Jobs and the Unemployed

Alison McGovern Excerpts

Wednesday 7th July 2010 Commons Chamber

[Chris Grayling]

We intend to continue the young person’s guarantee until the launch of the Work programme. However, there is no guarantee of a job at the end of any programme. The programmes are intended to create opportunities for employment. None of the last Government’s programmes involved a guarantee of a job at the end. The best we can do is to ensure that people are as work-ready as possible, and then try to provide an environment in which jobs are being created for which people can apply.

[Alison McGovern (Wirral South) (Lab)]

rose—

[Chris Grayling]

I said last time that I would give way only once more, but I will give way to the hon. Lady because I have not done so before. Then I must make progress and wind up my speech.

[Alison McGovern]

I am grateful to the Minister. It is fantastic that in my part of Wirral we saw a tenfold increase in the number of apprenticeships between 1997 and 2008. Does the Minister agree that the best thing we can do with apprenticeships—we all agree they are vitally important—is not to try to rewrite history or cut our way out of the recession, but to try to build business confidence so that investment in apprenticeships continues in my constituency and others?

[Chris Grayling]

One of the disappointing things about the last Administration was that we kept hearing the then Prime Minister make promises about numbers of apprenticeships. Year after year, we looked at how many had actually been delivered, and saw that they never hit the target. I hope we will not make the same mistake, and I believe that the 50,000 apprenticeships we have announced will make a difference to a large number people who will take them up as part of the Skills for the Future programme.

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[Elizabeth Truss]

I would. That is not to say that everything spent by RDAs was wrong. There have been many good projects. But the way it was spent and prioritised did not use Government money to its best effect. That is my point. That is why I want to see the Government assess projects on the basis of economic return, as I mentioned earlier to the hon. Member for Luton South (Gavin Shuker). I want the way in which the projects are assessed to be fully open and transparent, so that we can have a proper debate about the best way to spend our limited money.

It will be growth on the basis of real jobs and on the basis of decent infrastructure, good railways and roads, that will seal our economic future in the right direction, not pursuing the initiatives and schemes that we have seen time and again during the past 13 years, frittering away valuable money. It is our money, not the Government’s money. Ultimately, it is the money of all those in my constituency who pay taxes.

[Alison McGovern]

It is interesting to hear how fearful the hon. Lady is about incorrect spending on infrastructure projects and what she said about how the Labour Government wasted money. My region has seen great benefits from the improved infrastructure on the west coast main line, and we were looking forward to reconnecting the whole of our region, led by the RDA, with the Manchester rail hub. Will she call on Government Front-Bench Members to commit to those infrastructure projects? Will she acknowledge to the House that the money that was spent on infrastructure by the Labour Government was extremely helpful in resetting our national economy?

[Elizabeth Truss]

I am afraid that the hon. Lady’s intervention illustrates the problem with Labour Members. They present schemes, but there is no ex-post or ex-ante analysis of their economic benefits. The hon. Lady asks a question, but does not produce the evidence. Again, I would be happy to discuss that with her later, but she did not present the evidence. We must have debate. Not only are we talking about what we are putting in, we are also talking about the benefits that we get out. We need an economic policy that is based on the costs and benefits and that talks about the important areas of spending. I am pleased that the Chancellor in his Budget decided not to reduce capital spending further, but to make sure that it will go ahead so as to have a proper basis for economic growth and jobs in the future. That is the important area that we need to be looking at.

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[Catherine McKinnell]

I thank the hon. Gentleman for his intervention, because it highlights my point that these issues cannot be examined as a whole across the UK. The situation in each region is incredibly different and unique, which is why the RDAs were so successful in particular parts of the country and why the removal of the north-east’s RDA, which is successful and which business leaders across the region accept as a major driving force in the private economy, is a travesty.

[Alison McGovern]

My hon. Friend makes a very important point. Does she agree that regions are different, and that the previous Government used the movement of public sector jobs to regions such as the north-east and the north-west partly to save costs to the public purse?

[Catherine McKinnell]

Absolutely, and my hon. Friend rightly draws attention to some of the worrying consequences that will come out of the Budget. It will drive up unemployment and difficulties and increase public spending, particularly in the regions.

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[Esther McVey (Wirral West) (Con)]

I rise to speak in this debate concerned about youth unemployment and job prospects, and I do so as we discover that the number of 18 to 24-year-olds not in employment, education or training has reached an all-time high of 837,000. That is 17.6% of our 18 to 24-year-olds neither earning nor learning.

