21:59 - The House divided: - Ayes: 225 / Noes: 302 - Question accordingly negatived.
The Chief Secretary to the Treasury (Danny Alexander)
I welcome this opportunity to discuss youth unemployment and bank bonuses. Both matters are hugely important as we tackle this country’s extremely difficult economic circumstances. The recent youth unemployment figures demonstrate just how significant a challenge we face repairing the damage that the previous Government inflicted on the economy, restoring growth and creating new jobs in the recovery. This coalition Government will not let the young and the vulnerable bear the brunt of these difficult times, nor will we let them bear the consequences of the previous Government’s profligacy. Youth unemployment is not a price worth paying.
One thing that the shadow Chief Secretary failed to mention was the record of the Labour Government, who oversaw a 40% rise in youth unemployment.
Danny Alexander
I will give way to the hon. Lady, and then I will make some progress.
Meg Hillier
What would the right hon. Gentleman say to the young people in my constituency, where there has been a 12.5% increase in youth unemployment among 18 to 24-year-olds from December 2010 to December 2011, on this Government’s watch?
Danny Alexander
I would say to them that in very difficult times we are doing everything we can to support them. Let me tell the House what we are already doing.
Danny Alexander
Hold on. I will give way to the former Foreign Secretary, but let me make just a little progress.
We are already providing more apprenticeship places than any previous Government, with an increase of 400,000 in the last year and a commitment to 1.2 million over the entire spending review period. That is at least 250,000 more than the previous Government’s commitment, although the shadow Chief Secretary seems to oppose that increase. As announced in the autumn statement, we are also launching a new £1 billion youth contract to help get young people into work, so that they can learn a trade and get equipped for their future career. Starting this spring, the youth contract will support up to 500,000 young people into education and employment opportunities. The youth contract wage subsidy is targeted at employers in the private sector, creating sustainable private sector jobs for the long term.
Toby Perkins
The Chief Secretary talks about the previous Government’s record, but I feel as if I am listening to a broken record, because when we are here to debate a motion about this Government’s policies, all we hear is him harking back to the last Government. Will he come up with something constructive about what he is going to do for the millions of people who are unemployed and looking to him for some guidance?
Danny Alexander
I fear that the hon. Gentleman was planning his question so carefully that he did not listen to my remarks about apprenticeships or the youth contract, which is a vast improvement on the wasteful future jobs fund, which offered subsidies almost three times as high as the youth contract and funded too many temporary jobs in the public sector. In fact, almost 50% of participants in that scheme were claiming benefits again within eight months of starting a future jobs fund job.
David Miliband
The right hon. Gentleman quoted the figure of 40% for the rise in youth unemployment under the previous Government. It is correct that youth unemployment started rising in 2004, but the allegation against the current Government is that they have made the situation much worse. In my constituency of South Shields there was a 210% increase in long-term youth unemployment in 2011 alone. That is what he has to answer for. It is not that he invented the problem, but his policies are making it worse.
Danny Alexander
The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) will address the statistical changes that the previous Government made. However, the right hon. Gentleman was in government during a boom, yet his Government presided over an increase in youth unemployment. We are facing serious economic challenges in this country, caused in large part by the actions of the previous Government, and we have to take steps to resolve those problems.
The youth contract offers young people the prospect of long-term private sector employment. It is a scheme that has the full backing of the private sector. As John Cridland, director general of the CBI, has said, it strikes at the “scourge of youth unemployment”.
Sheila Gilmore
McDonald’s, which is apparently getting £10 million a year for training people in the things that it normally trains them in and calls the process apprenticeships, said in The Sunday Times yesterday that it had not created a single extra job with that money. What is the Chief Secretary’s response to that?
Danny Alexander
I have visited companies around the country, in Scotland and England, that have created a significant number of new jobs and new apprenticeships, providing a significant increase in skills. That is the right way to go about it, and that is what we are trying to do with the increase in apprenticeships. I hope that the hon. Lady will welcome that. It is fair to say that the apprenticeships programme and the youth contract complement our Work programme, which is the biggest payment-by-results employment programme that this country has ever seen. The Work programme will provide personalised support to around 2.4 million people over the next five years, helping those most at risk of long-term unemployment.
Alison Seabeck (Plymouth, Moor View) (Lab)
In Plymouth we are dependent on the public sector, and we are also a garrison town. As a result of the Government’s defence decisions, we are seeing a lot of young men, in particular, losing their positions in the services and becoming unemployed. Those coming out of the services are relatively highly skilled, putting pressure on the few vacancies that we have in Plymouth and cutting long-term unemployed young people out of the market. We have seen a 96% increase in the number of the long-term unemployed in Plymouth. What will this Government’s policies do for those young people? Absolutely nothing in Plymouth.
