EU: Youth Unemployment (EUC Report)

Baroness O'Cathain Excerpts

Tuesday 17th June 2014 Lords Chamber

Moved by

[Baroness O'Cathain]

To move that this House takes note of the Report of the European Union Committee on Youth Unemployment in the EU: A Scarred Generation? (12th Report, Session 2013-14, HL Paper 164).

[Baroness O'Cathain (Con)]

My Lords, I am truly delighted to have the opportunity to move the Motion for debate so promptly after the publication of our report on 10 April this year. The report, Youth Unemployment in the EU: A Scarred Generation?, is the product of an eight-month inquiry focused on the youth unemployment situation from an EU perspective. The members of the committee have been passionate about the subject throughout, and were very keen to bring our reflections to the attention of the House as soon as possible. In that vein, I should like to start by thanking them for all their self-imposed hard work. We had a very demanding timetable to meet the production date.

I thank the range of interesting witnesses who contributed through written and oral evidence. Our confidence in our conclusions was bolstered by the fact that we had heard from a truly wide range of witnesses including pan-European—or rather pan-EU—businesses such as McDonald’s and Marks & Spencer; a wide range of international think tanks; EU and UK trade unions; and charities that work directly with young people, such as the Prince’s Trust. Special thanks are due to the young people whose contribution was invaluable in witness sessions in the House, on visits to Birmingham and Liverpool, and indeed in Brussels.

Producing a report such as this would never have been possible without the sterling work of our clerk, Nicole Mason; our policy analyst, Paul Dowling; and the committee assistant, Deborah Bonfante. All of them are endlessly patient and so very helpful. It was an absolute joy to work with them. I am sure each member of the committee agrees with me on this. Our selection of John Bell, our specialist adviser, was inspired. We are immensely grateful to him for helping us navigate the wealth of evidence and other information at our disposal.

It is a shame now that I feel I have to introduce a sour note. The government response was due on Tuesday 10 June. It was received yesterday at 11.05 am, on Monday, after a weekend when members spent many hours crafting their speeches for this evening. This is unacceptable and was described as such, and worse, by members at our meeting yesterday afternoon. Worse than that, the response has all the appearance of being a very shoddy piece of work. The authors of the response could not even copy the title of the report. The heading reads House of Lords European Union Committee Report on Youth Employment in—in where? Perhaps they were unaware that we were just addressing youth unemployment in the EU. The response does not address the conclusions in our report in many places. It is badly drafted. There is no covering letter. And, to cap it all, there are no page numbers. The layout is certainly user-unfriendly, and cut-and-paste was probably the order of the day.

I was very interested to come late into the previous debate and hear almost the same sort of comments about the Government’s response to that committee’s report. What has happened? Let us get a grip. I am not having a go at my noble friend the Minister, and we will of course formally consider the response and then write to my noble friend imminently.

Our reasons for deciding to conduct an inquiry on this topic are perhaps self-evident. We are all aware of the shocking situation of youth unemployment in the EU. The title Youth Unemployment in the EU: A Scarred Generation? might sound somewhat dramatic. However, the more we learnt about the situation and its effect on millions of young people, the more we realised that this is a question not just of jobs but of the potentially devastating impact on many, many young people, some of whom could easily be scarred for life. What damage does it do to the self-esteem, self-confidence and self-reliance of our own young people?

In March 2014, youth unemployment across the 28 EU member states stood at 22.8%, more than double the overall unemployment rate of 10.5%. This is a very slight improvement on the rate of 23.5% a year earlier. The rate of youth unemployment is also reducing in the UK. The figure in April 2014 was 18.5%, down 1.3 percentage points from the previous quarter and down two percentage points from the previous year. This level of unemployment, however, is still considerably higher than the level in the first quarter of 2008, of 14%.

It is true, and we should be very thankful for it, that the levels of youth employment are on the rise. We hope that the shock to the system that we have experienced, and indeed are experiencing, will not deflect our attention from the very serious situation that still exists. Complacency has no place in this subject, and we shall continue to look for solutions to the problem. Time and again we hear stories of the impact these levels of unemployment are having on young people.

I was particularly moved by the right reverend Prelate the Bishop of Durham’s observation of the impact of youth unemployment in his excellent maiden speech on 10 June. He spoke movingly about the young people in schools and colleges who are concerned that they will never find fulfilling work in an area in which they are interested. He thoughtfully acknowledged that some have lost all hope and aspiration long before the end of school, let alone college and university, having been told that their value is in work and economic contribution rather than being “great human beings”.

