Unemployment (Halifax)

Steve Webb Excerpts

Wednesday 1st February 2012 Westminster Hall

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Halifax (Mrs Riordan) on securing the debate and on the very measured but passionate way in which she presented her case. I entirely agree with her that one person unemployed is too many and that the rise in unemployment in Halifax and other towns is absolutely a source of concern. She said that something must be done, and I entirely agree. I hope to use the few minutes available to me to set out what the Government are doing to deal with some of the very important points that she raised.

To set the context, for claimants of jobseeker’s allowance, the national average rate is just under 4%. The figure for the hon. Lady’s region, Yorkshire and Humberside, is 4.6%, but the figure for Halifax is 6.4%, so her town is above average in the region, and the region is above average in the country. I therefore take the point that she makes about the particular pressures on her town.

Part of the Government’s strategy is to move away from some of the schemes that unemployed people have faced in the past. The hon. Lady and I will both have met people who were sent on a scheme by the jobcentre and came away from it thinking, “What was the point of that?” It did not help them to get a job, yet the provider of the scheme got paid and went home happy. We want to change that. We want to move, and are moving, towards a system whereby the companies that we pay to help people from unemployment, from incapacity benefit and so on into work get paid only when they deliver.

The whole philosophy behind the Work programme, which is still gearing up across the country and gathering momentum, is that the providers get paid only when they get people into jobs and, specifically, when they get people into sustained jobs. The bulk of the money is end-loaded. They get very little money up front, and if they do not deliver for the people of Halifax, they do not get paid. That is a sea change from the sort of schemes that we have had in the past.

Let me give the hon. Lady a flavour of what is being provided in the west Yorkshire area, within which her constituency falls. In each area, we have two prime providers for the Work programme. They are the main contractors, and we have two because they have to compete against each other to do their best for the people of west Yorkshire. Each year, we look at how each provider has done, and if one is doing a better job than the other, more people are referred to it, so the successful providers that are good at getting people back to work receive more referrals and make more money from that. We do not mind them making money from it, because they are saving the taxpayer money and helping the individuals concerned.

The two main providers in the west Yorkshire area are Best and Ingeus. Best has a series of subcontractors that provide services to the hon. Lady’s constituents. One of the reasons that people get stuck on out-of-work benefits—not just jobseeker’s allowance, but incapacity benefits, employment and support allowance and so on—is that they have physical or mental health issues. Condition Management Partners, a subcontractor in west Yorkshire, helps such people to overcome their mental or physical health issues by providing cognitive behaviour therapy, motivational interviewing techniques and other such therapies. That is a voluntary third sector organisation working with a prime contractor to help people who have barriers to work.

We want to make sure that there is not a core of people in Halifax who have just lost touch with the labour market. The longer such people are out of touch with the labour market, the less chance they have of getting a job. We need to get them back in contact with the labour market. I entirely take on board the hon. Lady’s point that there needs to be jobs for them to go to, and I will say a bit more about that later. We want the people who have been on long-term benefits, particularly incapacity benefit and jobseeker’s allowance, to be effective competitors for those jobs. We know that jobs are being created and that vacancies will exist. There are hundreds of vacancies even now at the hon. Lady’s local jobcentre. We want the people who have been on long-term benefits to be effective participants in the labour market, so that when jobs come up, they can apply for them and get them, thereby breaking out of that cycle of long-term benefit dependency.

Another subcontractor of Best is Forster community college, which is a public sector organisation in the supply chain that provides help for Work programme participants with drug and alcohol issues. It also provides specialist support for ex-offenders and homeless people. For all those people, the danger is that their characteristics are such that they appear less attractive to employers. When private sector, or even public sector, jobs are created, they are always at the back of the queue and then get stuck on benefits. We want to make them as attractive to employers as everybody else so that they do not get stuck on benefits.

The other main provider in the hon. Lady’s region, Ingeus, has a series of subcontractors, including a group called Specialist Health Advisers, which is helping people with the basics such as exercise and healthy eating. The barriers preventing long-term unemployed people from being effective participants in the labour market include having got out of the habit of work, having got out of routines or not looking after themselves. We are trying to tackle many of those issues. Part of our strategy is getting people who are on benefit to be attractive to employers. I entirely take the hon. Lady’s point: unemployment has gone up. None the less, employment is still up compared with 18 months ago. There are more people working than there were 18 months ago. Somebody is getting those jobs, and the challenge is to ensure that help goes to the people of Halifax who are perhaps the furthest from the labour market and who are in most need of support and intervention. We pay extra for that. If somebody is unemployed but could probably get themselves a job, they do not come near the Work programme, but if they have been long-term unemployed or long-term sick, we pay extra money—in excess of £10,000 in some cases—to a provider to get that person into work. We must tackle what I call the supply side. We need to ensure that unemployed people are supported and enabled.

I am sure that the hon. Lady would be the first to say to me that that is not enough. Clearly, there have to be jobs available. She mentioned some successful private enterprises in her constituency. She mentioned an environmentally friendly company. We will shortly be launching the Green investment bank, which will provide money specifically for new enterprises and growth industries. This is not just about London and the south-east; it cannot be. We have a regional growth fund that specifically helps areas that are dependent on the public sector to make the transition to a better balance between public and private. There will always be an important role for the public sector in her area, but there is no reason on earth why, with the right support, Halifax should not have a thriving private sector as well.

Let me give one example of the incentives that we are giving. New businesses outside London and the south-east will be exempted from up to £5,000 of employer national insurance contributions for each of the first 10 employees they hire. That is a concrete and practical thing, which I am sure she will welcome.