Danny Alexander
The youth contract, which I have mentioned, along with the Work programme and many other things that we are doing, will help the young people in the hon. Lady’s constituency, and I very much sympathise with the position that she has described.
Mary Macleod (Brentford and Isleworth) (Con)
Does my right hon. Friend agree that apprenticeships are an important part of the solution, by giving young people the opportunity to build their skills? We have record numbers of apprenticeships; indeed, the number of them in my constituency has doubled.
Danny Alexander
I agree with my hon. Friend: the apprenticeship programme is a vital part of tackling youth unemployment and lifting the skills in our work force. It is a real shame that the Opposition now seem to be opposing the extra investment in apprenticeships that we have made.
Danny Alexander
I am going to make some progress, and I will give way again shortly.
Across the wider economy we are doing everything we can to foster renewed prosperity, create new jobs across the UK and return the country to sustainable growth. Whether we are talking about regulation, the planning system, reducing corporate taxation, our investment in infrastructure or the tax cuts that we are delivering for low-income workers, we are putting forward ambitious plans—plans that we need in these difficult times.
Danny Alexander
I will give way in a moment.
We have plans that will help to foster a recovery led by our private sector, by entrepreneurs and by exporters, creating the kind of growth that the Opposition failed to deliver in over a decade in government. We face the monumental task of dealing with their legacy of unsustainable spending and debt-fuelled consumption, which left the coalition the task of dealing with the largest peacetime deficit on record.
Danny Alexander
I will give way in a moment.
The Opposition do not seem to realise that tackling that deficit is the vital precondition to sustainable growth. It is only by tackling the deficit that we can provide the certainty, stability and low interest rates that are critical to a recovery. The past 18 months have seen sovereign debt downgrades across the Europe, bail-outs of the weakest Eurozone economies, and countries racing to consolidate at the behest of the bond markets.
Claire Perry
I should like to bring a local business perspective to the debate. I had dinner last week with a group of people representing small businesses in the Wiltshire area, all of whom said that their businesses looked reasonable and they were thinking about hiring. Most importantly, they said that they had benefited enormously from the economic stability that the Government had created. Has my right hon. Friend heard anything from the Opposition that amounts to a coherent economic policy, or are they simply offering a wish list of chops and changes, and opposing for opposition’s sake?
Danny Alexander
I have heard nothing coherent from the Opposition, and I have heard nothing from the business community in this country but support for our policies to deal with the deficit and restore this country’s economic credibility. The coalition has never shirked its responsibility to take tough and sometimes unpopular decisions to tackle the deficit and pull the country out of the hole that the previous Government dug. Because we did not delay, and because we took action to get ahead of the curve, we can cut the deficit on our own terms and shelter the UK from the debt storm that has engulfed our nearest neighbours.
Rachel Reeves
The right hon. Gentleman says that the Government are tackling the deficit, but will he confirm how much extra borrowing there will be during this Parliament, compared with the prediction when they took office? Is that not a cost of their failed economic policies?
Danny Alexander
I can confirm that according to the latest forecast, there will be significantly increased borrowing compared with the previous one. The hon. Lady should have explained in her opening speech that her policies involve substantial further increases in borrowing, which would destroy this country’s economic credibility and the hard-won low interest rates that we have achieved.
As a result of our action, we have record low bond yields that feed through to record low interest rates, which benefit households paying mortgages and businesses refinancing loans right across the country. Whereas our bond yields are just 2.1%, those of Spain have risen to 5.5%, those of Italy remain over 6%, and those of Greece have climbed to a staggering 34%. Even a 1% rise in our market interest rates would force taxpayers to find an extra £21 billion in debt interest payments. A 1% rise in effective mortgage rates would result in an extra £10 billion for mortgage payments.
The Opposition have had 18 months to come to terms with the mess they created, but they still do not get it. It has taken them 18 months to move from the wrong place to all over the place. The Leader of the Opposition called the pay freeze an
“ideological attack on the public sector”,
but he now accepts it. The shadow Chief Secretary to the Treasury called the uprating of pensions with the consumer prices index an “ideologically driven move”, but it is a move that the Opposition have now accepted for their party’s own pension scheme. So let us be clear—financial discipline is not ideological; it is a necessary condition for effective government. In the past 10 days, members of the Labour shadow Cabinet have succeeded in proving that they cannot even convince themselves of the credibility of their economic policy.
