised by Rebecca Plant were echoed and amplified by Marcus Mason, our witness from the British Chambers of Commerce, who said:
“I would like to echo Rebecca’s comments and the worries about the 3 million figure…the apprenticeship starts from the previous Parliament—just over 2 million—included a lot of rebadging of Train to Gain programmes, and we do not want to see that again. We do not want to see a decline in quality because we are just chasing an arbitrary figure.”––[Official Report, Welfare Reform and Work Public Bill Committee, 10 September 2015; c.9, Q10.]
I am confident that every member of the Committee will agree with his sentiment.
Amendment 75 addresses those concerns about apprenticeship quality, which are widely expressed by businesses and others, in two ways. First, it requires the report produced each year to split the apprenticeship starts in that year by sector, qualification and level, which is exactly the split Rebecca Plant called for in her evidence on Thursday. Secondly, the amendment requires the Secretary of State to publish each year a report from the UK Commission for Employment and Skills specifically addressing and describing the quality of the apprenticeships on which participants have embarked in the previous year.
Is the UK Commission for Employment and Skills the right body to produce that report? Clearly, what we want is an independent, reliable report on quality, which might be achieved in a number of ways, but the UKCES is in a good position to fulfil the task. It is, of course, a Government-appointed commission, so I hope the Government feel that they can have confidence in its conclusions. The commission’s chair, Sir Charlie Mayfield, is also chairman of the John Lewis Partnership, and the commission includes such distinguished business people as the director general of the CBI and the general secretary of the TUC. It includes representatives of large and small businesses, including Will Butler-Adams, the managing director of Brompton; Julie Kenny, the chairman of Pyronix, with whom I worked when I was a Minister; Grahame Smith from the Scottish TUC; and Liz Sayce of Disability Rights UK.
The commission has a broad range of experience and perspectives, and it has done a lot of relevant work in this area. It has published reports on understanding skills and performance challenges in a range of sectors, and those reports address apprenticeship issues. It has produced a series of reports called “Working Futures”, “Careers of the Future”, and “The Future of Work: Jobs and Skills in 2030”. It also has the capacity to give independent advice. It does not simply say what the Government want to hear. I do not know whether the commission is subject to the same sort of pressure as the Office for Budget Responsibility—we have discovered over the past couple of days that the Treasury leans on the OBR to prevent it saying things that will embarrass the Government—but we do know that the commission is able to make independent remarks.
On the persistent problem of stubbornly high unemployment among young people, to which my hon. Friend the Member for Stretford and Urmston has referred, the commission has said:
“High quality apprenticeships should be a normal career pathway for many more young people, and a normal way for businesses to recruit and develop…talent”.
The commission has the necessary independence, as well as the expertise, to provide the independent review of quality that, from the evidence we have heard in Committee and from what everyone in the field says, is needed.
The amendment also specifies a number of breakdowns of apprenticeship numbers that could be useful for informing policy and understanding of how the apprenticeships programme is working in practice. We should know the number of apprenticeships taken up each year by people with disabilities—my hon. Friend will move a separate amendment on that in a moment—and we need information by region and by gender. The importance of those breakdowns will be apparent to everyone.
I want to say a little more about the other two breakdowns the amendment calls for. The first is the breakdown of apprenticeships by age. As we heard from the witness from the British Chambers of Commerce, a lot of things that are called apprenticeships are really just rebadged Train to Gain programmes. Train to Gain was a programme under the last Labour Government wherein existing employees would take often quite short training courses to increase their skill levels. There is nothing wrong with that, of course, but it is not what most of us think of when we hear the term “apprenticeship”. One consequence of that emphasis in the apprenticeship programme is that only quite a small proportion of apprenticeships are undertaken by young people. Worse still, the number of young apprentices fell last year—a pretty disastrous development that is contrary to what we all want—so it is important to get a breakdown of apprenticeships by age each year.
Secondly, it is important that we see a breakdown of apprentices by ethnic origin. I pay tribute to the work of the Black Training and Enterprise Group and its chief executive, Jeremy Crook. Ethnic minorities are seriously under-represented among apprentices: 20.2% of the population are from an ethnic minority and 25.4% of apprenticeship applications are from ethnic minorities—a larger proportion than in the population as a whole—but the proportion of people from ethnic minorities who start an apprenticeship is only 13.8%, which is way less than the proportion in the population and around only half the proportion of those who applied.
The problem of under-representation of ethnic minority citizens among apprentices is not new. I first asked a written question on the subject three years ago, when I was told that 9.8% of starts were from ethnic minorities, so the current proportion, 13.8%, has gone up, of which I am glad. In fairness to the Government, the problem is not repeated throughout their employment support measures. For example, of sustained job outcomes in the Work programme, 19.9% are secured by ethnic minorities, which is almost up to the full 20.2% in the population. Nevertheless, there seems to be a particular problem in the apprenticeship programme that must be addressed. I know that efforts are being made to do so, but so far they have fallen well short of what we would want to see.
It is vital that the problem is fixed. Amendment 75 specifically requires a breakdown by ethnic origin, so that we can track what is happening. I hope that the Minister accepts that the amendment would build constructively on clause 2, and so will accept our proposals for strengthening the report.
Stephen Timms
I am grateful to the Minister for what she has told us about the data that will be published, which does pick up on the points in the first part of amendment 75. I am disappointed, however, that she was unable to confirm to my hon. Friend that we will be able to find out the number of people with education, health and care plans entering into apprenticeships, but I hope that the Minister will have another look to see whether that can be provided.
The Minister is a bit complacent on the quality point. I accept that it is not really a matter for her—it is for her colleagues in BIS—but we heard during our evidence from the British Chambers of Commerce, no less, that the only way the 3 million target will be achieved is by watering down quality. The mechanism that we proposed would have dealt with that. I will not press the amendment now, but I hope that she might commend our idea to her colleagues. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Jess Phillips (Birmingham, Yardley) (Lab)
I beg to move amendment 99, in clause 2, page 2, line 5, at end insert
“and that 20,000 of these apprenticeships are taken up by children and young persons leaving care.”
To amend the apprenticeships target to require that 20,000 of the three million apprenticeships are taken up by children and young people leaving care.
Jess Phillips
It is a matter of time, isn’t it, Chair?
I will come back on some of the things that the Minister has said. I welcome her concerns. I will send my constituent to her, as she is keen to get her into work. Although I understand what she says about targets and the policy being employer-led, there are a lot of things that other Government Departments, as well as hers, could potentially do to try to reach targets in both areas. I welcome that, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 ordered to stand part of the Bill.
Clause 3
Support for troubled families: reporting obligation
Stephen Timms
I beg to move amendment 4, in clause 3, page 2, line 46, at end insert—
‘(2A) The matters by which the progress made by a household that receives relevant support shall be measured under subsection (1)(b) include whether a member of the household is in employment.”
This requires one of the factors which is used to measure whether a household receive support is making progress is whether or a not a member of the household is employed.
The Chair
With this it will be convenient to discuss amendment 5, in clause 3, page 3, line 6, at end insert—
‘(4A) A report prepared under this section must include information about the number of households receiving support where a member of the household, who had not previously been in employment during the last 12 month, has entered employment.”
To require the report on support for troubled households to specify the number of households receiving support where a member of the household has become employed.
Stephen Timms
We now deal with the troubled families programme, for which there is widespread support. As Ministers have acknowledged, it has its roots in the family intervention projects introduced by the previous Labour Government. The pioneering Dundee families project, established in 1995, has been particularly influential. The approach has all-party support, and we welcome the proposal in the clause to introduce a new and more formalised reporting obligation.
The troubled families programme as it currently stands was given a big push by the riots in summer 2011 and was launched by the Prime Minister later that year. Louise Casey was appointed director general in November 2011. The troubled families programme is in touch with a lot of agencies: with housing departments because of rent arrears; with social services about the wellbeing of children; with police and youth offending teams; sometimes with drug and alcohol services; with education departments over school non-attendance and exclusion; and with the health service. All of that means that the families we are talking about impose a high cost on the taxpayer. They are also often high-harm to themselves and to others. Outcomes for children in those families tend to be poor, and many are on the borderline of being taken into care. A solution has to involve all family members and a multiplicity of agencies, so inter-agency planning delivery is the key to the effectiveness of the programme.
The goal announced in 2011 was to turn around 120,000 troubled families in England by this year, aiming to turn around the patterns repeated in generations of poor parenting—abuse, violence, drug misuse, antisocial behaviour and crime—with the Government investing some £4,000 per family over three years on a payment by results basis. The key element of the programme—this was distinctive to the family intervention projects as well—is that each family has an assigned caseworker responsible for turning their fortunes around and bringing together the efforts of all the agencies working with that family to maximise the chances of success.
The official evaluation, published last July, gave us some detailed information. Some 49% of all families in scope are lone-parent families. The under-18 conception rate is only 2%—rather contrary to the stereotypes we sometimes hear. Some 90% of the adults in the families involved have committed no criminal offence. Only 3% have been treated for alcohol dependency, and it is the same proportion for drug dependency. But 46% of households have an adult or adults suffering a mental health problem, and 33% of the children have mental health problems—that is a particularly troubling figure. Some 32% of the adults and 20% of the children have a long-standing physical illness or disability. Some 74% are workless households. For 83%, at least one person receives out-of-work benefits; 27%are in rent arrears; and 21% are at risk of eviction from their homes.
Priti Patel
I thank the right hon. Gentleman for his contribution and for the focus on the troubled families programme, because it has been designed to turn around the lives of families with challenges. In fact, the first troubled families programme turned around the lives of more than 116,000 families. That is not to say that those hardest-to-help families’ complex needs and multiple problems can be resolved overnight.
Amendment 5 would require information to be included in the Secretary of State’s report on the number of households receiving support where a member of that household progresses into employment following a period of 12 months out of work prior to engagement with the troubled families programme. Getting parents and young people into work is at the heart of the troubled families programme. To reflect that, there are specific progress measures on continuous employment, as set out in the programme’s operating framework.
As with the original programme, we expect the majority of families in the new troubled families programme to be claiming out-of-work benefits. Due to the complexity of the problems they face, they will also be a long way from the labour market. We know that getting a parent into work can have a transformative effect on the whole family. Any Committee member who has any engagement with constituents who have been involved in the programme will recognise the impact on families of the measures and interventions, which can really be transformative. That is what such programmes are about.
In recognition of that, the programme aims to support families with a multitude of problems where adult family members are currently out of work, irrespective of the length of time they have been unemployed. Information on how the programme has supported adults into employment is therefore already an important part of the troubled families programme’s independent national evaluation, which will be the basis of the Secretary of State’s annual report to Parliament.
On amendment 4, clause 3 provides that, at the start of each financial year, the Secretary of State shall issue a notice “specifying the matters” by reference to which progress will be measured and reported on in the following financial year. The amendment would place employment as a progress measure into statute. We have purposely not set out a progress measure for the programme within the clause, so as to ensure that the programme remains flexible enough to respond to families’ emerging needs and to reflect future Government priorities. The right hon. Member for East Ham mentioned that the programmes are varied geographically, and in respect of the local authorities involved and the multi-agency work that is taking place. Ensuring that the programme can remain flexible to respond to the needs of those families is therefore vital.
Stephen Timms
The Minister emphasised that getting people into employment is at the heart—I think those were her words—of the troubled families programme. I welcome her assurance, but that should surely then always be in the criteria against which the programme is assessed.
Priti Patel
The full employment measure, which we have discussed, is outlined in an annual report. This is about the troubled families programme, which already has an independent national evaluation. That will be the basis of the Secretary of State’s annual report to Parliament. We take the view that we are already reporting on those measures. Different information that can be used to measure progress may, of course, become available during the lifetime of the programme. The annual notice issued by the Secretary of State will accommodate that information and will be based on the operating framework for the programme.
The current financial framework includes progress measures for employment, and therefore the first report to Parliament will include information on the number of adults in families supported by the programme who have moved into continuous employment. We believe that that is covered and that the amendments are therefore not necessary, so I urge the right hon. Gentleman to withdraw them.
Stephen Timms
I am glad that the point will be covered in the first report, but I am rather puzzled as to why the Minister is not willing to say that it should be covered in all reports, given the centrality of employment to the goals of the programme. Nevertheless, I am grateful for her response and will not press the amendment to a vote. I hope that, in practice, we will find employment featuring prominently in each of those reports in each of the years they appear.
Amendment, by leave, withdrawn.
Stephen Timms
I beg to move amendment 6, in clause 3, page 3, line 6, at end insert—
‘(4A) A report prepared under this section must include information about the total value of expenditure directed at supporting relevant households by—
(a) local government,
(b) central government, and
(c) government agencies.”
To require the report on support for troubled households to specify how much has been spent to support targeted households by different parts of government.
I will not take up much of the Committee’s time on amendment 6, but there is one other set of data that we need to make a full evaluation of this programme: how much is being spent on it? As I understand it, the central Government allocation is £4,000 per participating family but, of course, other resources are also being allocated to those families. In particular, many local authorities, because it makes such a big difference to them if the families can be set on a new and positive path, are supplementing the resources provided by central Government, and other agencies are also contributing. We need to know the total value of spending on those households by the relevant agencies, and amendment 6 simply requires the report produced under clause 3 to include that vital piece of information.
The Government say that the 120,000 or so troubled families in the current programme cost the state £9 billion a year. Ideally, we would like to have a set of figures that add up at the beginning to £9 billion being spent on those families but that then fall as the programme starts to take effect. The announcement last March, on which the Full Fact website was rather sceptical, claimed that £1.2 billion had been saved as a result of the programme but, to secure a robust evaluation of the programme and to grasp the impact of those families on the Exchequer and the effect of the programme, there is no alternative to compiling the figures required by amendment 6, which would hopefully decline year on year if the programme is having the impact that we all want.
This is my final point, Mr Streeter, because I have a shrewd suspicion that you may not call a stand part debate on the clause today. The Local Government Association has made the point to us that, to minimise additional work in producing the report required by clause 3, data contained in the report must, so far as is practicable, be derived from any relevant official statistics, the national impact study and family progress data. What is the Minister’s response to that specific proposal?
Priti Patel
Again, I thank the right hon. Gentleman for his comments. Obviously, the troubled families programme is focused on better outcomes through the more efficient use of resources. It is therefore right that the primary focus of the report to Parliament is on the outcomes for those families.
Local authorities have been given the freedom to shape their own local programmes with their own local public service partners. In exchange, the Government have asked local authorities to provide information that will enable us to assess the impact of those programmes, which of course includes an understanding of what is being spent on families and the savings being achieved across local public services. That information on costs is part of the troubled families programme’s independent national evaluation, which I have touched on and which will also be published as the basis of the Secretary of State’s report. Information on Government spend on the programme is published annually in the Department for Communities and Local Government accounts. On that basis, it is not necessary to expand the scope of the duty.
There are a couple of points on the £9 billion estimate, which was based on the best information available at the time for the purpose of designing the original troubled families programme. The figure was the result of an analysis of a range of spending on troubled families by central Government Departments. The right hon. Gentleman also mentioned the £1.2 billion figure and the Full Fact website. That figure comes from a report published during the previous Parliament, and it is simply an indicative figure that suggests what potential savings could be made if average savings were replicated across local authorities.