The previous Government did not meet their apprenticeship targets, but they did leave us with a record deficit. That is a disastrous combination for the next Government not only to pick up but to clear up. We have unfulfilled targets, sluggish economic growth and a record deficit—a triangular tragedy for youth and unemployment. In my patch of Wirral West, we have some of the worst unemployment rates for 16 to 24-year-olds in the north-west. We were ranked seventh worst of the 39 local authorities in September 2009. The number of my constituents claiming jobseeker’s allowance has risen in the last year, and we are also below the national average for 16 and 17-year-olds in education and work- based learning. It is particularly worrying that those who are not in education or employment now will continue along that path, and it is vital that the Government put every effort into getting young people into work and training as soon as possible after they leave the compulsory education system.

The cost to the economy of youth unemployment is not insignificant. According to estimates, each of these so-called NEETs who drop out of school at 16 will cost the taxpayer almost £97,000 over their lifetime, when their unemployment benefits and their inability to pay taxes are taken into account. We have heard a lot about the economy today, and about what unemployment costs the country, but I want to look beyond the economics of the situation to the well-being of each individual, and to their physical and mental health, their self-esteem and their morale. To stare into an unknown expanse of time, not knowing how it will be filled or paid for, erodes the soul and destroys the spirit. That suffering cannot be quantified, but it seeps into the common unconscious of our nation.

We already have some of the highest levels of youth unemployment in Europe, and we need to be creative about how we are going to get out of that situation. We need to think of a new way forward. I like to think that there is light at the end of the tunnel, and I would like to bring to the attention of the House the Wirral Apprentice programme, which is leading the way in the apprenticeships field. It has created more than 100 new opportunities for young people by offering private sector organisations an 18-month wage subsidy for a minimum two-year apprenticeship. Working with the National Apprenticeship Service, the Wirral Apprentice scheme is delivered by Wirral council’s children and young people’s department and provides a dedicated member of staff to support each business that takes part. It has been hugely successful, and it is now in its second year.

The Wirral Apprentice scheme is heavily oversubscribed, however. Last year, more than 1,000 people submitted 3,117 applications but fewer than 150 businesses took part. It does not take a genius to see that many people will be left without an apprenticeship. The scheme is oversubscribed and under-resourced. Such oversubscription is not specific to Wirral or the north-west; it is to be found throughout the whole country, and we need to look at what we are going to do about it.

[Alison McGovern]

As a Wirral MP, I totally back what the hon. Lady says about Wirral Apprentice—it is a cracking scheme—but how does she think her Government’s cuts to local authorities will help Wirral to keep that fantastic scheme going?

[Esther McVey]

The Government are planning to get best value for money. They want to increase the apprenticeship scheme across the country by 50,000, and they are planning to put a significant amount of money into it. That is what we need to do. We need to look at places where the apprenticeship scheme is working. As I have said, however, the scheme is oversubscribed and under-resourced and we need to look at that as well. Perhaps the hon. Lady and I can do that together with the Government. The scheme is working, but we need to expand it so that more people in Wirral, the north-west and the rest of the country can be fulfilled.

As the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes) recently said:

“Demand for apprenticeship places is growing and one of our priorities is to encourage more employers to participate. Apprenticeships are both a route to key competences for employees and a vital way to help employers”.

I should like to extend an invitation to the Minister or the Secretary of State to come to Wirral to see how the scheme is working, and also to use what limited funds we have put aside to extend apprenticeship schemes. We do not need a new generation of our youth not knowing how to fill their time or how to pay their way.

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[Margot James (Stourbridge) (Con)]

There have been quite a lot of references to history in this debate. In the first few hours, which I sat through and enjoyed, many such references were made, including by the shadow Secretary of State for Work and Pensions, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), who said that she left school in the 1980s and that many of her friends became unemployed in the early ’80s. As I was born a decade earlier, I had a ringside seat in the decades that led to the 1980s. Throughout the ’60s and ’70s, various Labour Governments presided over truly disastrous industrial intervention policies.

I, too, come from Coventry, as does the hon. Member for Wakefield (Mary Creagh), who also contributed to the history lessons in the debate. She will remember the creation of British Leyland, the demise of our car industry, the massive subsidies that those Labour Governments poured into failing companies and failing industries, combined with marginal personal tax rates of up to 98%. In the end of course, as we all know, the country had to be rescued by the International Monetary Fund. That is what led to unemployment in the 1980s, not the Governments led by Margaret Thatcher.

A pattern developed during those previous Labour Governments, just as it has done in the past 13 years, and it results in the end in rising unemployment. Every Labour Government, I believe, have left office with unemployment higher than when they came to office. We must not forget that in a debate on unemployment. Unemployment among the young is greater now than it was in 1997. During the past five years there has been a 72% rise in my constituency of people on jobseeker’s allowance, more than a quarter of whom are between the ages of 18 and 24. Much has been said about the tragedy of unemployment among this age group with which I agree.