Robert Flello (Stoke-on-Trent South) (Lab)
Will the right hon. Gentleman explain his idea of economic stability to my constituents? In my constituency the long-term youth unemployment rate has risen by 162% in the past year. Will he explain how his stability will affect the people of Stoke-on-Trent who are losing jobs hand over fist because of his policies?
Danny Alexander
If the hon. Gentleman looks around Europe at the countries that have failed to tackle their deficits, he will see much more serious economic problems—problems of the kind that we would have here if we followed Labour’s policies. He should start by apologising for the mess that his party made of the economy.
Danny Alexander
I am going to make some progress now.
As the Secretary of State for Business, Innovation and Skills outlined today, we will also take the tough decisions to tackle excessive executive pay. At a time when millions of workers face a pay freeze or worse, and when many businesses are confronting a difficult trading environment, the highest-paid cannot be disconnected from reality. That is why the Secretary of State announced new measures to drive through greater transparency on executive pay, to empower shareholders to deliver responsible pay, and to reform remuneration committees to break the old boys club.
It is for that same reason that the Government are leading efforts, domestically and internationally, to reform our banking sector fundamentally in order to protect our competitiveness while safeguarding our stability. We are abolishing the tripartite system of regulation that failed so dramatically in the run-up to the last crisis, and putting the Bank of England in charge of both micro and macro-financial supervision. We are reforming the sector itself, as recommended by the Independent Commission on Banking, to safeguard the UK’s position as host to a world-class financial services sector without putting UK taxpayers at risk.
We have implemented a permanent bank levy to ensure that banks make a fair contribution to tackling the deficit, reflecting the risks that they pose to the system while encouraging them to move away from riskier models of funding. As we announced in the autumn statement, we have increased the levy from 1 January this year to ensure that it yields at least £2.5 billion a year, which is more than the amount yielded by the previous Government’s one-off tax on bonuses—a tax that
“failed to change the industry’s behaviour over pay”.
Those are not my words, but those of the previous Chancellor, who was responsible for the policy in the first place.
Through the Financial Services Authority’s remuneration code, we have ensured that bonuses are deferred over at least three years, and linked to the performance of the employee and the firm. Through the disclosure regime, we have provided more transparency than ever on pay. And while the previous Government managed to get only four of the top 15 banks to sign up to the code of practice on taxation for banks that was introduced in 2009, we have ensured that all are signed up.
Our expectations of the banking sector are clear: banks should make a full and fair contribution. They must respect the spirit, not just the letter, of the law, and make a commitment not to use artificial schemes to avoid tax. The new Bank of England Financial Policy Committee, established as a result of this Government’s reforms, has warned that in these turbulent times it is capital levels, not bonus payments, that have to be the priority. Did the hon. Member for Leyton and Wanstead (John Cryer) want to intervene?
John Cryer
I wanted to intervene while the right hon. Gentleman was speaking earlier.
John Cryer
Going back to the subject of unemployment rates, youth unemployment in my constituency has gone up by 140% since the election. That is what is happening now, not what happened under the previous Government. Will the Chief Secretary to the Treasury deal with the immediate issue and tell us why that is happening? Will he also tell us whether he thinks it is a price worth paying?
Danny Alexander
As I made clear earlier, I do not consider it to be a price worth paying. That is why the Government are doing everything possible, through investment in apprenticeships, in our youth contract and in the Work programme, to ensure that there are opportunities for people.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Will the right hon. Gentleman tell us how many jobs the Work programme has created?
Danny Alexander
I cannot give the hon. Lady that information—[Hon. Members: “Ah!”] I welcome her to her place and congratulate her on her election. In due course the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) will provide that information. I can tell her, however, that Work programme providers are making a difference across the country, helping people to come off all sorts of benefits and acquire the necessary skills and support to get back into work.
Danny Alexander
I have already given way to the hon. Gentleman and to the hon. Lady, and I want to make some progress.
Katy Clark (North Ayrshire and Arran) (Lab)
The right hon. Gentleman will be aware that while the living standards of those on low and medium incomes are going down, the wealth of the super-rich is going up. Will he give an undertaking that he will take action on this issue, and that the gap between rich and poor will be smaller by the next election?
Danny Alexander
The Government have taken on the issue of ensuring that the wealthiest pay a greater share, to ensure that there is fairness in our deficit reduction plans. For example, we have increased capital gains tax and put in place the new bank levy that I have mentioned. We have also maintained the 50p rate of income tax. We are making substantial changes to ensure that the wealthiest pay their fair share.
Alec Shelbrooke (Elmet and Rothwell) (Con)
On the point just raised in an intervention, we hear much crowing from Opposition Members, but does my right hon. Friend think that they might persuade their former leader and Prime Minister, Tony Blair, to pay more than £315,000 in tax on a £12 million income?