It is fair to say that, because the information on costs identified in the independent national evaluation of the troubled families programme is already published, and will continue to be published—there is a line in the DCLG accounts, too—we do not believe we need to expand the scope of the duty. I therefore urge the right hon. Gentleman to withdraw his amendment.
Stephen Timms
I am grateful to the Minister. When the evaluation came out in March, the then Secretary of State for Communities and Local Government did not speak in the circumspect terms used by the Minister. He claimed that £1.2 billion had been saved.
Full Fact points out, however, that that was based on just seven of the 152 local authorities that took part. Most areas showed gross savings per family of between £6,000 and £10,000, but in Salford savings were £18,000 and in Staffordshire they were claimed to be £49,000. The average was taken from those seven and grossed up to the 152, with the result being the £1.2 billion figure that Full Fact is understandably rather sceptical about. Ministers claim the figures to be savings with some authority, but it would be advisable to provide the more robust data that underpin the figures and estimates before such a claim is made. I do not propose to press the amendment to a Division, but the next time figures are claimed for savings resulting from the programme, I hope we have a more robust basis than that used in March.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Stephen Timms
In my earlier remarks I raised a question for the Minister about the request from the Local Government Association that information should be taken from existing sources where possible to minimise the amount of work. Is she in a position to comment on that, or perhaps will she drop me a line?
Priti Patel
I cannot comment at this stage, but I will be very happy to take that offline and drop the right hon. Gentleman a line.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Guy Opperman.)
Welfare Reform and Work Bill (First sitting)
Stephen Timms Excerpts(8 years, 8 months ago)
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The Chair
The first witnesses this morning are from the British Chambers of Commerce, Capp, Manchester City Council and Family Action. Before calling the first Member to ask the panel a question, may I ask you to introduce yourselves for the record? I remind you that we will finish this session at 12.30 pm. Who would like to start?
Marcus Mason: Good morning. I am Marcus Mason, head of business, education and skills at the British Chambers of Commerce.
Rebecca Plant: Good morning. My name is Becky Plant. I am head of apprenticeship solutions at Capp.
David Holmes: Hello. I am David Holmes, chief executive of the charity Family Action.
Geoff Little: Morning. I am Geoff Little, deputy chief executive of Manchester City Council.
Stephen Timms (East Ham) (Lab)
Q 1 I welcome you all to our Committee.
This is probably a question for Marcus in the first instance. The Bill requires the Government to report on progress towards full employment. How do you think full employment should be defined? What is the right definition for this purpose?
Marcus Mason: I will give that a stab. We all know that full employment can be defined in different ways, with different levels of full employment in different countries. In that sense, we very much think that full employment is a moving target. Our latest economic forecast shows unemployment reaching around 5% by 2017 and flattening out to 5% in Q2 2018. As a result, we feel that a level of unemployment of around maybe 5% to 4.5% is probably the point where, if you went below that, you might start causing inflationary pressures. So that is the sense that we get from the forecast that our chief economist does at the British Chambers of Commerce.
Emily Thornberry (Islington South and Finsbury) (Lab)
Q 2 I think the important thing, though, is to look beyond the 4% or 5% unemployment as being full employment. Isn’t it important to look at how we define employment? The Office for National Statistics says that someone on a zero-hours contract, perhaps working no more than two or three hours a week, is in employment, but that is hardly a good situation for that individual to be in. If we have a reporting requirement that focuses solely on those sorts of numbers, using that broad definition, how can we really be helping ourselves? Are we not just putting forward an incentive for people to be in insecure and low-paid jobs?
Marcus Mason: Obviously you need the headline unemployment figure, because that is most sensitive to Government policy and has the most impact on inflationary pressures. Of course, you could imagine a situation where a Secretary of State reports using that headline unemployment figure, but other figures could go into that report as well.
Hannah Bardell
Q 7 Surely we need something. There needs to be something around quality and decent work, rather than it being purely numbers based.
Marcus Mason: I guess it depends how you define quality.
Stephen Timms
Q 8 I want to ask a question about apprenticeships. This is really a question to Rebecca. We gather that you are concerned that the only way the 3 million apprenticeships target will be hit is if quite a lot of the apprenticeships are rather poor quality. Could you explain to us why you have that fear? Could you also tell us what it would take, in your view, to deliver both the target and the quality that all of us would want to see?
Rebecca Plant: I have been involved heavily with apprenticeships over the past six years, with the previous Government and the coalition really putting their hands around it and making it a credible work route. Specifically, my interest is around young people. The concern comes from sitting in the middle of some really heavy apprenticeship reforms that are taking place currently with Trailblazers. I am part of the digital Trailblazers group and have worked tirelessly for two years creating new digital apprenticeship standards for the sector.
Purely in my opinion, what you are starting to see with those new standards being released is that, for the tech sector particularly, the high-level skills that are needed are stuck at the moment. So the apprenticeship reforms in Trailblazers are making the ability for us to release and get young people on to Trailblazers really difficult, because we cannot get the standards through.
All of us who are interested in apprenticeships then look at myriad examples, such as apprenticeship barman and of apprenticeships in really low skills. How is that an apprenticeship? I understand about work and I am not patronising that as a job role but, when you are reporting on a number, you have to dig deeper than that number. How much of that 3 million is dedicated to higher skills?
My interest particularly comes with those young people who are “okay”. How do you use apprenticeships to progress them through a lifelong learning route, as the Prime Minister said when he released the new apprenticeship standards nearly two years ago? The idea is lifelong learning. Those people in those low-level jobs are put in there just to gain money for skills, for training. This is my opinion, but what is the route out? How does that help social mobility, when people are just turning a job role into an apprenticeship? That is not right.
Stephen Timms
Q 9 What would it take to deliver the target and the quality? How do we avoid that problem?
Rebecca Plant: In my personal opinion, the target should be broken down into levels of skills, so that higher level—level 4—degree apprenticeships should be broken out and there should be clarity. There should be some reflection on how that matches the skills gaps. Employers talk about skills gaps until they are going blue in the face. How does that work? With the lower sector, I would look at entry and ensuring that there were full-time job contracts at the end of those apprenticeships. I would ensure the commitment from the employer to keep training and to move that young person through. I am sorry that my answers are woolly. I am not very good at this.
Jess Phillips (Birmingham, Yardley) (Lab)
You’re doing great!
Rebecca Plant: Thanks! I’m really nervous.
Stephen Timms
That was a good answer.
Rebecca Plant: I would break it down and give transparency. What is a level 2 apprenticeship? What are people signing up to? Badging level 2 programmes as an apprenticeship is fundamentally wrong. That should be an entry point into an apprenticeship but there needs to be tightening up of these low-skilled, dead-end, monotonous jobs for these poor people.
Finally, just to add, traineeships should not count towards that 3 million at all. The traineeship piece is a really good on-ramp for some people, but does it lead to real job opportunities at the end? I question that completely. It is hard for employers to digest the traineeship, in my opinion. There needs to be an onboarding Work programme into an apprenticeship so that, no matter where you come from in your life, you have a level playing field with everybody else. That is what my particular passion is.
Amanda Milling (Cannock Chase) (Con)
Q 10 I have several questions for both Rebecca and Marcus. In the previous Parliament, about 5,000 apprenticeships were created in my own area, and I have met businesses and apprentices themselves. What can the Government and businesses—other providers as a collective—do to raise awareness of apprenticeships and the value of apprentices to firms both in the short and long term?
Rebecca Plant: This is the same question that has been going around for the past six years. On raising awareness, Sue Husband from the National Apprenticeship Service has done a fantastic job of trying to engage, but we always seem to be stuck at the same point. There is a real difference between delivery on the ground and understanding the National Apprenticeship Service and what it takes to deliver an apprenticeship, which is really different from what it feels like for an employer. There is still a massive mismatch between what Government-funded bodies are saying takes an apprenticeship to the reality of delivery on the ground—a huge disparity. When we hear that some of the large organisations in this country are struggling to take five apprenticeships, we really should be worried.
Marcus Mason: A good way of increasing awareness is to focus on the small and medium-sized businesses, because our research suggests that that is where there is the most potential for growth, and networks like the Chamber network can be an effective way of reaching that market. We have had events in partnership with other business groups and also the Skills Funding Agency, identifying businesses that had not previously taken on an apprentice and informing them about how they could go about doing that. That also has to go hand in hand with finding ways of incentivising schools to promote apprenticeships in their careers advice, because there is still a bias towards the standard A-level to university academic route, and a lot of schools judge themselves against that benchmark. We hear of businesses that offer high-quality, well paid apprenticeships, but still do not get enough applicants for those apprenticeships, so I think it has to work on both sides.
I would like to echo Rebecca’s comments and the worries about the 3 million figure and flag up that, ultimately, we are talking about a huge increase in apprenticeships. When you bear in mind that, the apprenticeship starts from the previous Parliament—just over 2 million—included a lot of rebadging of Train to Gain programmes, and we do not want to see that again. We do not want to see a decline in quality because we are just chasing an arbitrary figure. Ultimately, if we get the quality right, the businesses will take them on and will offer apprenticeships, and so will the young people go for them. So the focus has to be on that. When it comes to reporting, we need to absolutely think about how many of these people are going to progress into jobs and the quality of these apprenticeships. We really need to dig into all of that in the report that the Secretary of State does.
Jo Churchill (Bury St Edmunds) (Con)
Q 16 It is just a quick one, to Rebecca and Marcus, really, as to how Government can be more innovative.
You have outlined many of the problems. Perhaps I should declare an interest: I am a shareholder of an SME and have run an SME for some decades. What you are saying is exactly right. The big problem is not the lack of will. Sometimes it is the lack of skills both from the business and from the joined-up agencies. There is a problem with always having a job at the end of an apprenticeship, because you do not always know what your economic environment in a small business is going to look like in two years’ time, and that is something that very much needs to be taken on board.
So are there ways of looking at this in an innovative sense? Farming would be one example, where often the work is seasonal and therefore the farmer can offer practical work; but maybe there could be some alignment with colleges in order to make up that difference. One of the problems that we are having is that bums on seats in schools mean money, so they are unlikely to encourage apprenticeships at that stage because of that trade-off. Is there some positive way that we as a Government can help incentivise innovative thinking around apprenticeships, particularly for small businesses, which make up 99.9% in volume terms of all the companies in this country?
Marcus Mason: There are programmes by apprenticeship training agencies, for example, to pool apprentices so that they can work with different employers. That can help where there is seasonal working or—for example, in the construction industry—where work is project-based and they might be on one project with one business and then another project with another. Those can work in certain sectors. Looking at some of the lessons from those programmes and thinking about how to scale those up could be one area.
Also, you could encourage large businesses to work more effectively with their supply chain. At the moment, apart from the very best examples, small businesses and large businesses operate in silos, and a lot of recent announcements on apprenticeship policy have been aimed at larger employers. There is a bit of a gap between the two. I do not have the answer, but perhaps it might be worth investigating how you could encourage and incentivise larger businesses to help support training in their supply chain.
Rebecca Plant: There is an amazing man called David Barlow up north who has an electrician’s business. He is a larger employer, although not large. He supports his SMEs by bringing apprentices back into his business to train when they have periods of downtime. That is such an innovative model that we should be rolling it out further.
Stephen Timms
Q 17 I would like to ask David and Geoff about the troubled families programme. The Bill requires the Secretary of State to report on the progress made by households benefiting from the programme. I would be interested to know how you think progress should be measured. What is success for a family who have been in the troubled families programme? How fair, in your view, is the criticism I have sometimes heard that although a lot of families have been helped by the troubled families programme, not many unemployed family members have gone into jobs? Is that a fair criticism of the programme? Would you say that it has been a success so far?
David Holmes: Family Action delivers a range of troubled families schemes in different parts of the country. We strongly support the troubled families programme inasmuch as it supports and helps fund family support. I begin my comments by saying that troubled families are inevitably complex families, with a range of difficulties that they need help to manage.
If you will permit me a quick case study, we worked with a single-parent family: a mum with daughters aged 14 and two. The mum had experienced domestic violence in previous relationships and had had to leave where she was living. She had come with her two daughters into an area where she did not have support networks or family; she was quite isolated. The two-year-old was sharing a bed with mum. There was a lot of poverty in the family, and there were concerns about parenting and the child’s development, including her not meeting speech and language milestones. The 14-year-old was missing a lot of school and had had three exclusions from school over the past year; there were problems with mum’s relationship with the 14-year-old. There were concerns about mum’s mental health. Mum was also in debt.
I would say that in a lot of ways, that is a typical troubled family. It shows the range of issues with which the family is grappling. Mum has not worked for more than 14 years, and is on benefits. In order to make a difference to that family, we cannot just focus on getting mum back into work or getting the 14-year-old back into school; we need to think about all the issues that that family has and try to address as many of them as we can at the same time. We worked on mum’s relationship with the 14-year-old, we got the two-year-old into nursery provision, and we got the mum on a debt repayment scheme so that she could manage her finances better and got her counselling through the local GP service. We did as much as we could to address as many of that family’s problems as possible. The good news is that the relationship with the 14-year-old is much better and she is now back in school, the two-year-old is doing well in nursery and things are looking up for her, and that family is making progress.
I make those comments because in the current troubled families programme, one measure of success is to look at whether we can demonstrate significant and sustained progress. In the report that is going to be delivered under the provisions of the Bill, we need to be sophisticated in recording how significant and sustained progress has been made. It is about not only single factors such as whether someone has got back into employment, but what has happened to that family across all their needs to help them move forward.
Stephen Timms
Q 18 I would be interested to know how Geoff feels about the same issues.
Geoff Little: Well, there are three parts to the question. First, how should we measure success? Secondly, is it really effective for employment? Finally, do I think it has been successful so far?
I will take the last part first, because that is a good way to get into it. From my personal view, without a doubt, the troubled families 1 programme over the past four or five years has been a resounding success. It has been a great example of how taking an integrated approach to public service delivery can have a real impact on the direction of people’s lives. The example that David gave is replicated many times. In Manchester, for example, in troubled families 1, according to the definition in the programme, we turned around the lives of 2,385 families. That has had a significant impact on outcomes in Manchester.
In the next programme over the next five years, we will take on just over 8,000 in Manchester and 27,000 in Greater Manchester. We think we have demonstrated success on the ground in two ways. We are giving people a lead worker who works in a system in which their leadership can actually be turned into integrated plans, because all the public services recognise and respect their leadership role. In that system, we have seen the effect on families’ lives. We have also seen public spending reduced in the right way by reducing the need and demand for specialist and targeted services, which are obviously the most expensive. By getting demand down, we have released funds to spend instead on universal services that create the sort of placements that attract successful people, so the economy of our place will grow over time. You get a virtuous circle. It is about reducing demand for targeted services, but it is also about economic growth.
I would suggest that the evidence we have in Manchester is probably some of the best in the country, because when we started our work on this back in 2008-09, we all saw what was coming post-recession in terms of public spending cuts, but we were determined, as we went through the process, to have evidence. Does this way of working really allow you to allocate your budgets in an intelligent way? When you get to the budget-setting process, you cannot do it on hope; you have to have evidence. We therefore got best-quality evaluation, including cost-benefit analysis. That allowed us, as a council, in our budget-setting process last winter, which was the toughest I have ever been through, to nevertheless invest substantially in the development of our troubled families programme over the next five years.