[Alison McGovern]

Does the hon. Lady think that it is appropriate to compare unemployment in 1997 with unemployment today, at two completely different points in the economic cycle? That is not how economists would normally do it.

[Margot James]

The previous Government inherited falling unemployment in 1997, and it steadily increased during the first decade of this century. We have been through a couple of economic cycles during that time, but historically unemployment is always greater when a Labour Government leave office than when they arrive.

Rising unemployment under Labour Governments is always followed by a lot of well-meaning interventions to try to support people back into work. That is a laudable aim, with which we all agree, but it leads, as it has during the past five or six years, to a confusing array of individual benefit programmes that create a flourishing array of different funding streams and agencies, and they grow like Topsy. They beget a flourishing cottage industry of providers, all of which make money out of the taxpayer in trying to deliver the same services. It is imperative that the Government simplify, as they are doing, the 12 support-for-work programmes. I congratulate the new team on the steps that they have taken to integrate everything into a single get-back-to-work programme.

I do not want to be wholly negative about the interventions under the previous Government. I was a governor of Stourbridge further education college in my constituency, and a good programme was developed with Westfield, the company that manages the retail centre, and it was known as the retail academy. It took long-term unemployed people, such as women who had left the workplace to have a family, who had not been able to get back into work and who had lost their confidence. They did not have to lose their benefits. The programme was a 9-to-5 commitment, and more than half of them managed to get proper long-term jobs in the retail sector. I would not want to imply that all the individual programmes were a waste of money—of course some of them helped, and I am sure that we will learn from them—but simplification and better co-ordination is key, as another example that I want to share with the House demonstrates.

A few weeks ago, like me, some Members will have visited the manufacturing insight conference that took place just off Westminster Hall. I was struck by the story of a managing director of a small business in Lincolnshire employing about 30 people who wanted to access training for her finance staff. They wanted NVQ level 2 finance training, but in order to qualify she had to guarantee that eight people from her workplace would attend the course. She did not have eight people who needed the course, but there was only one provider that she could approach, and it was subcontracted by another provider that had the contract with the college.

All these providers and subcontracted providers take a slice of taxpayers’ money, which is another reason why we must simplify and codify the work, so that just one company or social enterprise is charging the taxpayer a fee for delivering a much-needed service. Business needs support, but it knows, for the most part, what it needs to employ people, and we must give companies much more direct access to the funding. They should not have to go through all these multiple layers of provision, and they should not have to go through regional development agencies, Business Link and so on—they should be able to access the vital help much more easily.

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[Alison McGovern (Wirral South) (Lab)]

I wish to focus my remarks specifically on young people, and with that in mind I should like to comment on what my hon. Friend the Member for Islwyn (Chris Evans) said. Like him, I grew up in the 1980s in a part of the world where it sometimes felt as though very few people had any faith in us. That motivated many of us in the House who come from such parts of our country to stand for election and stand up for investment in young people today.

With that in mind, I wish to say a few words on business confidence and its importance for young people’s employment prospects. I was concerned to read about the Deloitte survey of FTSE 100 directors of finance that was reported this week. The report explained that those finance directors saw an increased probability of a double-dip recession, up five percentage points from a 33% to a 38% likelihood in the past three months. That was attributed to the Government’s policies. That concerns me, because the last thing that I want is falling business confidence that will cause this country similar problems to those that we saw in France and other European countries years ago. At times when business did not want to invest, people at the start of their careers were disproportionately affected, and young people suffered much more than others in their career progression in times of downturn. I call on the Government to guard against that.

In addition to the importance of business confidence and the Government demonstrating counter-cyclical measures, I have a few comments to make at a practical level. Throughout the election and since being elected to the House, I have been concerned about what is happening in my local Jobcentre Plus. The people who work at that centre in Bromborough, about a mile away from where I was born and grew up, work incredibly hard and responded very well throughout the recession to help people who had been made redundant and suffered unemployment.

Over recent months, there has been a real threat of that jobcentre losing some of its work force. They have built up their capacity and skills to try to encourage people back to work and to find the best avenues for them, but now the centre is working under the shadow of the threat of losing its work force and their skills when they are most needed. I call on the Government to consider the matter carefully and not cut away front-line Jobcentre Plus staff at the very time when we need them most.

Members have mentioned the future jobs fund. Although my right hon. Friend the shadow Secretary of State has already referred to the Prime Minister’s comments, it is appropriate for me to say again that when he visited Liverpool, he said that the future jobs fund was “a good scheme” and that

“we’ve got to help people who are unemployed for a long time and social enterprises like this help. It demonstrates where giving more power and control to projects like these works.”