Danny Alexander
My hon. Friend has made his point, but I do not think that it is for me to comment on the tax affairs of any individual taxpayer.
Meg Hillier
Last week the right hon. Gentleman made a speech in which he talked about co-operatives, and ideas to bring them into the mainstream. When the Government had the choice and opportunity to remutualise Northern Rock, why did they sell it off to a private bank? Surely a mutual would have been fairer to all, particularly to the taxpayer, than a cheap sell-off.
Danny Alexander
I am quite confident that in that case we chose the option that was best for the taxpayer, best for Northern Rock customers and best for the many hard-working people who work for Northern Rock in the north-east of England. I think that was the right decision on all those bases.
Danny Alexander
No, I will not.
I mentioned the Financial Policy Committee of the Bank of England and its comments. That is why the FSA will scrutinise all proposed bonuses to make sure that they are not paid at the expense of rebuilding capital. There has already been some progress, with levels of bonus payment down significantly. Hon. Members should consider how far they have fallen. When the shadow Chancellor was a City Minister in the Treasury, bonus levels were £11.6 billion, whereas last year they were almost half that, at £6.7 billion. We fully expect them to fall further this year.
Lisa Nandy (Wigan) (Lab)
May I ask the right hon. Gentleman to consider one more fact before he concludes on this subject? When youth unemployment rose under the previous Government, that was largely due to increases in labour supply, but since his Government took over, the massive increases in youth unemployment have been due to a collapse in labour demand. That is why the Opposition are so desperately asking his Government to change course. If the hon. Gentleman cares about this issue, as he has said that he does, will he confirm today that he will change course and prioritise growth over jobs?
Danny Alexander
I am not sure that one can prioritise growth over jobs—and that is the first explanation I have heard from Opposition Members of the reason why youth unemployment rose during Labour’s time in office. I do not know whether that opinion is shared by those on the Front Bench.
As I have made clear, we are prioritising tackling youth unemployment. We do not want to see young people blighted by long-term youth unemployment as they were in the 1980s. That is why the youth contract, our investment in apprenticeships and the Work programme are all necessary to help young people back into work.
Danny Alexander
I will give way to the hon. Member for Barrow and Furness (John Woodcock), who has not intervened before.
John Woodcock (Barrow and Furness) (Lab/Co-op)
The Chief Secretary is being very up-front with the House about the fact that he believes that he is doing everything in his power to tackle youth unemployment—yet according to the Office for Budget Responsibility’s own figures, unemployment is scheduled to rise in the coming period. Does he think that that rise is inevitable?
Danny Alexander
I do not think that he is on the Government Front Bench any more, Mr Deputy Speaker.
A fair account of the OBR’s forecast would also reflect the fact that it says that unemployment will come down to 6.2% by the end of the forecast period. That is a fair reflection of the OBR’s forecast. Of course I wish that we had not inherited such desperate economic circumstances from the previous Government, I wish that they had not left us the largest budget deficit in peacetime history, and I wish that we had not inherited a situation in which, as the same OBR report to which the hon. Member for Barrow and Furness refers showed, the damage done to our economy by the bust was even deeper than expected. He should probably reflect on that point, too.
On bonuses, we fully expect them to fall further this year and, as we approach the season, let me be clear that this is just the start. Across the banking sector, Labour allowed a sense of bonus entitlement to grow. In no other industry is there such a distorted culture of bonus entitlement. Following 13 years of Labour Government we have come some way towards dismantling that culture in the banking sector, but we accept that we have a long way to go to make a fundamental change in attitudes to pay. The coming bonus round provides another chance for the banking sector and its shareholders to demonstrate leadership on pay. That message is already getting through. As Otto Thoresen, director general of the Association of British Insurers, wrote to bank chairs last December,
“it can no longer be business as usual for this remuneration round.”
I agree with that, and the Government will play our part.
We have already said that for RBS and Lloyds Banking Group there will be a limit of £2,000 on cash bonuses, as we also imposed last year.
Richard Fuller (Bedford) (Con)
There is a lot of consensus on both sides of the House that people who are wealthy should be looking to see what they can do to help. Part of what the Opposition miss is the fact that one thing the Government have done—although they could do more—is to promote the enterprise investment scheme, which gives people the opportunity to invest directly in small businesses. Will my right hon. Friend tell me what he is doing to promote that scheme, and in particular, how small businesses that benefit from it can also take part in the youth contract?