It is right that Parliament gets an annual report from the Secretary of State for Communities and Local Government that explains the impact of the programme, not only for Department for Communities and Local Government objectives, but for objectives across Whitehall. If you can get that cross-cutting look across Whitehall, that has to be a move in the right direction. I think it does work, so the clause that requires annual reports is correct.
How do we measure success? The proposals in the troubled families 2 programme feel about right to me. One part of measuring success is by place. There should be a troubled families outcome plan for the place, where we understand the number and distribution of troubled families, according to the definition; what our plan is to change outcomes over a period of time; and how we measure ourselves against the relevant objectives for our place, and we report that in.
There is also a specific way of measuring progress, which is by employment. If we can get people into jobs or sustained work through this programme, that almost trumps all the other requirements and the payment by results follows. It is absolutely right that the new programme is measured by employment specifically.
I think you are right that it was clear in the first programme that getting people into jobs was probably the most difficult part of the exercise, but we all found—certainly those of us in some of the more deprived parts of the country—that the vast majority of our troubled families were suffering from worklessness, normally long-term worklessness. More than two thirds of Manchester’s troubled families were workless. It was a very slow start, but when we got through the four-year programme, of those two thirds—a total of 2,300—we got 26% of those people into work, and 19% of that total was sustained for more than 12 months. I think that is reasonably good progress, given the difficulty of getting people into work. However, as we go forward, it is not only about the troubled families programme, it is also about applying the troubled families programme way of working to other interventions.
In the last Parliament, we convinced the Treasury and the Department for Work and Pensions that we should apply the principles of the troubled families programme to our version of a locally commissioned Work programme, and we called that “Working Well” programme. We got some excellent providers to come in and provide top-class employment interventions, but coupled that with their lead workers slotting, at a place level, into our system of integrating all of the public services. That is still rolling out, but it has been so successful that so far that we have convinced Government to allow us to scale that up through our devolution agreement to another 55,000 families in Greater Manchester over the course of the next Parliament. I think you can apply the principles specifically to employment and have really beneficial impacts.
Jess Phillips
Q 19 I was involved in developing two different troubled families services, both in the black county and in Birmingham. You have already covered the fact that employment is always the hardest target to reach. I want to hear about the reporting mechanism that is going to come in. I used to sit in troubled families offices listening to the headlines saying that we were helping 10 billion families, and think “Are we”—well, I will not swear. “We are not, actually; those are headline figures. We are at the first step of helping these families.”
The way that the troubled families scheme works at the moment means that there is very little step-down support once time on the programme is completed, and therefore long-term measures of success would be near impossible to measure, beyond employment capability, for a long time. What are your views on the reporting mechanism being headline candy for a scheme that is definitely extremely positive, aside from the employment headline? I was specifically working with vulnerable women and children and female offenders, and I have seen thousands of families like the one that you described. The woman you described is a real success, but I bet you did not get her into employment. If you didn’t, when her two-year-old turns three, she is going to be sanctioned and end up right back where she started.
Is the report going to have returns in it? Will it be cyclical? Will I see a report that says that that family has come back into the troubled families programme? There is no step-down support, so once families are done with the programme, they are done with the programme, and we do not know what success looks like. With this level of reporting, I am worried that the headline figure will be anyone who has ever been referred by any agency and it will not actually mean anything.
David Holmes: That is why I emphasise that we need sophisticated reporting, so that we unpick what “significant and sustained progress” means. While we were working with the woman I was talking about, we managed to help her to volunteer. So much of the success of the troubled families programme is the journey that we help families to take towards improved outcomes. It is not always about the achievement of predetermined outcomes at the beginning, and it is something about valuing and celebrating the progress that is made on that journey, because it is helping people to begin that journey that gives them the confidence and resilience to continue it.
Oral Answers to Questions
Stephen Timms Excerpts(8 years, 8 months ago)
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Stephen Timms (East Ham) (Lab)
Unemployment went up last month. The Government’s commission on employment and skills pointed out earlier this year that although we currently have German levels of adult unemployment, we have eurozone levels of youth unemployment, which went up in July and in August. Does the Secretary of State accept that much more needs to be done to give young people the chance of a decent start?
Mr Duncan Smith
Of course we are focused on youth unemployment, but it has actually been falling from what we inherited. It has fallen by more than 200,000 since we took over, and the claimant count has fallen every month in the past three and a half years. The right hon. Gentleman talked about the figures going up, and in a sense I am not surprised, because they cover the period leading up to the last election. Given what the Opposition were saying, and looking at the polls that some businesses carried out, it is no surprise to me that they might have held back. If he looks at the vacancies, he will see that there are 735,000 vacancies in the jobcentres every week, which is more than he managed.
Mr Duncan Smith
We inherited a situation where nearly one in five households in Britain had nobody in work at all. It is far more likely for someone who is out of work to be in poverty and for their children to be in poverty. We have pretty nearly halved that level and have the lowest number of workless households since records began.
Stephen Timms (East Ham) (Lab)
Until a few weeks ago, the Secretary of State told us that he was committed to the targets in the Child Poverty Act 2010, but now he has brought forward legislation that not only scraps those targets, but, as my hon. Friend the Member for Cardiff Central (Jo Stevens) pointed out, will leave Ministers with no child poverty targets at all. He has just denied that from the Dispatch Box, but the fact is that the Welfare Reform and Work Bill removes all the child poverty targets. Why are the Government, in reality, despite his fine words, throwing in the towel on child poverty?
Mr Duncan Smith
We are not; we are committed to eradicating child poverty and we will have to report every year on our achievement in line with the figures that I gave the right hon. Gentleman earlier. I simply say to him that his Government failed to meet their targets—they spent £75 billion on tax credits in their last six years and still failed—and it is under this Government, in the past five years, that child poverty has actually fallen by some 300,000, rather than under them.
Stephen Timms
The truth is that child poverty is now going to rise even faster than already predicted because of the huge cuts in tax credits next April, to which my hon. Friend the Member for Eltham (Clive Efford) referred. With most children in poverty now living in working households, not workless households, should the Secretary of State’s children’s life chances reports not include data on children in low-income working households, as well as on those in workless households?
Mr Duncan Smith
I believe that our reports will cover a much wider range of issues that affect child poverty. I have always felt that issues to do with family stability, drug and alcohol addiction and education are critical to a child achieving a decent outcome. If the right hon. Gentleman has anything further to add, I am always willing to take his submissions, and the Select Committee has also said that it will do the same. My point is that an arbitrary target simply for an income line, which is what his Government did, leads to a huge distortion in the benefits system, and the right hon. Member for Birkenhead (Frank Field) has said exactly the same.
Mr Duncan Smith
I can give my hon. Friend that assurance. In all the areas in which we have rolled out universal credit—in more than half of jobcentres—it is dramatically improving people’s lives. Unlike when the previous Government rolled out tax credit and hundreds of thousands of people lost their money, this scheme is ensuring that people who deserve the money and are ready for it are paid it.
Stephen Timms (East Ham) (Lab)
The number of people receiving universal credit remains derisorily small. Four years ago, the Secretary of State told us that the transition to universal credit would be complete by 2017. We told him he would not manage it. We were right; he was wrong. He still has not given us a revised date for the completion of universal credit roll-out. Has he given up entirely on ever having one?
Mr Duncan Smith
I am on the verge of giving up speaking to the right hon. Gentleman, because he misuses all the facts. As I have told him again and again and again, he is more than welcome to visit the sites where it has been rolled out. He has had an open invitation to come to see the digital site and I recommend that he does so. Universal credit is already working; no one has lost any money; it will be online; and it will go out fully and start next year. This is a successful programme and if the right hon. Gentleman wants to compare notes about tax credit roll-outs, I would be more than happy to do that.
Draft Health and Safety at Work etc. act 1974 (General duties of self-employed persons) (Prescribed Undertakings) Regulations 2015
Stephen Timms Excerpts(8 years, 9 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Stephen Timms (East Ham) (Lab)
I welcome you as Chair of our Committee, Mrs Moon. I also welcome the Minister to his new role and congratulate him on his appointment.
The regulations, as implied by their name, amend the Health and Safety at Work etc. Act 1974. Last year, we celebrated the 40th anniversary of that landmark piece of legislation. Barbara Castle originally commissioned Lord Alf Robens to undertake a review of health and safety at work, given the high level of workplace accidents and fatalities in the late 1960s. The work to convert his recommendations into legislation took place largely under Edward Heath’s Government but it was Michael Foot, as Employment Secretary, who oversaw the legislation in 1974.
The essential principle of the Act was that those who create risk should have the key responsibility for mitigating it. The legislation took a flexible, non-prescriptive approach that stood the test of time and allowed adaptation to a radically changed economic and social environment since then. It has been looked to as a model for common sense and safety throughout the world.
The Minister gave us a brief précis of the rather long and winding road that has led to this point. The regulations began when Professor Löfstedt made his recommendation in an excellent report commissioned by the previous Government. He said:
“I…recommend exempting from health and safety law those self-employed whose work activities pose no potential risk of harm to others.”
The Government initially tried to turn that recommendation on its head with a proposal that no self-employed people had health and safety obligations other than those undertaking activities included on a list, which was to be set out in regulations. Inevitably, in the background to this discussion is a concern that the good and obviously welcome long-term fall in accidents at work—workplace fatalities are down 75% since 1974—is showing worrying signs of starting to move in the wrong direction.
The Health and Safety Executive has reported that fatal injuries went up from 136 to 142 in the year to March. Fatalities in the agricultural sector increased, which underlines the importance of including that sector in the schedule to the regulations. We must all hope that this increase is just a blip, but it is absolutely clear that there is no ground for complacency, or for the rather cavalier approach to these matters that some of the Minister’s colleagues—not the current Minister, I am pleased to say—appear to have favoured in the past.
The Government’s initial approach was superficially attractive to people with an ideological hostility to health and safety legislation. Analysis by the HSE showed that that approach would more than double the number of self-employed people who would be exempt from health and safety obligations compared with Professor Löfstedt’s recommendation. The proposed list of high risk activities left out a lot with injury rates statistically higher than the average. For example, it was proposed that there would be no health and safety obligations on self-employed motor mechanics, van drivers, heavy goods vehicle drivers, furniture makers, woodworkers, metalworkers and maintenance fitters. That struck many people as a pretty serious list of omissions.
The proposed approach was fraught with other problems. In particular, it would have introduced huge uncertainty for self-employed people about whether they had obligations. The existing arrangement was felt by some to be onerous, but at least everybody understood what it was. The Government’s first proposed approach did not have that virtue. How exactly were the listed activities in the regulations defined? What about people who spent some of their time on prescribed activities and some on other activities? Under the Government’s proposal, even though people engaged in activities on the prescribed list did not have obligations under the Health and Safety at Work etc. Act 1974, they would still have obligations under other legislation. How would they know what those obligations were and how to fulfil them? In response to that initial proposal, EEF The Manufacturers Organisation said:
“EEF understands the logic of excluding the self-employed from the scope of the Health and Safety at Work etc. Act 1974 where they pose no potential risk, but do not believe it will be easy to determine or define (with any accuracy) who poses a potential risk and who doesn’t. This will lead to a very complex legal situation which will prove impracticable to interpret and enforce. On that basis we believe that current requirements should be retained.”
It is certainly the Opposition’s view that the important virtues of clarity and certainty in health and safety legislation should not readily be given up.
The CBI responded to the Government’s consultation. In answer to the question it posed,
“would a self-employed person know if the law applied to them or not?”
61% said that they would not. It was frankly a terrible mess.
The regulations represent a significant shift from the initial, unattractive proposal and I welcome that the Government made those changes. It has been a long and winding road, but the scale of the problems that we were heading towards has been averted. I pay tribute in particular to my noble Friend Lord McKenzie of Luton, who, through his tireless efforts in the other place, should take much of the credit for the Government’s change of heart.
The TUC described the regulations as
“unnecessary legislation that no-one wanted, aimed at resolving a non-existent problem”,
and that remains correct. As I look through the impact assessment, I am struck by the scale of the so-called problem. At paragraph 52, it tells us that research was carried out in 2012 involving interviews with 60 people and only five of them
“thought they had any health and safety obligations.”
Therefore, fewer than one in 10 were conscious that they had any obligations that the Government wanted to remove from them. The remaining 55 either said that they did not have any such obligation—they were the majority—or that they were not sure.
Paragraph 62 of the assessment says:
“Interviewees who took part in the qualitative research were asked directly whether they thought the removal of health and safety obligations would make any difference to their working practices. The response was unanimous, with all participants stating it would not.”
It is not quite clear what the Government are trying to achieve. Paragraph 67 says:
“One of the questions asked of interviewees in the 2012 qualitative research was how much time they spent each year ensuring they were compliant with health and safety law”—
as we know, of the 60 respondents, 55 did not think that they had any obligations. It continues:
“The five respondents who were aware that legal requirements in this area applied to them provided estimates centred around 30 minutes.”
The impact assessment assumes that those self-employed people probably do only half of that anyway, so perhaps that 10% will save 15 minutes a year as a result of the regulations. I guess that is why the Government came up with the extremely modest total net present value of £4.65 million benefit from the changes.
Compared with the long-standing position that everyone is covered, the regulations stipulate that people who are not involved in activities listed in the schedule and who do not pose a risk to the health and safety of another person are no longer covered by the Health and Safety at Work etc. Act 1974. In principle, that is a reasonable position finally to have arrived at, but I want to press the Minister on how self-employed people will know what their obligations are. As we know from the impact assessment, the great majority of self-employed people do not think that they have any obligations under the Act at the moment.
For people undertaking activities listed in the schedule—now a much clearer and broader list—including agriculture, asbestos, construction, gas, genetically modified organisms and railways, the position is as it always was: they are covered by the Act. However, how are those not participating in those activities to know whether they should be regarded as posing a risk to the health and safety of another person and so have legal obligations under the Act? If they reach the view that they do not pose a risk to anyone and then there is an accident in which someone is badly injured or even dies, will they be liable for having reached the wrong conclusion? What penalty might they suffer? How can self-employed people who, in good faith, do not believe they pose a risk to anyone but, in fact, do, protect their position?
The £4.65 million claimed benefit to business from the change, which is an extremely modest amount, will quickly be lost if a few difficult and costly legal cases arise from the uncertainty that might be created. Does the Minister expect the courts to clarify the position, or will the guidance that he mentioned make that clear? If he intends to follow the latter approach, can he tell us now what the guidance will say, and when does he expect to publish it? How do the Government intend that we establish whether someone poses a risk to the health and safety of another person if they are self-employed? Will he reassure us that guidance will be available in good time before the regulations come into effect on 1 October? The regulations provide for a review to be undertaken in five years’ time, but it is not clear to me why we are waiting so long. Will the Minister comment on whether that review could be brought forward?
There is not much to admire in the regulations, even though I do not think they will cause the problems that the Government’s previous suggestions would have created. We welcome the Government’s re-think, especially following the debates in the other place on the Deregulation Act 2015. I will not be calling on my hon. Friends to vote against the regulations, but I hope that the Minister will be able to clarify the important points that I have raised.
Justin Tomlinson
I thank the shadow Minister for his characteristically thoughtful and assured speech, in which he raised important points. I am delighted to hear about Barbara Castle’s involvement. She was my mother’s MP, so that bodes well.