We are also using deregulation as a way to help small businesses. I remember that at one point my local party wanted to employ its first employee. I was absolutely horrified by all the paperwork involved and the bureaucracy of running PAYE. There is a real barrier to taking on that first employee. We have said that all small businesses will be exempt from all new regulation for the next three years. Therefore, we are saying to people who start new businesses, “We are on your side. We want to give you support.” We are lowering the rate of corporation tax, with the small firms rate cut to 20%. Again, we are trying to ensure that, where a company makes a profit, it keeps more of it so that it can invest it in the local area.

We contacted the Jobcentre Plus district manager in preparation for the debate. I know that Jobcentre Plus is working very hard. Next week, for example, it is hosting a jobs fair to coincide with national apprenticeships week. I understand that the district manager would be very pleased to meet local MPs on a one-to-one basis. If the hon. Lady is happy to take up that invitation, he will talk through some of the issues that she has raised today that we may not have the chance to cover in as much detail. No one can supply as much local detail as the Jobcentre Plus manager on the ground.

The hon. Lady mentioned young people. I agree that unemployment is devastating for anybody, but at the start of somebody’s working life, it is a particular tragedy. That is why I am pleased with what the Government have been able to do on the apprenticeships front—an issue that was mentioned by the hon. Member for Upper Bann (David Simpson). My understanding is that, last year in Halifax, there were 1,150 apprenticeship starts. That programme is being expanded and we will update those figures shortly. Many people recognise that the apprenticeship scheme, which is linked to an employer and is about learning and applying skills, is a much better way of dealing with youth unemployment. It gives young people a focus and links to an employer. Although it does not guarantee a job, it makes someone more employable and gives them a reference. I am proud that the Government are doing so much in that regard.

I must admit that I am not an expert on Halifax. I was not aware of the full details of the hon. Lady’s constituency. I should say, however, that normally my right hon. Friend the Employment Minister would be responding to this debate, but with the Welfare Reform Bill going through the House, he has had to be in the main Chamber. I had a look at some of the figures for Halifax, which I am happy to leave with the hon. Lady. I have a chart that shows the number of people who have been on out-of-work incapacity benefits for the last decade in Halifax. What struck me was how the number had not moved. For 10 years, despite the booms and the busts, there was the same number of people—obviously not all of them are the same people but many are—stuck on the list. I entirely take her point that we should not stigmatise or parody the position of people on benefits. Although many people are on benefits through no fault of their own, we have allowed ourselves to get to a situation in Halifax and in many other such towns in which nearly 5,000 people have consistently been on ESA or incapacity benefit for the last 10 years. The question is: are we doing right by those people? Many of them will be in their 50s. If we just left them alone because there are not many jobs, we would be saying, “You can be on incapacity benefit for another 10 years and then you can have a pension, but it won’t be much of a pension because you haven’t been working.” We can do better than that, which is why we are keen to have these Work programme providers incentivised to help the long-term sick and disabled to overcome the barriers to work which get greater the longer people are out of work.

The hon. Lady asked about the Government’s macro strategy. She mentioned public sector job losses. She would accept, I think, that a substantial rebalancing of public spending had to be done. She was not unduly partisan in her remarks, so I will not be in my response, but it is commonly known that substantial public sector savings had to be made.

Given that—this is from memory—roughly two thirds of everything that Government spend is spent on pay, and that is certainly true if we exclude social security benefits, we cannot scale back public sector spending without significantly scaling back public sector employment, particularly if we are going to protect pensions and so on. It can be done partly through pay, as the Government have obviously done, but it will also imply a smaller public sector. It is therefore doubly crucial that we assist towns where the public sector—the local authority, the hospital and others that the hon. Lady mentioned—has been a major employer.

The hon. Lady described what has happened to the private sector and how the wool industry among others is in long-term decline. The public sector will not fill that void. Across Europe, Governments are retrenching, so it would be dishonest for me to say that the public sector will take up the slack. I think that she and I are agreed that the vital thing is to facilitate a vibrant private sector, but I also agree with her that that will not just happen. Part of the solution is about skills and training—I have mentioned apprenticeships—part of it is about unsticking the folk who get stuck on benefits and part of it is about the overall macro-economic position.

To give one example, the hon. Lady mentioned her local department store, which needs people to have spending power in their pockets. My right hon. Friend the Deputy Prime Minister has been pressing for a rise in the tax threshold, and the Government are committed to that. Instead of low-paid people paying tax after roughly £6,500, as they did last year, by the end of this Parliament they will not pay tax until after £10,000. That extra £3,500 at a basic rate of 20% is an extra £700 a year in their pockets, and I know that it would be very welcome if we moved faster on that.

People at that level of income tend to spend it. We know that, if we put money into the hands of those on lower and modest incomes, they will spend it. When we faced difficult decisions before Christmas on what to do about benefit levels for the coming year, there was a lot of debate about consumer prices index inflation peaking at 5.2% in the year to September. That very high figure has come down significantly since, so what was the case for using the full 5.2% for jobseeker’s allowance, ESA and all the main benefits, as we did? One of the things that convinced us that it was the right thing to do was the fact that those people would spend that money, thus boosting the local economy, and that decision will have helped the hon. Lady’s constituency, where benefit income is a significant part of income.

We agree with the hon. Lady: something must be done, and it is being done at both the macro and micro level. I hope that she will continue this conversation with her local Jobcentre Plus district manager, who, I am sure, will be pleased to meet her.