Danny Alexander
The Government have made decisions to improve the benefits available through the enterprise investment scheme precisely to encourage more people to invest in small firms in such a way. The new seed enterprise investment scheme, which we announced in the autumn statement, will further help new businesses to be created through that route.
We have already said that for RBS and Lloyds Banking Group there will be a limit of £2,000 on cash bonuses, as was imposed last year, and let me reiterate that the bonus pool this year must be far, far lower than it was last year, and more transparent too. Tackling bank bonuses and youth unemployment is not just an economic challenge, but a challenge that is at the centre of the coalition’s purpose, which is to promote a sustainable and responsible banking sector that puts consumers’ needs at the centre of the financial system.
Danny Alexander
I shall give way one last time, and then I shall finish my speech.
Julie Hilling
Is the right hon. Gentleman confirming, then, that the chief executive of RBS will only get a £2,000 bonus?
Danny Alexander
I am doing no such thing, because those announcements will be made in due course. I have said that bonuses in the banks that we own will have to be far lower than they were last year. The cash element of bonuses will be limited to £2,000 for all employees, but of course there are other parts to bonuses, too.
Returning our country to prosperity has been the founding purpose of the coalition Government, but in our determination to restore growth, we will put fairness at the very heart of our recovery, tackling gross inequity in senior pay and tackling the perils of youth unemployment to ensure that young people’s prospects are not blighted in the way that those of too many were in the 1980s.
Rehman Chishti (Gillingham and Rainham) (Con)
Will the Chief Secretary give way?
Danny Alexander
No, I am going to make some progress now.
A fair and sustainable recovery demands leadership, and that is exactly what we are providing. Labour cannot be taken seriously on the economy until it admits the mistakes it made when it was in power. If Labour was really changing its position on the economy, the first thing it would do is say sorry. Sorry for letting youth unemployment get out of control, sorry for letting the banking sector get out of control, and sorry for letting the deficit and debt get out of—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Hon. Members should calm down, as a lot of Back-Benchers want to speak as well.
Danny Alexander
I do not think that those on the Opposition Front were trying to shout the apology that the country wants from them. They should say sorry, too, for letting the deficit and the country’s debt get out of control. Instead, all we have heard today is the apology of a speech made by the shadow Chief Secretary.
Rachel Reeves
I wonder when the electorate might get an apology from the Liberal Democrats for trebling university tuition fees and imposing a VAT bombshell.
Danny Alexander
I am sorry that the shadow Chief Secretary did not take the opportunity to offer an apology for the terrible mess made by her party and the Government of which the shadow Chancellor was a leading member.
It is the coalition Government who are investing in skills, infrastructure and innovation to create new opportunities in the recovery. It is this coalition that is reforming a broken financial sector to entrench greater stability and embed long-term sustainability. It is this coalition Government alone who are determined to face up to today’s economic challenges to build tomorrow’s fair, prosperous and sustainable economy.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is timely that I follow the hon. Member for Salisbury (John Glen), who lamented the increase in youth unemployment in his constituency, which is less than half the 1,305 people aged 24 and under claiming jobseeker’s allowance in my constituency—an increase of 12.5% on the same time last year.
In December 2011, 420 jobs were advertised in jobcentres in Hackney, which equates to around 14 claimants per vacancy. Young people who are just leaving school or college are competing for those jobs against people who have work experience on their CV, which is one reason why I lament some of the changes this Government have introduced—getting that experience is crucial to helping people to get on their career path.
Hackney is a very young borough—around a third of Hackney residents are under the age of 24—which means that youth unemployment is a particularly striking and important issue in my constituency. The percentage of 18 to 24-year-olds who have been unemployed for six months in Hackney is now higher than the national and London averages. In December 2011, 2.1% of young people in Hackney had been unemployed for six months, compared with 1.5% in London and 0.9% nationally. In Hackney, 1.2% young people were unemployed for more than 12 months, compared with 0.5% in London and 0.6% nationally. One of my concerns is that we are seeing a growing trend of longer-term unemployment for young people. They might be small in number, but the trend is in the wrong direction.
It is important that we hear from young people themselves. I have been talking to providers of the Work programme in my constituency that work with some of the hardest-to-reach people. The private companies take the easier-to-place people and give specialist agencies and organisations the harder-to-reach ones. Janet Usoro, the student contact co-ordinator at East London Advanced Technology Training, which is a third sector IT training company for young people based in my constituency, told me of a young man who comes from a troubled background. His mother has mental health issues and his father is unknown to him, and he had difficulties in the past with drugs that resulted in a prison sentence.