The right hon. Gentleman is absolutely right to highlight the importance of the long-term fall in injuries. The driver for that is not the £4.7 million, but ensuring that the perception of health and safety exists so that the workplace is made safer and businesses engage. As a former self-employed person in a relatively small office, I know that things are a lot harder for a small business than for companies with big human resources departments that are skilled and well-trained in such areas.
On why the list is not more exhaustive, those occupations listed were the ones that were deemed to involve high risk, and that therefore were high profile, but the crucial catch-all proviso remains. It is vital that we encourage wider engagement, and I have already done a huge amount of work with the HSE board. If we look at all the statistics over recent years, there has been good progress in how much businesses are engaging and their seeing that it is beneficial to do so, but the change will clarify where there is no risk and no duty, thus helping to reduce the perception that health and safety law is inappropriately applied, which was turning businesses off from engaging and helping to maintain a safe workplace.
As I said, it is not the £4.7 million that, in the grand scheme of things, will make a huge difference, but 1.7 million self-employed people. The Government consider that the proposal will encourage an increase in self-employment and boost economic growth by removing negative perceptions about health and safety law in circumstances in which there is a low risk of harm, which we would all welcome.
The shadow Minister rightly highlighted the need to ensure that people are aware of the changes and guidelines. Once the changes have been agreed by Parliament, the Health and Safety Executive will implement an extensive communications plan to publicise them. Every effort will be made to ensure that self-employed workers are aware of the changes and that they can easily understand how those changes affect them. That is especially the case for those to whom the law will continue to apply. As I have said, in recent years there has been a complete transformation in the documents and communications provided by the HSE, which has been well received by the business community, but the self-employed will not be exempt from the Health and Safety at Work etc. Act 1974, only from section 3(2). Other sections will still apply even if someone is exempt from section 3(2), so this is not a complete wipe-away of any responsibility.
The right hon. Gentleman asked who is responsible if the wrong conclusion is reached. It is the duty of the self-employed person to understand that the law applies to them, and liability will not be based on a subjective understanding.
Stephen Timms
That is the point that troubles me most and I do not really understand that answer. The old position was that one was subject to the law, so the position was clear. Under the regulations, a person will be subject to the law if they pose a risk to someone else. I do not understand how somebody can make a sound assessment of whether, as a self-employed person, they pose a risk to somebody else.
Justin Tomlinson
Businesses have to make such decisions day after day. For example, they have to decide if they are subject to VAT conditions if they are in an industry in which certain products are VAT-able and others are not. A self-employed bookkeeper working at home who does not invite the public into their home would clearly be exempt according to the guidelines. If someone is coming into contact with the public and doing work that might pose a risk, they will be covered. That is why the guidelines will be produced, and self-employed people will make a judgment. It is estimated that approximately 1 million people will still be subject to health and safety law as they fall into those high-risk activities listed on the schedule.
Question put and agreed to.
Welfare Reform and Work Bill
Stephen Timms Excerpts(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Duncan Smith
I am not going to give way to the hon. Lady again, because I thought it was pretty simple maths. However, I will give way to the right hon. Gentleman.
Stephen Timms
Given what the right hon. Gentleman was just saying about ESA, what is his response to Parkinson's UK and Macmillan Cancer Support? They point out that, in the case of Parkinson’s, there are some 8,000 people in the work-related activity group with Parkinson’s and other progressive diseases who are not going to get better but who, under his proposals, will lose £30 a week. How can he defend that?
Mr Duncan Smith
As originally designed by the Labour Government, the work-related activity group was to be a transitional stage on the way to work. It included people who had conditions that were perceived to be likely to improve, thus enabling them to move into work, and people who could, even while they were in the work-related activity group, do some work, and that had to be assessed. If a person’s condition is such that they are unable to do any work at all, under the existing rules of the work capability assessment, they should be assessed and moved into the support group. That is exactly the point.
The objective of the work-related activity group—its design was, I think, rather faulty, but we have what we have—is to encourage people to go into work. As the right hon. Gentleman knows, there are no sanctions to make them take work. There are sanctions if they are unwilling to make an effort, but if they cannot take the work they are not sanctioned.
Stephen Timms
The Secretary of State will readily acknowledge that people with Parkinson’s or multiple sclerosis who are in the work-related activity group are not going to get better. Surely he should not be taking £30 a week away from them.
Mr Duncan Smith
As I said—the right hon. Gentleman should remember this—the purpose of the work-related activity group is that the people in that group are deemed to be capable of some work, or at least to be capable of doing some work very soon. That is the point of the group. My point is that when someone becomes too ill to do any work, at that point they are assessed and they should go into the support group. I am happy to discuss the matter further with him elsewhere, but those are the rules as they stand.
Stephen Timms (East Ham) (Lab)
I beg to move,
That this House, whilst affirming its belief that there should be controls on and reforms to the overall costs of social security, that reporting obligations on full employment, apprenticeships and troubled families are welcome, and that a benefits cap and loans for mortgage interest support are necessary changes to the welfare system, declines to give a Second Reading to the Welfare Reform and Work Bill because the Bill will prevent the Government from continuing to pursue an ambition to reduce child poverty in both absolute and relative terms, it effectively repeals the Child Poverty Act 2010 which provides important measures and accountability of government policy in relation to child poverty, and it includes a proposal for the work-related activity component of employment and support allowance which is an unfair approach to people who are sick and disabled.
In government we addressed all the challenges set out by the Secretary of State. We stand for the right to work and the responsibility to work. We believe the Government have a responsibility to ensure full and fulfilling employment. We believe in making work pay so that people are always better off in work, and that work is the best route out of poverty. The deficit has to be eliminated. We believe in controlling the costs of social security so that it is fair on the working people who pay for it and so that it is there for people who need it because they cannot work or earn enough to live.
We support a number of measures in the Bill. We welcome the reporting obligations on full employment, apprenticeships and troubled families. We are committed to a cap on household benefits to help make families better off in work. We support reforms to mortgage interest support that will strengthen work incentives and deliver savings. But this Bill does some very bad things as well. It abolishes the duty of Government to tackle or even to report on child poverty, it breaks promises that the Conservative party made before the election to protect sick and disabled people, and it comes alongside a ruthless reduction in the support to working families through tax credits that will reduce work incentives and undermine the goals of universal credit—
Stephen Timms
I will give way in a moment. Universal credit is a reform which, even though it is running four years late, we still want to succeed.
Andrew Gwynne (Denton and Reddish) (Lab)
Was my right hon. Friend as shocked as I was at the response of the Secretary of State to his intervention in respect of disabled people, especially those who have terminal illnesses as well—cancer and Parkinson’s disease were two of the examples that he used? The Secretary of State does not seem to understand the implications of the changes to the employment and support allowance for these very vulnerable people at a very worrying time in their lives.
Stephen Timms
My hon. Friend raises an important point, which I wanted to return to. The implication of what the Secretary of State said is that, for example, people with Parkinson’s disease or multiple sclerosis should be in the support group, not in the work-related activity group. The Secretary of State needs to follow that through.
Because we support some measures in the Bill, oppose others and want to change yet others to make them workable, we ask the House to support the reasoned amendment in my name and those of my right hon. and hon. Friends.
Mike Wood (Dudley South) (Con)
There seems to be an omission from the list of measures that the right hon. Gentleman supports. Will he clarify whether the Labour party will support the measures to limit child tax credits to two children, and whether that will still be the party’s position in October?
Stephen Timms
I look forward to coming to that part of my speech. The Bill, as I understand it, says that the limit does not apply in the case of tax credits for children born before 6 April 2017. The limit does apply in the case of universal credit for children born before 6 April. That seems to me a pretty clear unfairness and we will oppose that unfairness, and we will table amendments to deal with that and other unfairnesses in the Bill.
Mr Duncan Smith
For the sake of clarity for Opposition Members if not for Government Members, will the right hon. Gentleman tell us, as this is missing from his reasoned amendment, whether he supports in principle that reduction of payments for two children for families on child tax credits?
Stephen Timms
As I told the House, we will table amendments to deal with unfairness in those measures and in others in the Bill, and we will vote on those in Committee in the autumn.
Mr Duncan Smith
I want to be very clear about this. Is it now the official Opposition’s position that they support the limiting of payments of child tax credit for two children from the date specified in the Bill?
Stephen Timms
We support removing unfairness from the Bill that the Secretary of State published. For that reason we will tonight table a raft of amendments to that part of the Bill and others where we think there is unfairness.
Mr Duncan Smith
The right hon. Gentleman is very generous in giving way. I want to establish clarity for those on the Government Benches as well as those on the Opposition Benches. Putting aside the fact that in Committee he may want to table amendments to make changes, do the official Opposition support the principle that those with more than two children should not receive further child tax credits? Is that the principled position they support? That is missing from the right hon. Gentleman’s reasoned amendment.
Stephen Timms
The Secretary of State does not need to wait until the Committee because we will table a raft of amendments tonight: if our reasoned amendment fails and the Bill receives a Second Reading, we will table our amendments. He will see in that list of amendments a series of amendments to deal with the unfairness in that part of the Bill. Those amendments will give him the answer that he seeks. They will appear on the Order Paper tomorrow so that the House can consider them over the weeks ahead.
Barbara Keeley (Worsley and Eccles South) (Lab)
My right hon. Friend is right to talk about removing unfairnesses. There are a number of unfairnesses in the Bill that affect carers. The Conservatives seem blind to the impact of their measures on carers. Can my right hon. Friend say whether we will table an amendment to exempt carers from the benefit cap? Carers should not be affected by the benefit cap and they should never have been affected by the bedroom tax, but the Government would not listen about that either.
Stephen Timms
My hon. Friend is absolutely right. That will indeed be the subject of one of our amendments, because at the moment carers who do not live with the person they are caring for are caught by the cap, and they should not be.
I want to turn to the impact of the Budget changes on tax credits and on universal credit, some of which are in the Bill and some not. Of course the increase in the minimum wage is welcome, but it does not make up for the measures in the Budget, though mostly not in the Bill, that cut tax credits for working families. The claim that they do make up for it—the Secretary of State repeated it in his speech—is, according to the Institute for Fiscal Studies, “arithmetically impossible”. The problem will be especially bad in the next couple of years. The increase in the national minimum wage is phased in over five years, but big tax credit cuts hit immediately next year. Over 3 million working families will lose over £1,000 a year on average, and work incentives will be cut. That is the reason we voted against the Budget. When the Government bring forward the statutory instruments to implement those huge cuts to the incomes of working families, we will vigorously and fiercely oppose them.
James Cleverly (Braintree) (Con)
Do Labour Members not understand the fundamental idea that being in work should always make people better off than being out of work? If so, will the right hon. Gentleman lead his party through the Lobby in support of the proposals in this Bill that make people better off for being in work?
Stephen Timms
I fear that the hon. Gentleman did not understand the Budget. According to the Institute for Fiscal Studies, the Budget reduced the income of 3 million working families by over £1,000 a year on average, and in many cases it lessens the incentive for the first person in a household to go into work. He need only read the very clear analysis of that point by the IFS.
Huw Irranca-Davies (Ogmore) (Lab)
My right hon. Friend goes right to the heart of one of the difficulties involved. I support the idea of getting away from taxpayer-funded poverty pay to a situation where people are paid a genuine living wage. The IFS analysis shows clearly that the people most affected by this change are working families in the second lowest decile. If it goes through, together with the other changes, I will have to go back to my constituents and explain why I have made them poorer in work.
Stephen Timms
My hon. Friend is absolutely right to highlight this, because the IFS is absolutely clear that the cuts in tax credits target working families. Those people will lose out from the changes not in this Bill but in the Budget—that is why we voted against them. This is not about making work pay; it is about making working families pay. As the party of working families, we will be fighting those changes tooth and nail in the period ahead.
Ms Karen Buck (Westminster North) (Lab)
Returning to my right hon. Friend’s commitment to amend unfairnesses in the Bill, will he confirm that one of his amendments might tackle the obscenity of a woman who has been raped having to prove to the Department for Work and Pensions that she has been raped in order to be able to claim tax credits in future?
Stephen Timms
We will have to hear from the Government how they envisage that part of their proposal working, but I can well understand the concern that my hon. Friend raises.
Let me turn to the individual measures in the Bill, starting with the benefit cap. We support the principle that work should always pay and that people should be better off in work than on benefits. That is why our manifesto supported a household benefit cap and the idea that it should be lower in areas where there are lower housing costs.
Lyn Brown (West Ham) (Lab)
Does my right hon. Friend accept that Conservative Members do not seem to understand that two out of three children growing up in poverty are in working households?
Stephen Timms
My hon. Friend is absolutely right. For the first time, the majority of children below the poverty line—quite a significant majority, as she says—are in working families. That is a reflection of how things have gone over the past few years.
To avoid hardship and unfairness with the reduction of the benefit cap, we will press for some people to be protected from the cap. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) referred to the position of carers. Under the current cap, carers who live with the person for whom they are caring are exempt, yet 8% of those affected by the cap are carers. That is because carers who do not live with the person they are caring for are included in the cap. We want that to change. We think that those with the very youngest children should not be affected by the cap. We also want protection for those affected by domestic violence. As it stands, those who have been affected by domestic violence can be exempted from job-seeking requirements at the jobcentre, but if they are living in supported accommodation a cap will apply. The amendments that we will publish tonight would exempt them along the same lines as the current exemption in jobcentres.
It is absolutely vital to keep the implementation and the impact of the benefit cap policy under scrutiny. There must be jobs for people to move into and childcare available to help them. We need to be vigilant against increases in homelessness and child poverty. We also need to make sure that the policy does not have knock-on consequences for councils and others which mean that it ends up costing more than it saves. If the Bill goes ahead, we will seek to add a requirement for the Secretary of State to report to Parliament within a year on the impact of the policy.
Martin John Docherty (West Dunbartonshire) (SNP)
Will the shadow Secretary of State join me in recognising the unpardonable folly of these proposals and their impact on the entire islands of the United Kingdom of Great Britain and Northern Ireland? Does he agree that that is felt not only on the front line by children and women but by the staff of the DWP, who in Glasgow and Bolton are considering strike action because of the effects of these proposals and the stress that they are under?
Stephen Timms
There do need to be some safeguards in place, as I have been spelling out. Indeed, the Government themselves have recognised the need for a fund to protect people in exceptional circumstances. We welcome the extra £150 million for the fund for discretionary housing payments to help mitigate the worst impacts, but it will not be enough. Many local authorities have already exhausted their funds, which are vital in preventing those affected from becoming homeless. With the cap now lower, there will be more demand for discretionary help. We will therefore want to amend the Bill to require the Social Security Advisory Committee to review the funding for discretionary housing payments each year to make sure that sufficient resources are available.
Caroline Lucas
The right hon. Gentleman has talked a lot about child poverty. The benefit cap, according to the Government’s own figures, will push a further 40,000 extra children into poverty, yet he is talking about some amendments around the edges. Will he explain how much extra child poverty is acceptable to Labour Front Benchers?
Stephen Timms
As the hon. Lady well knows, the big impact on child poverty will come from the huge cuts in working tax credits and other changes not in this Bill but elsewhere. I hope that she will join us in fighting very strongly against those changes when the House has the chance to do so.
Andrew Bridgen
The shadow Secretary of State is making a brave effort to defend whatever his party’s policy is on this, but he has very little credibility because the country knows that under the previous Labour Government the number of workless households doubled, so Labour policies not only trap people in welfare but trap people in poverty.
