Opportunities for the Next Generation

Tom Blenkinsop Excerpts

Tuesday 13th September 2011 Commons Chamber

[Mr Willetts]

My hon. Friend is absolutely right that the graduate tax favoured by the Labour leader would make the fiscal crisis that we have inherited far worse. That is one of the many objections to the idea.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Will the Minister confirm that the Chancellor’s own Office for Budget Responsibility has stated that the borrowing requirement will have to increase by £46 billion and that unemployment figures will increase by 200,000 as a result of the Chancellor’s economic strategy?

[Mr Willetts]

I do not know which specific OBR forecast the hon. Gentleman refers to, but the OBR work I have seen makes it clear that although there are reductions in public sector employment, they are more than offset by increases in private sector employment. That is one of the many ways in which we are rebalancing the economy. We are now hearing claims to fiscal rectitude from the party that left us the largest structural deficit in the G7 and the largest level of borrowing in the developed world. Unless the Labour party gets serious about the importance of prudent management of the public finances, we simply will not take seriously its commitment to caring about the interests of future generations.

--- Later in debate ---

[Mr Willetts]

That is a very important point; indeed, I understand that with its latest debt issue the Bank of England has secured historically low—almost unprecedentedly low—interest rates, which is further evidence of the confidence that people have in our seriousness about tackling the deficit that we inherited from the previous Government.

I now want to make progress on some of the specific points in the motion that the shadow Secretary of State put before us. First, let me focus briefly on youth unemployment and those not in education, employment or training. Youth unemployment is a serious problem; it does need to be tackled, and of course we regret the fact that it now stands at 949,000, having been at 924,000 when we took office. However, as we have heard, when Labour took office it was at 664,000, and the rise in youth unemployment began long before the economic crisis hit.

The really serious question that parties on both sides of the House need to address is why, even during Labour’s boom years, was youth unemployment already starting to rise. That tells us that it is a deep-seated trend, which tells us that something has gone seriously wrong with our education and training system—it was not meeting employers’ needs.

[Tom Blenkinsop]

Will the Minister give way?

[Mr Willetts]

Just a minute; I want to make a bit more headway on this point.

There is a very similar pattern in numbers of NEETs. On the current data series starting in 2000, there were 655,000 NEETs in 2000, and when Labour left office there were 874,000. I have looked up the figures for two dates that may particularly strike the shadow Secretary of State’s memory. When he arrived as Secretary of State in the Department for Innovation, Universities and Skills, there were 835,000 NEETs. During the following two years, until he left that post, he was remorselessly harried on those figures by his Opposition spokesman. By the time he left the post, the number of NEETs had risen to 954,000; we debated that many times in the House. We had an increase of 120,000 on his own watch as the Secretary of State responsible. Actually, he got out just in time: the quarter after he left, the number went over 1 million, to hit 1.74 million. I had hoped we would hear a slightly more frank account from him of the lessons he learned about the difficulty of tackling the challenge of NEETs, drawing on his own experience.

The shadow Secretary of State went on to complain about our record, but I have to say that when in opposition we warned about Train to Gain, which we said was not a serious investment in training opportunities; about programme-led apprenticeships, which were losing contact with the jobs market; and about paper vocational qualifications being churned out that did not meet the real needs of employers. Those warnings, sadly, have proved to be correct.

[Tom Blenkinsop]

I thank the Minister for giving way; he is being generous with his time. We are experiencing not only record youth unemployment, but record female unemployment. I believe that the last time that such rates were experienced was in 1988, when the Minister was last in power.

[Mr Willetts]

I was not personally in power then—but absolutely, some groups are excluded from the labour market whenever times are tough, and youth unemployment and female unemployment are both aspects of that.

--- Later in debate ---

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

This debate is about the ability to provide skills, work and disciplined, self-organising working communities. That in turn provides revenue in tax and safeguards pensions, services and social security, on which we all rely to support the next generation.

I draw the attention of the House to a response that I received from the Minister to a written question. I asked him:

“what assessment he has made of the potential effect on youth unemployment of the change in higher education fee arrangements in 2012.”

He replied:

“The change in the fee arrangements enables the Government to continue to finance a high number of places in higher education for students in 2012, and therefore there is expected to be no adverse impact on youth unemployment as a consequence of the change.”—[Official Report, 7 September 2011; Vol. 532, c. 721W.]

The poverty of that response from the Minister is surpassed only by the poverty that the Government’s policy on tuition fees will induce in areas such as mine.

Last week Bill Gross of PIMCO said that the market would look favourably on a change of the Government’s economic plans. That is because the growth forecast has repeatedly been lowered. Inflation today was 4.5% on the consumer prices index, although that is not reflected in pay increases. We have seen an increase in unemployment, massive public sector redundancies and the private sector slowing down and building up for redundancies. In manufacturing and construction purchasing managers’ index figures have declined continuously in the past few months under this Government

Middlesbrough, unfortunately, tops the league in the north-east as the area with the highest youth unemployment, with 31.6% of economically active young workers aged 16 to 24 resident in the borough out of work. It is followed by Redcar and Cleveland, two boroughs that I also represent. Across the UK as a whole, almost one in five economically active young workers aged 16 to 24 are unemployed. Around 949,000 16 to 24-year-olds are out of work, following a rise of 15,000 in the last quarter, which is approaching levels last seen in the 1980s. Overall, unemployment rose by 39,000 in the three quarters to June this year, to top almost 2.5 million. The number of jobless women benefit claimants rose by 15,600 to over half a million, the highest rate since 1996.

What is especially concerning for me, coming from an area where the mass unemployment of men from 1979 onwards led to a cultural phenomenon of long-term family unemployment, is that we are now seeing massive unemployment for women. We have not seen such unemployment rates since 1988. That has a massive cultural impact on constituencies like mine, where we have had fathers, brothers and uncles unemployed, because we will now see mothers, aunties and sisters unemployed for the long term, too, as a direct result of these policies. However, these concerns seem to be falling on deaf ears in the Government. The Office for Budget Responsibility, which was set up by the Government, knows that the Government will have to borrow £46 billion more as a result of their economic policies. That means that 200,000 more people will become unemployed, also as a result of those policies.

I suggest to the Government that their rebalancing of the economy, along with the recovery, seems to be flatlining. The latest survey data from business organisations suggest that the manufacturing revival has run out of momentum. Even as businesses complain about engineering skills shortages, the unemployment rate remains the highest in the north-east, at 10%. The fear is that the skills hoarding that we saw before is not happening. The unfortunate position we are in at the moment is that the same people are now going back on short-term working agreements that they had only recently come out of. We are returning to a period in which the economy could go either way. One suggestion that the Minister might like to make to the Chancellor is to reverse the CFP policy, please look at primary industries, such as the chemical and steel industries, and please do not put manufacturing in jeopardy from foreign competition.