I was struck by the comments made to me by my friend John, who is a trustee of an older people’s charity in Wirral. He told me about the two young men who came to work for the organisation, doing practical tasks in the building where the charity is housed, and described the confidence boost that this had given them and the important skills that they were learning. Those jobs would not necessarily be jobs for life, but they were going to keep the CVs of those young men consistent. That example, along with the evidence from the Prime Minister, shows that perhaps the Government could have thought more carefully about the future jobs fund. The Government’s decision, added to the loss of the young person’s guarantee, has caused me real concern about the prospects for young people in my constituency and the part of the world where I grew up.

I hope that the House will permit me a small amount of partisanship.

[Mr Stewart Jackson]

Before the hon. Lady continues, let me say that the House would be slightly more accommodating of her partisanship—which is no doubt coming—if she were willing to admit that the number of NEETs under her Government was the highest ever and that the further education capital programme was a calamitous disaster. The corollary of that negative news is that this Government are setting up 50,000 more apprenticeship places and expanding higher education. In the spirit of fairness, surely she can concede that her Government made mistakes and that this Government have new and fresh ideas.

[Alison McGovern]

I will certainly concede that any plans to increase the number of apprenticeships are welcome. Such plans are vital for my constituency and, I am sure, the hon. Gentleman’s constituency too. When I meet the people from Wirral borough council who work on the Wirral apprenticeship scheme and they tell me about the proactive way in which they have helped young people not in employment, education or training in my area, I can only applaud their work and hope that we will support them on a cross-party basis to continue that work. In that regard, where there are increases in the number of young people who face the threat of unemployment or who are not in employment, education or training, we all need to redouble our efforts and find what can be done. We are all aware of the potentially scarring impact of that not just on those young people, but on their families and communities.

The tenfold increase that we have seen in apprenticeships in Wirral since 1997, which I mentioned in an intervention, has been so welcome partly because of its intergenerational aspect and how it has built up our community. Parents no longer feel that the options for their young people are university or nothing very much. They are now starting to feel that there might be some options; so, to respond to the hon. Gentleman, as Members of this House we must redouble our efforts to focus on apprenticeships and encourage business to invest. However, that needs to involve the public and private sectors working hand in hand. It is important to recognise that we cannot expect those in the private sector to take a chance on young people where the public sector locally is not working alongside them.

As well as talking about those who go into apprenticeships, I want to say a few words about graduates. In this discussion about unemployment, we need to recognise that getting a degree these days is no magic bullet for securing a future career, and we must not pretend that it is. In fact, we need to encourage young people, both pre-university and while they are there, to gain the work-relevant skills that will assist them with their careers.

[Margot James]

Will the hon. Lady give way?

[Alison McGovern]

I will make a bit of progress, if that is okay.

We should recognise that the downturn that we have faced has been worse for graduates from lower-income backgrounds, and there are a few reasons for that. Graduates from lower-income backgrounds are much less likely to go on to further study. When I was studying philosophy at University college London, at a time when the economy was growing, I remember my tutor saying to me that downturns were always good for philosophy departments, because they kept hold of people who would otherwise have gone straight into the City, as their parents could pay for them to do a master’s degree or something like that for a few years.

We need to recognise that graduates from lower income backgrounds are less able to progress their careers, because they are less likely to have the informal networks that will help them as graduates to take the first steps into their careers. Unless we are able to rebuild business confidence, even graduates will continue to face difficulties. I return to my original point that the key to unlocking the problem of unemployment, especially among young people, is to improve business confidence and to ensure that the private sector and the public sector continue to invest in jobs.

In liaising with the CBI in the north-west on apprenticeships, I heard about companies in Wirral that were very keen to employ local young people. I talked to those companies at length about how we could support them in their endeavour to build new infrastructure in Wirral while training young people in my area. Those companies were working on vital infrastructure projects such as Building Schools for the Future, and the problem with the Government’s decision to cut the deficit more quickly than we would have liked is that the withdrawal of Government input into the economy will be counter-productive because those companies will no longer feel that they have the backing of the Government to hire young people and build up their skills.

[Jake Berry (Rossendale and Darwen) (Con)]

rose—

[Nick de Bois]

rose—

[Alison McGovern]

I should like to make some progress. I do not want to prevent others from speaking in the debate.

I fear that that withdrawal of Government input, especially in areas where the employment picture, though recovering, is historically fragile, will result in more people on the dole, which will make it even more difficult for us to reduce the deficit.