Stephen Timms
Child poverty fell dramatically under the previous Government; now it has plateaued. I fear that because of measures announced in the Budget, it is going to rocket, and we are determined to stop that happening if we can.
Another reform in the Bill that we support in principle is the provision to turn support for mortgage interest into a repayable loan. That is a sensible step, in principle, given that the benefit enables homeowners to retain an asset and potentially gain substantially from rising house prices. However, it must not make affordability problems worse for people struggling to stay in their homes. Repayments must not tip people into repossession and homelessness. The Secretary of State did not tell us what arrangements are proposed for repaying these loans. We will argue that those who access that support should be able to defer repayment until they sell the property without pressure from the Government to do so. The Budget announced an increase in the waiting period for support for mortgage interest from 13 weeks to 39 weeks. That is too long. As it is a loan scheme, why make people wait, particularly as that could force them into the hands of loan sharks? With support for mortgage interest becoming, in effect, a form of low-risk consumer credit, it should be readily available without nine months of delay to those struggling to make repayments.
We welcome the plans to reduce social rents, which will save 1.2 million households £700 a year, but we have grave concerns about the impact on housing associations and local authorities. They will face a huge reduction in rent revenue, drastically undermining their capacity to borrow and to build. The Office for Budget Responsibility says that many fewer homes will be built; the National Housing Federation puts the figure at 27,000. We will table amendments to address that.
Catherine West (Hornsey and Wood Green) (Lab)
Is my right hon. Friend aware that up to billions of pounds will go missing from local authorities? If we lifted the cap, they could build more homes and thereby help address the terrible housing crisis, particularly in London and the south-east?
Stephen Timms
My hon. Friend is absolutely right. Affordable home building is already at a historic low, and the Government need to stop making things worse. We will table an amendment requiring the Secretary of State to produce a plan to make up the shortfall in house building funds that will result from this change.
Stephen Timms
I give way to my hon. Friend, whose popularity among Conservative Members I have noted.
Jeremy Corbyn
Obviously, a reduction in local authority rents is good for tenants—I fully understand that—but does my right hon. Friend know whether the Government have given any consideration to the effect that a consistent drop in rental income over five years will have on the housing revenue account; on housing maintenance, including of the common areas of estates; and, of course, on any future building programme that could have been funded by the housing revenue account?
Stephen Timms
My hon. Friend is absolutely right. The proposal will affect not only new house building funds, but funds for maintaining existing stock. The Secretary of State needs to explain how that shortfall will be met.
We support the aim to provide 3 million apprenticeships, but the Government need to do more than just publish a target in a Bill. We want quality apprenticeships. There is deep concern among businesses and others that the quality of apprenticeships is being watered down in order to increase their numbers, so we will table an amendment to require that the UK Commission for Employment and Skills should provide an independent assessment of whether quality is being delivered.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
Does my right hon. Friend agree that the concern about the impact of the changes to housing rental income relates not just to the immediate shortfall in funding, but to the uncertainty they will create among registered providers, whose business plans are drawn up five, 10 or 15 years in advance?
Stephen Timms
My hon. Friend is absolutely right. Attention has been drawn to that issue, not least by the Financial Times, which has reported that housing associations’ business plans and their loan covenants and agreements with lenders could be at risk, and that even some big associations could go bust. The implications are very serious.
Richard Graham (Gloucester) (Con)
The right hon. Gentleman is a reasonable man, so I am surprised that he cannot see the advantages of the housing policy in, first, reducing rents for large numbers of tenants who are among the poorest people in the land; secondly, obliging housing associations to make a 1% productivity saving each year, which is very small compared with other parts of the public sector; and, thirdly, reducing the welfare spend and therefore the budget deficit. Surely they are all advantages.
Stephen Timms
I think the hon. Gentleman was momentarily distracted, because I have welcomed both his first and third points. We welcome the fact that rents are being reduced, but he needs to recognise the impact that the changes will have. As I am sure he will be aware, housing associations do not share his rather sanguine view of what the changes will mean, particularly for new house building at a time when we all recognise the need for substantial new socially rented housing, which is not being delivered at the moment.
The Bill does not provide a definition of “full employment”. In line with recent research and the previous Labour Government’s definition, our amendment will set the full employment target at 80% of the working-age population. To pick up on a point rightly made in an intervention by the hon. Member for Enfield, Southgate (Mr Burrowes), in our view the annual report on progress to full employment must also set out progress on the target to halve the disability employment gap.
We will support policies that make work pay and increase opportunity, but where the Government are wrong we will not hesitate to say so. The Conservative party promised in its manifesto that it would
“work to eliminate child poverty”.
It is now absolutely clear that it did not mean it: the Bill abandons any pretence that it did. Instead of eliminating the scandal of child poverty, the Bill attempts to eliminate the term. Labour in government was committed to reducing the appalling levels of child poverty left behind by the Thatcher and Major Governments, and we did so. We introduced the Child Poverty Act 2010, with cross-party support, including from the Secretary of State when he was in opposition and the Conservative party. It contained clear targets to reduce absolute and relative poverty, persistent poverty and material deprivation.
We have known for some time about the debate in the Conservative party about the validity of the relative poverty measure, but now it is not just changing the definition. It is interested not in stopping child poverty, only in stopping people talking about it. It is exactly the same with food banks: the Tories want to stop people discussing them. Clause 6(9) tells us that we should not refer any more to the Child Poverty Act and that instead it is to be known as the life chances Act, but there are fewer life chances for a child growing up in poverty, and poverty needs to be reduced.
Getting rid of the targets and measures leaves the Government with no commitment to tackle child poverty at all, just a requirement to publish a mix of loosely connected statistics. Instead of removing child poverty, the Bill seeks simply to remove it from the lexicon.
John McDonnell (Hayes and Harlington) (Lab)
My right hon. Friend is, like me, a London MP. The driver of child poverty in my constituency is a combination of low pay and high private rents. When the cap was introduced, the Prime Minister advocated—there was an element of logic in this—the idea that it would reduce rents in the private rented sector. That has failed in my area and right across London; rents have increased significantly. Have the Government produced any evidence to prove that the cap reduced rents in the private sector at all?
Stephen Timms
I certainly have not seen such evidence. We have just seen the impact assessment, and the figures are in there, so we will have to see what information they provide. I am worried about the proposal—it was made in the Budget, but it is not in the Bill—of a cash freeze in local housing allowance for the next four years, irrespective of what is happening to rents in London and elsewhere.
The child poverty changes are a shameful attempt to brush under the carpet what should be right at the forefront of Ministers’ minds as they make policy and manage the economy. It is, I am afraid, the final nail in the coffin for compassionate conservatism.
Chloe Smith (Norwich North) (Con)
It is always a mystery to me why more Labour Members do not agree with the right hon. Member for Birkenhead (Frank Field) and, indeed, Alan Milburn, who think that the Government’s proposal to measure the root causes of child poverty is an improvement on what went before. Why does not the right hon. Member for East Ham (Stephen Timms) agree with them, or indeed with another 50 of his colleagues? Is not Labour a shambles?
Stephen Timms
I have no doubt that my right hon. Friend the Member for Birkenhead (Frank Field) will contribute to the debate, but I can tell the hon. Lady that he feels very strongly, as we all do, that this huge hit on 3 million working families—it will take more than £1,000 a year from them, with tax credit changes coming in next year—is a very bad thing to do. It will let down working families, and all Labour Members will fight hard against the iniquitous change being made by the hon. Lady and her colleagues.
Before the election, the Government promised to protect those with disabilities from welfare cuts, but that promise has been broken. As has already been discussed, Parkinson’s UK reckons that there are currently 8,000 people in the work-related activity group with progressive and incurable conditions such as Parkinson’s and multiple sclerosis. Macmillan, in opposing the provision, points out that
“thousands…will experience a significant drop in support at some point during their cancer journey.”
As my hon. Friend the Member for Easington (Grahame M. Morris) said in an intervention, that group includes people with learning disabilities and many with mental health problems.
The Bill reduces the level of support for new claimants by nearly £30 a week, from £101 to £73. That change introduces a new perverse incentive, because it increases the incentive for people with health problems to get into the support group by providing a higher payment, meaning that even more people will not get help to return to work.
The recent marked increase in the ESA case load, at a time when unemployment has come down, has been sharpest in the support group. Anyone in the support group will be seriously deterred from taking the risk of trying employment, for fear that it will result in their receiving a much lower level of support if they are then reallocated to the work-related activity group. I say to the Secretary of State that a particular worry is that young people with mental health problems, who ought to be getting help to return to work, are being abandoned in the support group at the moment. We therefore want the ESA measures removed from the Bill.
Simon Hoare (North Dorset) (Con)
These serious issues are arousing passions on both sides of the House. I am slightly concerned that none of the right hon. Gentleman’s colleagues who are candidates for the leadership has decided to put their name either to the amendment tabled by the hon. Member for Bishop Auckland (Helen Goodman) or to the Opposition’s reasoned amendment. Are they not prepared to give us their views?
Stephen Timms
I am glad to be able to reassure the hon. Gentleman that he will be pleased with what happens when the House divides at 10 o’clock tonight.
The Bill seeks to restrict support provided through tax credits and universal credit to families with more than two children. We will aim to amend the Bill in Committee, for example to protect families with multiple births or those whose claim arises because of exceptional circumstances. We do not support locking in a cash freeze for four years for tax credits and benefits. We recognise that reducing the deficit will require savings on indexation, but those decisions should be made annually so that actual inflation can be taken into account. We do not support the accompanying sharp reductions in income thresholds for tax credits and the corresponding cuts to work allowances announced in the Budget, which will be legislated for outside this Bill. They will be a huge setback to work incentives. The whole point of universal credit was supposed to be to improve work incentives; now it is being hobbled even before it has properly got started.
We want progress towards full employment. We want demanding targets for apprenticeships and help for troubled families. We want a household benefit cap, and to make sure that families are always better off in work. We want support for mortgage interest and reductions in social rents that will deliver savings to the taxpayer. We want better economic opportunities, and we want social security to be fairer and more affordable.
However, children who are growing up in poverty—as we have heard, the growing majority of them are in working households—need a Government committed to improving their position. People who because of illness and disability are found by the Government’s own tests to be not fit to work, as can happen to anybody, need social security to assure them of a decent basic standard of living. Families who are doing the right thing and going out to work, often when they are already struggling with low or stagnant wages and increasing insecurity and uncertainty about their future, need a Government who are on their side, not one who will pull the rug out from under them, as the tax credits announcements in the Budget will do.
These are not just matters of morality and social justice, although they most certainly are; this is also about how we secure our future prosperity and stability, ensuring that everybody in Britain can play their part, make the most of their talents and make the most of the ambitions of all.
Emily Thornberry
On a point of order, Madam Deputy Speaker. I made a point of order earlier about when the impact assessments were published, and I understand that there is an inquiry. When we heard the Secretary of State announce that they had been published, my researcher went to the Vote Office and found that they were not available. A phone call was made to the Vote Office in Members Lobby, which said that they had just arrived. This is not right, and I would like your advice about how we can hold the Government to account when they do not publish impact assessments until after the Secretary of State has got to his feet.
Stephen Timms
I wonder whether the hon. Gentleman has reflected on the fact that in 1997 the employment rate among lone parents was less than 45%, whereas today it is getting on for 65%. Those who have looked at the matter have confirmed that that dramatic improvement is largely thanks to the additional incentive from tax credits.
James Cartlidge
The employment statistics are very much on the side of the agenda we have been pursuing: employment is now at a record high. The fact is that this Bill is socially just because it will enable people to stand on their own two feet and to support themselves through their wages, not rely on the state. That is a sound Conservative principle.
Budget Resolutions and Economic Situation
Stephen Timms Excerpts(8 years, 10 months ago)
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Stephen Timms (East Ham) (Lab)
The hon. Gentleman makes an interesting point, and many Labour Members agree with him on this issue. However, if one area agrees to extended opening, as many no doubt would, is not the reality that the neighbouring areas will have to do so as well, so the devolution issue is a bit of a red herring?
Kevin Foster
I would not necessarily agree with the right hon. Gentleman. There were issues involving local licensing authorities, going back to before the reforms that were brought in a decade ago, which meant that some authorities would permit later closing than others. That had worked for some years. There might be a challenge for local planning authorities, however, in that if slightly later opening were permitted, there could be pressure for development on the edge of their area to get around restrictions in neighbouring communities. I understand the difference that the proposals would make for consumers. At the moment, we all know that large supermarkets tend to open between 10 o’clock and 4 o’clock on Sundays, although some of them exploit the ability to have browsing time beforehand.
This is a positive Budget. It is one that we can take pride in, and it will take the country forward. It is notable that it has been based on policies that were agreed and supported by the electorate. The policies were endorsed by 51 of the 55 MPs in the south-west, and I am pleased to be able to support them today.
Jeremy Quin (Horsham) (Con)
It is a pleasure to follow the hon. Member for Birmingham, Erdington (Jack Dromey), and we have also heard five excellent maiden speeches this afternoon. Between them, they covered Walter Scott, the Brontës, George Eliot, Roosevelt and Voltaire. I do not want to sow any dissension within the ranks of the Scottish National party, but I will leave it to the hon. Members for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for Berwickshire, Roxburgh and Selkirk (Calum Kerr) to sort out between themselves who has the more beautiful constituency, to which they both laid claim. All five maiden speakers exhibited the great passion with which I am sure they will defend their constituents in the future. I hope that they would all agree that in setting any budget—for a household, a company or a country—it is best to start with reality.
The reality that we face is a deficit of £90 billion a year and a national debt of 80% of GDP. That should have a sobering effect on all our considerations and, clearly, the former Chancellor Alistair Darling is well aware of it, given his remarks this morning. I hope that where he leads the official Opposition will follow. It is the easiest thing in the world to run up a deficit, and a Government can become very popular in doing so. As the House knows, it is very painful to get it back under control.
The Budget can be commended on many grounds, but its most important characteristic is that it means we can anticipate our national finances returning to surplus during the lifetime of this Parliament—and a healthy and growing surplus at that. To have eliminated a deficit of £150 billion is a historic achievement.
Stephen Timms
Of course, the Chancellor actually announced that he was postponing achieving a surplus for a year, which he said he would achieve by 2018-19. Does the hon. Gentleman welcome that deferral?
Jeremy Quin
I am delighted that the Chancellor set out a clear, smooth plan that will get us to a surplus of £10 billion—a larger surplus than was anticipated previously—by the end of this Parliament, and it will grow from there. I recognise the point the right hon. Gentleman makes, but I am proud of what the Chancellor has managed to achieve. I am sure the right hon. Gentleman would accept that the elimination of a deficit of £150 billion is no mean feat.
As we all know, the best way to eliminate a deficit is to achieve growth in the economy. The best news, which I am sure we would all endorse, is the forecast from the OBR of continuing growth in our economy. It is a solid basis on which to build. I especially welcome the extra 8% investment from business in 2014, and the fact that that is expected to grow this year and next will be an important part of our recovery programme. It is great that we are achieving that growth notwithstanding the external headwinds. The shadow Chancellor was a little ungenerous in criticising us for having fewer exports to the eurozone: we are growing as an economy, but the eurozone is in a sorry state and it is no wonder that our exporters are suffering at the moment.