This young man decided to get his life back on the straight and narrow and at ELATT has achieved NVQ levels 1 and 2 in IT networking. He is progressing through level 3. He has gained confidence and found new personal self-discipline. He is on the right track, but with his background, his chosen career path will require a record of work experience and extra support, which, I worry, the Work programme is not entirely equipped to give him. I hope the Minister responds to that in his summing up.
Anthony Harmer, the chief executive of ELATT, tells me of his worries about long-term, sustainable funding for the high-level support work it does with such difficult-to-reach young people.
The Minister of State, Department for Work and Pensions (Chris Grayling)
As the hon. Lady has raised a specific point, may I put it to her that the Work programme providers have complete freedom to do what works to help people into work, including securing work experience places for them? It is my hope that the providers in her area find work experience places precisely for someone such as the young man she describes, even if they have not found work experience through the Government scheme or Jobcentre Plus.
Meg Hillier
If what the Minister says transpires, I will be a very happy Member of Parliament for Hackney South and Shoreditch, but I am picking up on the ground that that is not happening in the way that it should be. The bulk of the business is going to private providers, for the easier-to-place people, and they are taking the money, but the harder-to-reach people are going to the voluntary providers, which are struggling to make the packages work because their funding is crumbs from the bigger table. There may be a structural issue, which I hope the Minister will watch closely as the programme is rolled out, because we do not yet know about the success of the Work programme. Ministers herald it as a success, yet we have seen no figures or results, for all the reasons that have been well rehearsed. This is an issue that the Minister, if he is serious about his job, needs to monitor.
In my area, the third sector agencies are picking up the harder-to-place young people, after what we might call cherry-picking. However, I am not trying to be political; I am concerned that those young people should get that work. Ian Ashman, the principal of Hackney community college, has similar stories to tell. For example, he has told me about Kevin, a 23-year-old father of two with a baby on the way who had an accident going to work one day and, as a result, lost his job. After 100 job applications, he has not been able to find another job. When it comes to full-time college courses, although the college has a good relationship with the local jobcentre, the employment advisers there do not know enough about what colleges can provide. As the Minister is probably aware, that concern was shared by 44% of colleges in a recent Association of Colleges survey. Full-time courses such as those provided by Hackney community college are not always appropriate for young people such as Kevin, because of the impact on their benefits. Indeed, there is an issue with young people wanting to progress and improve their lives, but often being unable to undertake the extra qualification or study that they need. Where do they go in the meantime? As we have heard, some of the apprenticeships on offer are not really true apprenticeships. I am all for more apprenticeships if they are real apprenticeships, but not if they amount to cheap, unpaid work experience.
Agencies, job brokers and colleges need long-term sustainable funding to help their work with the most difficult-to-reach people, which is something we need to look at. The young people in my constituency are not interested in party politicking; they want to know that there is a career path for them. We have seen huge improvements in schools in my constituency, with more than 84% at one school alone getting A* to C grades at GCSE, and seven young people placed at Cambridge, including one young woman who had a baby at 15 and is now at the university with her child. There is real opportunity and a real desire to achieve in Hackney. There is no poverty of ambition among the young people in my area. Most of all, however, we need to get those young people on pathways into jobs. We need work experience available, so that they can get the experience they need to compete in the job market. I want to see the unemployment levels in my constituency fall dramatically.
Stephen Timms (East Ham) (Lab)
We have had a very good debate. In June last year, the Prime Minister told the House that cutting the deficit faster would revive private sector confidence. That was the basis of the strategy with which we were presented for private sector investment and jobs to surge. Tragically, that has not happened. The business confidence monitor from the Institute of Chartered Accountants says:
“UK Business confidence has collapsed”.
It says:
“Confidence has declined across all sectors and all regions.”
Nobody now claims that the coalition strategy is working to boost confidence. Confidence has evaporated, and the strategy has clearly not worked.
We are debating the consequences tonight: unemployment rocketing; youth unemployment of over 1 million, and becoming worse—the highest that it has ever been. My hon. Friend the Member for Wigan (Lisa Nandy) drew attention to the growing sense of hopelessness and the long-term damage to our economy. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) pointed to the growth of long-term unemployment among young people as particularly damaging.
As a result of that failure, the Government have to spend a great deal more on benefits. It is worth comparing the latest forecast from the end of last year showing how much they intend to spend on benefits in the year after next with the forecast a year earlier. Projected benefit spending in the year after next has gone up by £5.4 billion. The overall estimate of borrowing has gone up by £158 billion—a figure at which the Chief Secretary to the Treasury balked at admitting. The Government are determined to press ahead with their version of the benefit cap, which the Department for Communities and Local Government says will add 20,000 to annual homelessness figures, with massive Exchequer costs. The ill-judged attack by the Secretary of State for Work and Pensions on the bishops at the weekend has led to yet another defeat for him in the other place.