All economic forecasts, however, including those of the wise men and women of the OBR, are of course vulnerable. We only need to look at China and Greece at the moment to realise that no one with any credibility would ever claim that we can abolish boom and bust. I therefore welcome the Chancellor’s publication of the new rules of the fiscal charter. This Government, once they have returned the country to surplus within this Parliament, will still be looking to the future. The fiscal charter will help this Parliament and, in particular, future Parliaments to hold the Government to account, to ensure that in normal times they continue to pay down our national debt and restore our national fortunes. Without sound and sustainable public finances, there is no economic security for working people. With sound and sustainable public finances, we will ensure that by the 2030s Britain is the most prosperous major economy in the world.
The whole House would recognise that that prosperity, while welcome, is not a goal in itself. It would be a hollow success if that prosperity was not widely shared among all our citizens. That is why I welcome the Chancellor’s creation of the national living wage and the raising of the basic tax threshold to £11,000. I am delighted that it is a one nation Conservative Government who are seeking to take the lowest paid out of income tax altogether. I went on record supporting the principle of a living wage during the election campaign. It seems to me a positive step in ensuring that work pays for all those who undertake it. The principle that we have a society in which everyone has access to work and is fairly paid for it is surely a good one. Higher wages and lower taxes must be a principle that surely Members on both sides of the House would endorse. The natural corollary of that is that in good times there will be lower welfare expenditure.
I welcome the progress on corporation tax, making the UK an enormously fiscally attractive place in which to operate a business. Combined with the employment allowance, this will ensure that the costs for business of meeting the new national living wage are offset. Similarly, I note what my right hon. Friend the Secretary of State for Work and Pensions said earlier about tax credits. The original system cost just over £1 billion but has risen to £30 billion, which is not sustainable. It needs to be addressed, and I note that we will still maintain expenditure on tax credits in real terms at around the level spent in the 2007-08 fiscal year, under the last Labour Government.
Lastly—I recognise that time is short, Madam Deputy Speaker—I welcome the Chancellor’s announcement on the road fund and the increased expenditure on the NHS to meet the NHS’s own five-year plan, as recognised earlier by my hon. Friend the Member for Halesowen and Rowley Regis (James Morris). My constituency of Horsham has had to accept significant additional house building. That is a concern for many residents. Those concerns will not be eradicated, but they can be mitigated if we all know that there will be enhanced infrastructure to meet the needs of an expanding population. That is especially the case with healthcare, and I look forward to taking up specific issues with my right hon. Friend the Secretary of State for Health. I welcome the additional expenditure on the NHS as a positive recognition that, while we cannot have increased NHS spending without a growing economy, a growing economy may also place increased and different demands on the NHS. I congratulate the Chancellor on an excellent Budget.
Stephen Timms (East Ham) (Lab)
Let me begin, as others have, by congratulating all those who have made their maiden speech during the debate: my hon. Friends the Members for St Helens South and Whiston (Marie Rimmer) and for Bradford South (Judith Cummins) and the hon. Members for Berwickshire, Roxburgh and Selkirk (Calum Kerr), for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for North Warwickshire (Craig Tracey). The House enjoyed hearing from each of them today and we look forward to hearing from them again in the years to come.
Yesterday’s Budget contained a number of ideas that we support, not least because we campaigned for them at the election. For example, we argued that the pathway to a surplus that the Chancellor committed to in March would in fact lead to spending cuts so extreme that they would not be credible. We discovered yesterday that the Chancellor had caved in and accepted our argument. He has deferred the planned surplus for a further year, and I have to say that that was a sensible U-turn. He might have told us that that was what it was, but he did not. As a result of his U-turn, the scale of the cuts, though still substantial, will no longer be as extreme as he suggested in March.
We said that it was unreasonable to try to take £12 billion out of the social security budget in two years. The Chancellor has done a U-turn on that as well. He now plans to do it over four years. We also campaigned for Britain to have a pay rise, stating that an increase in the national minimum wage was key to reducing the cost of welfare. The Chancellor has accepted that argument. On the basis that imitation is the sincerest form of flattery, we welcome his change of heart on that as well.
It is a great disappointment, however, that productivity growth is so low. My hon. Friend the Member for Luton North (Kelvin Hopkins) was right to draw the House’s attention to what the Office for Budget Responsibility had to say about that. It has stated that productivity growth has fallen short of expectations once again. It is a relief that this Budget speech at least mentioned productivity—there was no such mention in March—although it was accompanied by a very thin package. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) and my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) pointed out that the cancellation of the electrification of the TransPennine line was a glaring failure if we are to bring about the infrastructure investment necessary to improve productivity across the country. It is a big disappointment that so little is being done.
It is a tragedy that the Chancellor is accompanying his welcome U-turns with such a swingeing attack on the incomes of working families. The analysis published today by the Institute for Fiscal Studies highlights the fact that the proposed tax credit cuts focus on working families. It is working families that are going to be hit. They have been badly let down by a party that had promised to be a party for working people. That promise seems to have been torn to shreds in everything other than the rhetoric. Vital support has been ripped away at a time when so many of those working families are already struggling to make ends meet.
In 2010, the Chancellor promised
“we will bring down the benefits bill”.
At the beginning of this year, the Institute for Fiscal Studies said:
“Real terms benefit spending…is forecast to be almost exactly the same in 2015–16 as it was in 2010–11.”
The benefits bill has not been brought down. The reason is that, in the previous Parliament, the Government failed to tackle low wages and rising private rents, which are the real drivers of welfare spending. As a result we saw 400,000 more people who are in work forced to rely on housing benefit to pay the rent, and 1.5 million more people paid less than a living wage at the end of the Parliament than was the case at the beginning. That led to a £25 billion overspend on welfare by the Secretary of State’s Department. With this Budget, working families are being told to pay for that failure—so much for being on the side of working people.
The Chancellor is cutting tax credits immediately, but taking five years to increase pay. As my hon. Friends have pointed out, the tax credits cuts hit immediately, full scale, from the beginning of the next financial year. The pay rises intended to compensate for them, which in fact do not compensate for them, are being phased in over five years. Working families are losing out in a very big way. This is not about making work pay, but about making working families pay, which is wrong.
Today, the IFS said:
“Unequivocally, tax credit recipients in work will be made worse off”.
That is the reality of what was announced in the Budget yesterday. The Chancellor’s decision to cut tax credits leaves 3 million families worse off. Working families who are doing the right thing are finding that the rug has been pulled out from under them. A couple with one person working full-time on average earnings will lose more than £2,000 in tax credits next year. A single parent trying to provide for her two children, working 16 hours a week, will lose £860 in tax credits next year. Those losses are nowhere made up for by the modest pay rise that that person is likely to receive.
I cannot help wondering what happened to the families test. The Prime Minister promised that
“every single domestic policy that government comes up with will be examined for its impact on the family.”
Well, here are working families being hammered. The measures clearly fail the families test, but they are being announced nevertheless. That is another broken promise from this Government when so many families are losing out.
The IFS says that the striking consequence of yesterday’s cuts is that the work incentive effects of universal credit—if we ever see universal credit; only 1% of benefit claimants have been switched on to it so far, and at that rate it will take 150 years or so to roll out fully—are being substantially reduced.
I have made it clear that we welcome the increase in the national minimum wage—indeed, we campaigned for it. However, as my hon. Friends have pointed out, just because the Chancellor calls it a living wage does not make it a living wage. My hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Ellesmere Port and Neston (Justin Madders) emphasised that point in particular. The Living Wage Foundation, the custodian of the living wage, made the position clear last night. It said that
“this is effectively a higher National Minimum Wage and not a Living Wage.”
That is the reality. Simply calling it a living wage does not make it one. The Chancellor is trying to sell us a dud.
That was not the only dud in the Budget speech. I cannot resist the temptation of quoting what the Financial Times said about the Budget speech yesterday: “When you heard” the Chancellor
“say six times in his Budget speech that he had moved British towards a ‘lower tax society’, he made a small but important mistake. He really meant ‘higher tax’.”
Of course that is right. The living wage is based on the full take-up of benefits such as tax credits and housing benefit. With the cuts to tax credits, the current figure for the living wage will no longer be enough and will certainly have to be revised upwards. We are in favour of tax cuts for those on middle incomes and we support the increases in the personal allowance and the higher rate threshold, but cuts to tax credit mean yet again that the Chancellor is giving with one hand and taking away with the other.
What a missed opportunity the Budget was to promote a proper living wage by introducing Labour’s plan for tax breaks for firms that pay a proper living wage! My hon. Friend the Member for Brent Central (Dawn Butler) drew attention to the excellent initiative that Brent Council has introduced along those lines. It is clearly succeeding, and our make-work-pay contracts could have started to boost wages straight away.
My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) was right to point out that, once again, young people have been badly hit by the Budget, but where there are good reforms, we will support them. We support the Government’s plan for a youth obligation, which is strikingly similar to our manifesto pledge and the Institute for Public Policy Research proposal that underpins it. The principle of earn or learn is right. Of course, it is absolutely vital that the right exemptions to the withdrawal of housing support should be in place. My hon. Friend the Member for Sheffield South East (Mr Betts) underlined that absolutely rightly. Can the Minister confirm in winding up that young people leaving care, those who are at risk of abuse or homelessness and those who are the parents of young children will still be eligible for housing support under these proposals?
We will not support cuts for disabled people. We were told in the election campaign that the £12 billion package would protect the vulnerable and the disabled, but cutting employment support allowance will hit those who are assessed as not fit for work, which is the reason why they are not on jobseeker’s allowance. That includes people with cancer and people with Parkinson’s disease. Ministers said that they would protect sick people in these changes; instead, they are cutting their support, and that will hit some very vulnerable people very hard. It will also drive even more claimants into the ESA support group at even higher cost. In 2010, Ministers said that they would cut the cost of ESA. In fact, given their failure to manage assessments and the failure of the Work programme for ESA claimants, costs have rocketed. ESA will cost £4.5 billion more this year than they said it would in 2011, but that is no justification for punishing the sick.
There is nothing in the Budget to boost the number of homes being built. The cost of renting and buying is soaring out of reach, particularly in London and south-east. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) drew attention to that. Yet again, rather than tackling the housing shortage and bringing rents down, the Government have chosen to cut housing support.
We welcome the Chancellor’s U-turns from his election campaign, but this is not the Budget that working people need. It leaves working people worse off. Working people needed a Budget that supported them and their families, not one that cut the support that so many people rely on. We support reform that protects those who cannot work and that makes work pay. We will not support cuts that make working families pay.
Madam Deputy Speaker (Mrs Eleanor Laing)
Before I call the Minister, the House should note that several Members who have taken part in the debate were not here for the beginning of the speech of the right hon. Member for East Ham (Stephen Timms). That is discourteous. Some Members who have taken part in the debate are still not here. That is extremely discourteous and has been noted.
Child Poverty
Stephen Timms Excerpts(8 years, 10 months ago)
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Stephen Timms (East Ham) (Lab)
I thank the Secretary of State for early sight of his statement. What he read out today is the obituary notice for compassionate conservatism. It is the death knell for any idea that his party might one day be a party for working people.
It is only a week since we received the news that progress on child poverty has stalled, with most poor children now living in working households. The Conservatives’ manifesto said that they would
“work to eliminate child poverty”.
Instead, their solution is to change the definition—incidentally, at their second attempt; they tried this before and gave up—to remove altogether child poverty from the remit of the Social Mobility and Child Poverty Commission, and next week to announce cuts that will make the problems much worse.
The Child Poverty Act, which the Secretary of State, if I understood his statement correctly, now wants to repeal, received all-party support before 2010, and it put one of the most important duties on Government: to ensure that, in the 21st century, children do not grow up suffering deprivation or lacking the necessities that most of us take for granted. It has not just one, but four measures of poverty: absolute, relative, persistent, and material deprivation. The relative measure is the internationally accepted definition used by every OECD country.
Do the Government accept the importance of relative poverty? Will the Secretary of State clarify that? He told us in his statement that a decade or so ago he was arguing against the use of relative poverty. As he knows, at the same time the current Prime Minister was arguing for acceptance of relative poverty. In what he said today the Secretary of State echoed the words of the Prime Minister last week when he said:
“Just take the historic approach to tackling child poverty. Today, because of the way it is measured, we are in the absurd situation where if we increase the state pension, child poverty actually goes up.”
Of course, the Prime Minister was right. If the Government increase the income of better-off people, they make others relatively poorer. The Prime Minister last week described that as absurd, but that was not what he said when he was trying to re-brand the Conservative party in 2006. In his Scarman lecture he said that the Conservative party
“will measure and will act on relative poverty…poverty is relative and those who pretend otherwise are wrong.”
He went on to say:
“We need to think of poverty in relative terms—the fact that some people lack those things which others in society take for granted.”
That was the Prime Minister speaking in 2006.
So what is the Government’s current view? Is it that focusing on relative poverty is absurd, as the Prime Minister said with conviction last week, or is it the diametrically opposite view that he set out with apparently equal conviction on behalf of his party before? Where do they now stand? The Prime Minister promised that a Government he led would “act on relative poverty”. Why is that promise being broken?
Why cannot the Secretary of State level with the House? He hopes nobody will notice this announcement or its significance because it coincides with the airports statement. Am I right in understanding that he proposes that in his legislation there will be no targets at all, or will he include some targets in it and, if so, will he tell us what they are? I remind the Secretary of State that he and his colleagues all voted for the Child Poverty Act in 2010.
When in government, Labour lifted more than 1 million children out of relative poverty and more than 2 million out of absolute poverty. A key success was raising lone parent employment from less than 45% in 1997 to more than 60% today, mainly thanks to tax credits. That was not about lifting a few people from just below a line to just above it; it was about a very substantial change in the way the economy works. Will the Secretary of State tell us whether next week the Government will announce big cuts to tax credits? That is not about making work pay; it is about making working families pay.
What we need is not a change in the definition of poverty, but a plan to deal with poverty and boost productivity. Ministers should be tackling low pay, but instead they are attacking the low-paid. The Children’s Commissioners for England, Wales, Scotland and Northern Ireland have today come together to warn that the Government’s policies will push more young people into poverty. What happened to the long-term plan? Why have children been left out? Why is the party that promised in its pre-election manifesto to work to eliminate child poverty now planning to increase it?
Mr Duncan Smith
Let me deal with the points that the right hon. Gentleman has made. First, I thought that his comments were a little ridiculous. The idea that this is somehow an obituary for compassionate conservatism does him ill. He knows very well that the purpose of what we are doing is to get rid of child poverty, and that remains our central purpose. As I said earlier—and we are not alone in this—the problem is that if we lock two sets of measures that actually drive spending to rotate people over that line, what we get is a process of churning, but not the real and deeper change in people’s lives. That is the big reason why we want to do this.
The truth is that the previous Labour Government, on their own measure, failed to achieve their target—they failed to halve child poverty by 2010. Worse, in-work poverty actually rose. We could go through the list, but I would have thought that there was a better way of building some consensus than saying that Labour, if in power, could somehow embark on a massive spending spree and everything would be all right. Even Alan Milburn said that was unrealistic, and it remains unrealistic. We have to deal with the world as it is now, and we have to change the life chances of those children.
It is worth remembering that under this Government 74% of poor workless families who found work escaped poverty, and there was a higher poverty exit rate of 75% for children living in families who went from part-time to full-time employment. That has happened under this Government.
The right hon. Gentleman talked about international measures and suggested that we are somehow breaking away from everyone else. The reality is that no other country embarked on a plan to get rid of child poverty using that child poverty measure, and the reason is that other countries realised that it would lead to peculiar patterns of expenditure, with very little result for those who most need help.
The right hon. Gentleman asked whether relative poverty is important. Yes it is, which is why we continue to publish statistics on houses below average income, and we will continue to do so, so everybody will still be able to comment on that. Our focus will be on turning around the lives of the poorest through education and ensuring that they get back to work through skilling, which my right hon. Friend the Education Secretary has been working on.
The right hon. Gentleman talked about the poverty figures published by the IFS last week. He knows very well that before last week most of his colleagues were running around saying, “It’s going to be terrible. The IFS is predicting that child poverty will rise dramatically.” Actually, none of that happened. [Interruption.] Even on those measures, child poverty fell by over 300,000 under this Government.
The right hon. Gentleman referred to a well-respected body such as the IFS, which has all the means at its disposal, and we have enormous respect for its ability to predict things, but its predictions on child poverty have been wrong every single year that we have been in government. In its most recent prediction it was wrong again. Its original prediction was that child poverty would rise to 2.8 million, but that was out by over half a million.
I am not attacking the IFS—far from it—but simply saying that if a Government set a policy on something they find incredibly difficult to forecast or predict, they will end up chasing the error, as the previous Labour Government did. Well over £200 billion was spent on tax credits, but the key point is to turn lives around. That is why we will present this Bill, and why we will change this so that we can reach the poorest children.
Oral Answers to Questions
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Mr Duncan Smith
As I have said, we did a huge amount to support carers in the last Parliament, and we intend to continue to protect and support them throughout this Parliament. Carers do a huge amount to support people, including in the national health service, and including people with disabilities. This has been our promise and our pledge. We will continue to support carers.
Stephen Timms (East Ham) (Lab)
The Secretary of State referred to the shadow Secretary of State; I am pleased to tell the House that she gave birth to a baby boy last Wednesday and that mother and baby are doing well. The Secretary of State referred to disabled people and the effect on them of the £12 billion benefit cuts. It now appears that the anxiety and uncertainty facing carers will be extended, because we will not get the full list of cuts on 8 July; we will have to await a further statement in the autumn. When the final list of £12 billion is announced, will carers be protected from those cuts?
Mr Duncan Smith
First, will the right hon. Gentleman pass on our thanks—I mean congratulations—to the hon. Lady on her great news? I have already made it clear that we have done a great deal to support carers, and it is my intention to keep on supporting them. It is worth pointing out that our changes improved the lot of carers over the course of the previous Parliament, and will continue to do so.
Stephen Timms
The absence of any reassurance there will give rise to a great deal of concern among carers. May I ask the Secretary of State about working families on lower and average incomes? Will they be better off or worse off once his £12 billion of cuts have been announced?
Mr Duncan Smith
We are looking at welfare, and at how to reform it. When we are ready, I will come forward with an announcement. Let me take the right hon. Gentleman back to the issue of tax credits. We have had many Labour Members going on about tax credits. I looked up how tax credits were increased under a Labour Government. Interestingly, it appears that just before every election, the Labour Government dramatically increased tax credits—in 2004 by 60%; in 2005, just before the election, by 7.2%; and in 2010, just before the election, by 14.4% and by 8.5%. The truth is that his Government have always used benefits as a way of trying to buy votes. We believe that benefits are about supporting people to do the right thing, to get back to work, and to live a more prosperous life.
The Minister for Employment (Priti Patel)
I commend my hon. Friend, who is a strong and assiduous champion of young people and apprenticeships. I assure him that we are engaging with young people in his constituency, promoting nine apprenticeships that are available with his local authority and working in partnership with Kirklees College to promote traineeships. In 2013-14, 616 apprenticeships were started in his constituency.
Stephen Timms (East Ham) (Lab)
We welcome the Government’s belated decision to consult on a charge cap for savers withdrawing their money from pensions. Will the cap apply only to exit fees, or will it also cover recurring charges on investment and income drawdown products? Which? says that that sort of cap could save £10,000 out of a typical £36,000 pension pot, and before her appointment, in March, the new Minister for Pensions said that that sort of cap was needed to protect savers. Will the wider cap be the subject of the Government’s consultation?
Mr Duncan Smith
The right hon. Gentleman is right in the first part of his question. In the second part, as he knows, the Chancellor announced the consultation, which will go out in July. We have concerns about some companies that may be overcharging, and that will form part of the consultation.
Oral Answers to Questions
Stephen Timms Excerpts(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Esther McVey
Again, I need to correct the record. It would be helpful if Opposition Members looked at the true youth unemployment numbers, which are down on the year and down nearly a fifth since 2010. Opposition Members delivered an increase in youth unemployment of 45%. Please stop scaremongering, get the facts right and go and help young people into jobs.
Stephen Timms (East Ham) (Lab)
I hope the Minister will at least take some note of her own UK Commission for Employment and Skills, which points out that the UK now has German levels of adult unemployment, but eurozone levels of youth unemployment. Some 40% of unemployed people in the UK are under 25. Youth Contract wage incentives failed and were scrapped eight months early last summer. Does she have any new plans to tackle the very high level of youth unemployment—nearly three times the level of adult unemployment—which, as my hon. Friends have rightly pointed out and contrary to what she has been telling us, has gone up in the past couple of months, not down?
Esther McVey
What can I say to Opposition Members? They seem blind to the truth. The fact of the matter is that youth unemployment was going through the roof—there was an increase of 45%—and this Government have brought it down by nearly 200,000 since 2010. Working with businesses, we brought in an array of support, from work experience to sector-based work academies and wage incentives. We brought in a whole plethora of support. Some worked better than others—that is correct—but the aim and the outcome remains: youth unemployment is down by nearly 200,000 since Labour left office.
Stephen Timms
There is not much evidence of soft skills in that answer. The part of the UK where we have seen real progress on youth unemployment has been Wales. Youth unemployment used to be higher in Wales. Thanks to Jobs Growth Wales it is not higher any longer. Is it not now clear that for young people to benefit fully from the recovery that is under way, we need the young people’s job guarantee right across the UK?
Esther McVey
I am afraid it is the right hon. Gentleman who has soft skills. I have core skills in telling the truth: youth unemployment is down 200,000 since he left office. We do not need a job guarantee scheme, which does not work and costs an incredible amount of money. The work experience scheme we brought in is delivering better results at a twentieth of the cost. You bring in Labour, you pay a lot more for a lot less results.
Compulsory Jobs Guarantee
Stephen Timms Excerpts(9 years, 2 months ago)
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Stephen Timms (East Ham) (Lab)
I beg to move,
That this House calls on the Government to put a strict limit on the amount of time that people can be left on jobseeker’s allowance without being offered, and required to take up, paid work, by introducing a compulsory jobs guarantee that would ensure that anyone under 25 who has been receiving jobseeker’s allowance for a year, and anyone over 25 who has been receiving jobseeker’s allowance for two years, would be offered a paid job, with training, that they must take up or face losing benefits; and further calls on the Government to ensure this compulsory jobs guarantee be fully funded by a one-off repeat of the tax on bankers’ bonuses and restricting pension tax relief on incomes over £150,000.
This is a debate about the kind of recovery our country needs to see, about who is being left behind, about the kind of future we are building for the next generation and about whether this Government are using more than just warm words when they talk about full employment, as the Prime Minister has done recently.
Our challenge to Ministers today is to put a strict time limit on the period for which someone can be left on jobseeker’s allowance before they are offered, and required to take, proper paid work. The compulsory jobs guarantee, funded by a tax on bankers’ bonuses and restrictions to pensions tax relief on incomes over £150,000 a year, would mean a new start and new hope for the more than 29,000 young people who have been out of work for over a year, and for the 130,000 over-25s who have been out of work for more than two years.
Andrew Bridgen (North West Leicestershire) (Con)
Will the right hon. Gentleman clarify whether this will be the 10th or the 11th time his party has spent the bankers’ bonus tax?
Stephen Timms
We had a bankers’ bonus tax in the past, but this will be the sole purpose for the new bankers’ bonus tax to be introduced after the next election. We will all be committed to the guarantee that I am setting out for the House this afternoon.
Those people I have described are the ones this Government have left behind. They are the people whom Labour Members are not going to forget, not only because we owe them a fair chance to escape long-term unemployment but because we cannot afford, as a country, to leave them on benefits for years on end. Nor can we afford the consequences of the low wages that they are likely to earn if they do find work after such a long period of unemployment.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does my right hon. Friend agree that this guarantee is a serious step towards what has always been my great ambition, which is that there should be no unemployment for anyone under 25? They should be in a job, in a job with training, in training, in education or in valuable paid work experience. That is the ambition and the Government cannot grasp it because it is too ambitious.
Stephen Timms
My hon. Friend is absolutely right about the ambition, and of course this scheme will be an enormous step towards tackling the scourge of long-term unemployment. To build a strong and stable recovery, and a fairer and more united country, we need to make sure, as he says, that everyone gets to play their part, that we harness its talents and fulfil the potential of all, and that everybody knows they have a stake in our country’s future.
We have seen some welcome recent falls in the headline rate of unemployment, from the peaks reached after this Government choked off the recovery they had inherited in 2010. More people in work is always good news, which is why we repeatedly urged the Government to do more to stop the soaring unemployment they presided over after the general election.
Mr Alan Reid (Argyll and Bute) (LD)
I draw the right hon. Gentleman’s attention to the fact that in my constituency unemployment rose by 385 under his Government, whereas it has fallen under this Government by 763. His Government failed, not this one.
Stephen Timms
But long-term unemployment is higher in the hon. Gentleman’s constituency now than it was at the time of the last election. That is the legacy of the three years of almost no growth in the economy following the general election, which we now need to address. Let me say to him and to other Government Members that self-congratulation on what has happened in recent months is dangerously complacent about underlying problems in the labour market and utterly out of touch with the impact such problems have on people who are desperate to work and to earn their way out of the cost of living crisis they are facing. People are deeply concerned about the prospects for their children and the grandchildren. Those are the points we now need to address.
Alok Sharma (Reading West) (Con)
The right hon. Gentleman talks about self-congratulation, but that is not what Government Members are doing. We are recognising that policies have been put in place for businesses to create more than 2 million jobs. Why will he not congratulate the Government on their policies and businesses on creating those 2 million-plus jobs?
Stephen Timms
We were left with a legacy of a very large number of people who have been out of work for a long time. It is welcome that at long last the economy is growing and jobs are being created; the long-delayed recovery is now, finally, in place. The question is: are those who have been left out of employment by the events of the past few years going to get the opportunities that these new jobs will create? Addressing that is exactly the purpose of this afternoon’s debate and of the proposal I am commending to the House.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
If the right hon. Gentleman wants to be completely fair, will he take the chance now to apologise for the fact that under the last Government long-term unemployment doubled and youth long-term unemployment rose by a half? Should Labour not be saying, “We are really sorry, we got something very badly wrong”?
Stephen Timms
The number of long-term unemployed young people—those claiming for more than a year—is a lot higher now than it was at the time of the election. As we are talking about apologies, I would hope the Secretary of State would apologise to the House and to the country for the fact that the Government allowed unemployment to soar to 2.67 million after the general election, allowed youth unemployment to soar to more than 1 million and allowed long-term unemployment to hit historic highs at the end of 2013. Those are the failures and the legacy we must now address.
Pete Wishart (Perth and North Perthshire) (SNP)
I note that Labour’s motion talks about taking benefits away from under-25s if they do not take an offer of a job. How does the policy of the right hon. Gentleman and the Labour party to take benefits away from young people differ from the Tory party’s policy on taking benefits away from young people?
Stephen Timms
Young people want a job. That is what they are asking for and that is what we will provide under the jobs guarantee, and I hope the hon. Gentleman will support us.
Andrew Gwynne (Denton and Reddish) (Lab)
May I commend to my right hon. Friend the work of Tameside’s Labour council, which has implemented, as part of its “15for15” pledges, a local youth jobs guarantee and a Tameside enterprise scheme that will support small businesses not only to take on and to train young people, but to give them vital mentoring?
Stephen Timms
I am glad to join my hon. Friend in congratulating Councillor Kieran Quinn and Tameside’s council on what they have achieved. We are seeing this idea being introduced by Labour councils. We heard earlier this afternoon about the Edinburgh guarantee, and these ideas are now taking their place around the country. We now need the Government to be putting a national guarantee in place.
Unemployment is now, at long last, back on the downward path that the Labour Government set it on in 2010, although, of course, its level is yet to return to the lows under Labour before the global financial crash.
Stephen Timms
I will in a moment, but I wish to make a little more progress first.
There are serious causes for concern in the labour market and much more needs to be done to build a recovery that works for everyone. Long-term unemployment remains much too high. The long period—three years—after the general election when there was almost no growth in the economy has left too many people locked out of employment and now left behind even as overall employment is rising. The number of people claiming jobseeker’s allowance for more than two years is 224% of what it was in May 2010, and young people remain at high risk of unemployment. Strikingly, the relative position of young people has become steadily worse since 2010 The most recent figures show that the youth unemployment rate is almost three times the overall rate—it is 2.9 times that rate—and for the past three months, while overall unemployment has been falling, youth unemployment has been going up. The total is now back above three quarters of a million, and we just have to hope that that is not the new trend. Action needs to be taken now to make sure that it is not and that young people are able to share in the benefits of the recovery.
Andrew Bridgen
Would the right hon. Gentleman like to comment on the words of James Sproule, the chief economist of the Institute of Directors? He said that
“Labour’s job scheme does not bear much scrutiny as a solution. No government can pull a lever in Whitehall and expect youth unemployment to disappear.”
Is not the truth that only the private sector can create sustainable jobs but that it needs a business-friendly Government to do so?
Stephen Timms
Jobs are being created. The question is: who is going to get them? At the moment, the evidence clearly shows that young people disproportionately are not. We know that the future jobs fund worked—I will discuss that in a moment—and we are going to be repeating that approach with this jobs guarantee.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The right hon. Gentleman is making some important points about youth unemployment, which is a big issue in Wales. Given that, does he think his Labour colleagues in Wales have been wrong to cut the Jobs Growth Wales fund for 18 to 24-year-olds?
Stephen Timms
I shall be discussing Jobs Growth Wales. I believe the hon. Gentleman is commending it, and I agree with him; it has been a great success and there are certainly lessons to be learned by the rest of the UK from the great success of that programme.
Derek Twigg (Halton) (Lab)
My right hon. Friend rightly says that young people, in particular, have been suffering and continue to suffer under this Government. Is not one of the important points about our jobs guarantee the fact that it will give young people experience in work? One of the biggest problems on getting into work is that lack of experience because these people cannot get a job.
Stephen Timms
My hon. Friend is right about that. I have spoken to a large number of people, including young people whose break came through the future jobs fund. They have said that having got six months’ work under their belts, thanks to that initiative, they were then able to look after themselves and apply for jobs, do well and build a career. As he rightly says, young people need that crucial first break and that is what this guarantee will provide.