All along, we have been told that the solution to all these problems was the Work programme. Let me begin by welcoming the U-turn by the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). I welcome his change of heart, because until now he has refused to allow Work programme providers to publish any data on their performance. Today, he has announced that he is going to change his policy.
Stephen Timms
Perhaps the Minister will tell us when the guidance to which he referred will be published.
Chris Grayling
I am a little puzzled. I could be wrong, but I thought I heard the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) say that the Labour party supported the benefit cap, but the right hon. Member for East Ham (Stephen Timms) has just said that they do not. Would he tell us which is right?
Stephen Timms
We do support the benefit cap. The version that the Minister is pressing through is, as the House of Lords has rightly pointed out, going to cause huge costs for the Exchequer. I hope that even now the Secretary of State will think again before returning to the House with the measure next week.
The Work programme was rushed, and badly prepared. As we pointed out at the time, there should have been a plan for transition to the new programme. There was no plan. We can glimpse how the Work programme has been going by looking at the number of people coming off benefit each month. The number plummeted last May, when the flexible new deal stopped, and it stayed low as the Work programme got going. I invite the Minister to compare the months after May with the same period the previous year, because he will see that poor Work programme performance resulted in 86,000 people not getting into work who should have done. That is probably a permanent unemployment rise. The damage will be with us for years.
The Government told us that the Work programme would enlist an army of voluntary organisations to give specialist help to jobseekers. To begin with, we were told that 508 voluntary sector organisations would be involved. By August, that number had fallen to 423. Next week the Government will count once again. Last week, apparently, at a crunch meeting, voluntary sector organisations told the Minister that they were being used as “bid candy” to win contracts. Some of them still have not had a single referral since the Work programme began last summer.
The “Open Public Services White Paper” promised, as I quoted to the Minister earlier:
“Providers of public services from all sectors will need to publish information on performance and user satisfaction.”
I welcome the Minister’s U-turn on performance. What about user satisfaction? Let me tell him about the satisfaction of one user, the father of a constituent of mine, who came to me to complain about his daughter’s experience on the Work programme. She received a letter referring her to mandatory work activity. It was completely incomprehensible; I will send the Minister a copy. She lives in my constituency in east London. The letter appeared to require her to report on an unspecified date to an address with a postcode in Sheffield, and the telephone number was given as 000. It was a shambles. It is no wonder the Work programme is not delivering and youth unemployment is rocketing.
The Minister of State, Department for Work and Pensions (Chris Grayling)
Let me start by making it absolutely clear that tackling unemployment and youth unemployment is right at the top of the Government’s list of priorities. I share the frustration of my hon. Friend the Member for Salisbury (John Glen) at some of the comments from Opposition Members. My right hon. Friend the Secretary of State for Education, to whom I pay tribute, is firmly of the view that the decline in the teaching of history in this country is a lamentable failing in our education system, and we realise precisely why when we listen to the Opposition. They have forgotten the history not of 10 or 100 years ago, but of two years ago: the mess they left behind for us.
Someone listening to Opposition Members tonight might think that youth unemployment had been created in the past 18 months, but the truth is that when Labour left office 18 months ago youth unemployment stood at 940,000. It has since risen by 100,000, which we wish had not happened. Half of that increase has come from students in full-time education looking for part-time work. The Opposition talk about surging youth unemployment, and I get increasingly frustrated by their use of figures, because they keep up the spurious claim that long-term youth unemployment under this Government has rocketed, but that is utterly untrue. A like-for-like comparison that removes all of the ways in which they massage the figures reveals that long-term youth unemployment today is actually lower than it was two years ago. There is one other fact that they do not mention: fewer people in this country are on out-of-work benefits today than were at the time of the general election. Let us hear nothing about the failures of the past 18 months, and let us never forget the failings of 13 years of Labour government.
We have had a thoughtful debate and heard some sensible contributions, including those from my hon. Friends the Members for Bury St Edmunds (Mr Ruffley), for Rossendale and Darwen (Jake Berry), for Bristol West (Stephen Williams), for Salisbury (John Glen), for Elmet and Rothwell (Alec Shelbrooke) and for Gloucester (Richard Graham). We have also had a snapshot of the past, present and future of the Labour party. On the future of the party, I must say that the hon. Member for Wigan (Lisa Nandy) made some thoughtful contributions on things the Government might do, and I listened carefully to what she said. We also had a bit of a throwback from the right hon. Member for Oldham West and Royton (Mr Meacher), who talked about bankers’ bonuses while conveniently forgetting that the bankers’ bonus pool in the City of London was twice as big under Labour as it is today.