Every day of unemployment means hardship, worry and missed opportunity for someone who wants to be working and earning. But the full costs are borne more widely and last much longer. Every day of unemployment is a cost to the taxpayer in unemployment benefit and tax revenue forgone, and a cost to the economy in lost output. It also imposes a cost we can never account for, through the strain it puts on individuals, families and communities. Those costs—in benefit spending, tax revenues, economic output, and individual and social well-being—can reach far into the future, as the scarring effects of unemployment build up.
The Acevo commission on youth unemployment found that people who experienced unemployment in their younger years are more likely to suffer not only spells of unemployment in later life, but in work an average wage penalty of more than 15%. That is why it is so troubling that youth unemployment is going back up. It is back up today to more than three-quarters of a million. Young women now unemployed will, a decade from now, be earning on average £1,700 a year less as a result of being unemployed today. Young men now unemployed will be earning £3,300 less a decade from now. Those effects worsen the longer that somebody is out of work.
Work by Paul Gregg at the university of Bath and Emma Tommony at the university of York suggests that the 200,000 young people who have now been out of work for more than a year are, on average, likely to spend another two years either unemployed or economically inactive between the ages of 28 and 33, and that the men, by the age of 42, will be suffering a wage penalty of more than £7,000 a year. Those are big effects that need to be addressed.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
My right hon. Friend is making a very powerful case. On the effects of long-term unemployment on young people, he mentioned the impact on income, but will he comment about the impact on mental health, as unemployment can have lifelong effects? Does he agree that it is important to have a joined-up approach between the Department of Health and the Department for Work and Pensions?
Stephen Timms
My hon. Friend is absolutely right. I was at an event yesterday with the Prince’s Trust where a young man was describing how he was about to be sectioned when, thanks to the Prince’s Trust, he was able to go into a job and his mental health problem was resolved. She is also right about the costs to the economy and the health service of long periods of unemployment early on.
Mike Gapes (Ilford South) (Lab/Co-op)
Will my right hon. Friend confirm that the jobs that we are talking about here, unlike the jobs that many young people have to take at the moment, which are zero hours and exploitative, will be real and proper jobs? They will not be the fake jobs that this coalition Government are producing.
Stephen Timms
I can assure my hon. Friend that these will be jobs for at least 25 hours a week and paid at least at the level of the national minimum wage.
The persistent unemployment that we still see today could be contributing to a continued cost of living crisis tomorrow, weakening the productivity and the growth potential of our economy as well as undermining efforts to keep social spending under control and to bring down the deficit. We must take urgent and effective action now to tackle the problem.
What action have we seen from the Government? One of their very first acts on entering office was to abolish the future jobs fund, breaking, incidentally, the promise that the current Home Secretary made during the election campaign. Eventually, the DWP published an evaluation of the future jobs fund and, to the surprise of nobody on the Opposition Benches, it was glowing. It found a net benefit to society—net of all the Exchequer costs—of £7,750 for every single young person who took part. It reckoned that, within three years, half the cost of that intervention came back to the Exchequer because participants stopped claiming benefits and started paying tax and national insurance. It was an exceptionally cost-effective policy.
By late 2012, when the evaluation was published, it was too late. The future jobs fund had gone. In the time since its abolition, unemployment had risen to more than 2.5 million and youth unemployment had risen to more than 1 million.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
As the right hon. Gentleman is referring to the research, may I just read out what it says? It says that
“even under the most optimistic combination of assumptions…the FJF programme is still estimated to result in a net cost to the Exchequer…there might never be an estimated net benefit to the Exchequer.”
That is what the analysis said.
Stephen Timms
If the right hon. Gentleman looks at the previous paragraph, he will see that the evaluation said that half the cost of an intervention came back to the Exchequer within a three-year period and that the wholly inadequate replacement for it was the Work programme, which sends more people straight back to the jobcentre after two years than it places in sustained work. It also performs shockingly badly not just in Edinburgh, as we were hearing earlier on, but for those in need of support, such as older workers and people with health problems for whom it has so far recorded failure rates of 87% and 93% respectively. The Work programme has been a failure and we must replace it with something that works better.
On youth unemployment, the Deputy Prime Minister saw what was going on and had an attack of conscience. He announced the Youth Contract, which the Government promised would lead to 160,000 work subsidies for young jobseekers. It started in April 2012 and it was an utter flop. It was not promoted. That was undoubtedly because DWP Ministers, with the possible exception of the Minister for Pensions, did not have their heart in it. Employers knew nothing about it. Those who did hear of it were confused by it and had nothing to do with it. The Government’s own advisers on poverty and social mobility said that it was not working, so last summer it was unceremoniously shut down early, after it had achieved fewer than 10% of the promised placements that were budgeted for. Ever since then, unemployment among young people has been going up.
The latest proposal from the Government is time-limiting support for young people without giving them the opportunity to train, after which they will simply be required to do community service. That is not an employment policy, but a policy for punishing the victims of the negligence and ineffectiveness of this Government.
Mr Marcus Jones
For all the right hon. Gentleman’s bluster, does he not accept that youth unemployment has gone down under this Government? For all his criticism, does he not accept that youth unemployment under the Labour Government was steadily going up from 2004 to 2010? Labour does not have a good record.
Stephen Timms
Youth unemployment was affected by the worldwide economic crash. What is worrying—even the hon. Gentleman might, in the privacy of his own reflection, be worried about this—is that, at a time when overall unemployment is coming down, youth unemployment is going up. The rate of youth unemployment is nearly three times the overall rate of unemployment now, and that multiple has been going up progressively since the general election.
Stephen Timms
The hon. Gentleman just needs to look at the figures published in January, which show that youth unemployment has been going up for the past three months. The figures that we saw last month cover the period from September to November.
Stephen Timms
Let me make a little more progress, then I will gladly give way again.
Labour has a real plan to get young people into work and to end the scourge of long-term unemployment. It is a tough plan as we will hold people responsible for accepting work when it is offered, but it is also a fair plan as it gives a young person the opportunity to work, earn a wage and develop skills. Our compulsory jobs guarantee will guarantee a real, paid job, most likely in the private sector—[Interruption.] Members just need to look at what has happened with Jobs Growth Wales, which we heard about a few moments ago. About 80% of the jobs provided on the same wage subsidy model—5,000 companies have been hosting those jobs—are in the private sector. We will guarantee a job for every 18 to 24-year-old who has been looking for work and claiming jobseeker’s allowance for a year, and for every adult aged 25 and over who has been looking for work and claiming for two years.
Robert Halfon (Harlow) (Con)
I am grateful to the right hon. Gentleman for giving way. Let me quote him the statistics from Harlow. In May 2010, 605 young people aged 18 to 24 were claiming JSA, a rate of 8.1%. That was higher than the national average. Now, 235 young people are claiming JSA in Harlow—a rate of 3.1%—putting Harlow back in line with the national average. What does he say about that? Surely those figures are to do with not just the Work programme but all the investment in apprenticeships, the new university technical schools and other methods.
Stephen Timms
I refer the hon. Gentleman to the national figures. Of course unemployment was hit hard by the worldwide economic crash, but over the past three months in particular there has been a steady, month-by-month increase in youth unemployment at a time when overall unemployment is coming down. I put it to him—I think many Government Members would sympathise with this view—that we need to ensure that young people have a fair chance in the recovery that is now under way of gaining the jobs that are being created. The measure that I am arguing for will allow that to happen.
Stephen Timms
I will make a little more progress and then I will gladly give way again.
The Government would cover the costs to employers of paying national minimum wage and national insurance for a 25-hour week plus £500 per employee to help businesses with training, admin and set-up costs. In return, employers would be expected to provide training and development for those taking part and show how the jobs were additional—not replacing existing jobs and not leading to somebody else losing their job or seeing a reduction in hours.
Nick de Bois (Enfield North) (Con)
Given the right hon. Gentleman’s faith in the private sector in rallying to his scheme, is he not perturbed by the Institute of Directors saying that it
“does not bear much scrutiny”?
It continued:
“Wage subsidies for employers are not the source of sustainable jobs.”
With that in mind, will he place in the Library or share with the House how many companies have come forward to express their delight at the scheme?
Stephen Timms
I can answer that very directly: 5,000 employers are taking part in the Jobs Growth Wales scheme. The Federation of Small Businesses in Wales is a champion. I simply contrast the quote given by the hon. Gentleman with the experience of those on the ground, including the FSB.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
Many of the jobs that my right hon. Friend is referring to would come from small and medium-sized enterprises. One of the main problems faced by SMEs on my patch is cash flow—trying to get money from work that they have completed. Is there anything that a future Labour Government could do to speed up payments, so that small suppliers could get the money in and take on young people?
Stephen Timms
I have just mentioned the FSB. My hon. Friend will know how active it has been in demanding change of the kind he describes and makes a telling case for. I agree: more should be done to support small business in that way, and in other ways. We need to reform how the banks deal with their small-business customers too.
Andrew Bridgen
The right hon. Gentleman is being generous in giving way. He has expounded a great deal on his belief in Jobs Growth Wales. His party’s socialist policies have been implemented in Wales, but figures from the Welsh Government show that only one in three of the young people who have applied for Jobs Growth Wales got a job, so it is nowhere near guaranteeing a job for all young people.
Stephen Timms
We will be delivering a guarantee, exactly as we did with the future jobs fund. Anyone can look back at the record of the future jobs fund, where a guarantee was delivered. It will be again.
I shall say a little more about how the guarantee would work. Participants would be required, if their employer did not plan to keep them on when the subsidy ended, to pursue intensive job search for a permanent opportunity at the end of the six months. Any jobseeker who refused to take up a job offered under the guarantee would, in the normal way and in line with the long-standing conditions for benefit claims, lose their benefits. That is always the case.
The Minister for Pensions (Steve Webb)
The right hon. Gentleman is very careful with his figures, so he will know the answer to this question. He points to the future jobs fund as evidence of how his new scheme would work, and he says he hopes those new jobs would be in the private sector. What percentage of future jobs fund jobs were in the private sector? What is the figure?
Stephen Timms
Very few. There is the good example of Jaguar Land Rover taking on a group of young people under the future jobs fund, and my understanding is that every single one of those young people was kept on in their job when the wage subsidy ended. The future jobs fund was largely about the charity and public sectors; the guarantee is largely about the private sector, exactly as Jobs Growth Wales has been.
Alok Sharma
The right hon. Gentleman is keen to talk about numbers, so let me give some from his own constituency. In May 2010, there were 410 jobseeker’s allowance claimants who had been unemployed for more than a year. In December 2014, the figure was 225. In May 2010, the six-month figure was 1,585, but in December 2014 it was 1,045. Will he not acknowledge that, even in his own constituency, this Government’s policies are making a difference and people are getting real jobs?
Stephen Timms
Those figures, in my constituency and in his, are far too high. A great deal more needs to be done to enable young people in particular, but long-term unemployed over-25s as well, to share in the benefit of the recovery that is, at last, under way.
Stephen Pound (Ealing North) (Lab)
I am a little distressed at the rather mean-spirited response from some Government Members. Does my right hon. Friend agree that one of the most salient features of the proposal is giving people the experience of work and letting them see what 8 o’clock in the morning looks like and get the idea of being in a job? If the job that they move into in the future is not the same job, so what? The important thing is to get people into the world of work.
Stephen Timms
My hon. Friend is right. I have spoken to many people, including those who went through the future jobs fund, who say exactly that: having the break of getting six months in a job, becoming familiar with the habits and routines of work, and putting that on their CV enabled them to thrive.
This policy is not just an immediate intervention to limit youth and long-term unemployment; it is an investment in the skills and employability of the British work force, underpinning our productivity, growth potential and fiscal sustainability into the future, but we have been clear that there will be no commitments in our manifesto that require more borrowing. Therefore, we have set out clear plans to fund the policy fairly and prudently.
In the first year, to provide for the large number of long-term claimants left by this Government’s policies, we would pay for the policy with a repeat of the successful bank bonus tax, which was levied in 2010. That could raise £2 billion. In future years, the costs would be covered by restricting pensions tax relief for the highest paid—those earning more than £150,000 a year—to 20%. The House of Commons Library has estimated that that could raise between £900 million and £1.3 billion a year. That is a fair and prudent way to fund jobs for young people and the long-term unemployed, and to fund the guarantee throughout the next Parliament.
Stephen Timms
I will not give way again.
Those measures have been opposed and rejected by Government Members, but we have seen where five years of their trickle-down philosophy has taken us—five years of protecting privileges for a few at the top while leaving the rest to fend for themselves.
Our plan is to put working people first, ensuring that those who can and should work are in work, that we make the most of their talents and that hard work is always rewarded. That is the way to secure a recovery from which everybody can benefit and to get social security spending under control and our public finances on a sustainable footing. That is the way to secure a future in which prosperity and social justice go hand in hand and ensure that the next generation can look forward to a brighter future. That is the plan our country needs. This Government will not deliver it. We can be thankful that the time is not far off when we can elect a Labour Government who will.
Mr Duncan Smith
May I say to my hon. Friend—I repeat, my hon. Friend—what an excellent job he has done in championing his constituency? He is right—it is about getting private sector businesses to create real jobs for young people and older workers to go into.
I want to deal in some detail with the jobs guarantee versus the future jobs fund. A Labour press release that I saw in 2014 extolled the Opposition’s pet project as
“building on the success of the Future Jobs Fund”.
The right hon. Member for East Ham carried on the Labour line. I hope that was noted back at headquarters. He is clearly to be trusted through the election, and I give him a lot of support for that.
As for the claimed success of the future jobs fund, the DWP analysis that I quoted earlier is important. It was commissioned under Labour and was subjected to extensive peer review by the National Institute of Economic and Social Research, which, as I said earlier, found that not only was the fund estimated to result in a net cost to the Exchequer but that, as I pointed out, the future jobs fund was not estimated to benefit the Exchequer at any stage, and the Exchequer would not be able to get back the money that it had spent on the programme.
By contrast, as the hon. Member for Ealing North said, young people want work experience. I remember that early on, when I first went into jobcentres, I was accosted by young people who said that the problem for them was that at job interviews they were asked whether they had job experience, and when they said they had none, they were told that they could not be given a job without work experience, but their response was that they could not get work experience without a job.
Under the previous Government, people were allowed only two weeks’ work experience before they were expected back at the jobcentre. What we did instead was to allow them up to two months’ work experience in a business, and an extra month if they were offered a job or an apprenticeship. So, by contrast, work experience under this Government—this is the interesting point—has achieved the same success rate at least as the future jobs fund achieved, but at a twentieth of the cost—£325 per place as opposed to £6,500 per place. Another difference is that the vast majority of positions under the work experience programme are in the private sector, whereas I can think of hardly any private sector companies that offered jobs under the future jobs fund. It is a success versus a costly failure.
Stephen Timms
As the right hon. Gentleman knows—he has the evaluation in front of him—there was a net benefit to society of £7,500, net of all Exchequer costs, for each person who took part. Is he surprised that youth unemployment has been going up over the past three months, at a time when overall unemployment is coming down, or was that what he expected?
Mr Duncan Smith
Youth unemployment is now lower than it was under the previous Government, and it has been falling consistently. I will wait for the figures for the next few quarters, and when they show that youth unemployment has continued to fall, I expect the right hon. Gentleman to write me a note saying, “Sorry about that; that’s another thing we got wrong.”