I was also struck by the lack of ambition among Labour Members. When they went through their plans yet again—we have to bear it in mind that the money from their proposed bankers’ bonus tax has been announced for nine different things so far; another bit of history they have conveniently forgotten—we realised that the reality is that they are talking about creating 100,000 places in a replacement for the future jobs fund. I see that as rather unambitious, because the package of support we have put together will help, and is helping, far more young people into employment.
We have a clear strategy to support the creation of jobs in the economy and provide help for those people, older and younger, who are looking for work. We have set out some of those measures. My right hon. Friend the Chief Secretary to the Treasury, the Chancellor of the Exchequer and the Treasury team set out in the autumn statement a range of proposals to do everything we can to stimulate and support the growth of business. I am particularly pleased that in the last quarter private sector employment in the economy increased at a time when we face huge economic challenges that were described recently by the Governor of the Bank of England as probably the most difficult in modern peace time history, if not ever. Yet against that background we are determined to give business every opportunity to grow and develop through investment in infrastructure, measures in the tax system and the measures we are taking to deregulate—for example, in relation to health and safety—in order to support business growth. There is no other way of securing the future of our work force or job creation in the economy.
We cannot go back to the uncertainty and instability under the previous Government and under the right hon. Member for Morley and Outwood (Ed Balls), who is chuntering away on the Front Bench and forgets the severe damage that he and his colleagues did to the economy when they were in office.
Alongside the work that we will do and are doing to ensure that business has the best possible opportunity to grow and to create jobs, however, we have put in place a package of support for the unemployed that I believe is more ambitious and more successful than anything that the previous Government did.
Let us start with our work experience scheme, which will double in size under the youth contract and is already helping large numbers of young people to move into work.
Sheila Gilmore
I am sure the Minister agrees that work experience programmes should give people skills that they do not already have, and perhaps confidence if they have not worked for a long time, so why has it been made compulsory for people who have already done the work or had the training to go into jobs such as shelf-stacking, on which I know the Conservative party is so keen? Why is that relevant to people who already have such experience?
Chris Grayling
I simply cannot understand the view that Opposition Members have of our retail sector. Our larger retailers are national and international businesses, with hugely varied career opportunities for young people. The manager of a single supermarket can run a £100 million business, so let nobody say that giving an unemployed young person the opportunity to show to a supermarket chain their ability to contribute to that organisation is nothing but a possible footstone for a long-term career.
The proof of the pudding is in the eating, because more than half the young people who are going through our work experience scheme are moving off benefits quickly afterwards. When we make a comparison with the future jobs fund, from which about half moved off benefits immediately afterwards, we find the total cost of that scheme was between £5,000 and £6,000 per placement, whereas the total cost of our work experience scheme—of achieving a similar result—is about £300 per placement. Which do Opposition Members think represents better value for the taxpayer?
Alongside that, we are also delivering 170,000 wage subsidies, through the youth contract, to employers who take on young people, and that is the big difference between our philosophy and that of the Opposition, who simply want to recreate another scheme with artificial, six-month job placements in the public or voluntary sectors. We are trying to create a path to a long-term career for young people. That is what the wage subsidies in the youth contract will do, and it is also why we have expanded by so many the number of available apprenticeships. They are not about short-term placements; they are about building long-term career opportunities. Since we took office, we have increased massively the availability of apprenticeships in the economy, precisely because we believe that our young people are best served by creating a path that they can follow to a long-term career opportunity.
The right hon. Member for East Ham (Stephen Timms) talked about the Work programme, which is providing much better and more intensive support for the long-term unemployed than previous schemes, and about the flexible new deal, which we inherited last year. Let me, however, give him some statistics about that. It cost the Department for Work and Pensions £770 million, and it achieved 50,000 job outcomes in six months—at a cost of £14,000 per job outcome. Does that represent good value for money or a programme worth keeping? Does anybody seriously believe that that programme had the effect he describes?
I am confident that, by contrast, the Work programme will deliver results because it is based on payment by results, and because we have created an environment in which the organisations, large and small, that are delivering the programme are paid only when they succeed in getting somebody into long-term employment. Having now been around the country and visited almost all the providers, I have seen a team of people who are motivated, determined and succeeding in getting the unemployed back to work. I meet people who have not worked for years but who have got back into employment, and people who did not believe they could get back into work but are getting back into employment.
When we publish the figures, and we will, I look forward to demonstrating that that approach makes a difference to the prospects of the long-term unemployed in this country—
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question put accordingly.