I agree wholeheartedly with the right reverend Prelate. To tackle the issue of unemployment, we need to think beyond just finding young people jobs. The conversations I had with the young people we visited in Liverpool and Birmingham brought this fact home to me. Many of these young people faced complex personal barriers to work—for example, insecure accommodation, caring commitments and criminal records. Through talking to them, I realised the importance of an approach that enables them to build stable and fulfilled lives before being able to find meaningful employment.

Therefore, I wish to preface my further commentary on various other factors affecting unemployment and the solutions to it with my belief that youth unemployment cannot be properly addressed in the absence of a holistic approach. The aim of our report was to take this knowledge of the very real impact of unemployment right across the EU and consider what the role of the EU should be and how European funds should be used.

To be fair, the issue of youth unemployment has long been central to the EU strategy. It has been targeted through the European Social Fund, which was set up in 1957. In recent years, the European Commission has shown a renewed focus on addressing youth unemployment through various measures. It has increased funding so that, between 2007 and 2013, 68% of the European Social Fund went toward such projects. Additional funds have been allocated to deal with the problem. The Youth Employment Initiative comes to €6 billion in total, with a pledge from member states to add a further €2 billion. This money is intended to go to regions with more than 25% unemployment. In the UK there are five such regions: inner London, Merseyside, south-west Scotland, Tees Valley and Durham, and the West Midlands. Not all member states were eligible for such funds because not all member states have these areas of 25% youth unemployment. Another measure is the youth employment package, which was proposed in 2012, one of whose significant elements was the Youth Guarantee.

Despite the funds at EU level, the amount of money spent at national level by each member state dwarfs the amount of available EU funding. We concluded that it was right that the responsibility for dealing with youth unemployment should rest primarily with member states. There are, however, clear benefits from the EU co-ordinating the member states’ responses, sharing good practice and using EU funds for specific tasks that complement action at national level.

I turn now to the issue of the Youth Guarantee in more detail. It is an example of the EU spreading good practice. We must never forget that nobody—no Government, no institution, no international institution —has a monopoly on good ideas. All member states should and must learn from others and avoid a “not invented here” reaction. Surely it is part of the internal single market to have this relationship. The Youth Guarantee proposal, which the committee supports, is an example of the EU spreading good practice. In essence, it is an undertaking that all young people aged under 25 should receive a good-quality, concrete offer of employment, continued education, apprenticeship or training within four months of leaving education or becoming unemployed. It was pioneered in the Nordic countries. One witness said that the operation of a guarantee scheme was likely to be the reason for the very low rate of long-term unemployment in these countries.

The Youth Guarantee could, and probably would, look different in every country, but the key benefits are: immediate support, not waiting to offer help until young people have been lingering in unemployment for some time; personalised support, finding the outcome that is right for the young person, which could be an internship, employment, personal mentoring or something else; and support for all unemployed young people.

The concept of the Youth Guarantee is different from the current system where the help is not immediate. The Minister said that because most young people on benefits come off them after six months, “It would be inappropriate to put support in earlier”. We found this rationale problematic as it does not account for those young people who have found unsuitable or temporary employment.

Implementing a Youth Guarantee scheme would be an opportunity for the UK to use EU funds to try something new which we know has worked in other member states. I repeat that we were disappointed by the Government’s lack of engagement with the EU’s recommendation that member states should implement a Youth Guarantee. Of the eligible member states, the UK was the last to submit a report outlining whether and how it would use a youth guarantee scheme. Our Government submitted it on 3 March, more than two months after the 21 December deadline. That does not show a lot of enthusiasm or interest.

In the report, the Government confirmed that they would not implement a Youth Guarantee scheme and used the report to describe how current initiatives served the same purpose as would a Youth Guarantee. We were disappointed by the Government’s decision, which we think would complement efforts to tackle youth unemployment at national level. We recommended that the Government reconsider this decision and use the funds to pilot a Youth Guarantee scheme in the five areas eligible for the extra funding. A Youth Guarantee scheme would tackle unemployment at an early stage before the feeling of being worthless and the loss of aspiration kick in.

A Youth Guarantee scheme is focused on the specific needs of the individual and therefore would complement UK measures, such as the Youth Contract with its focus on changing the labour market, making it easier for businesses to take on young people though providing wage incentives and support for those who are looking for work experience. We welcomed the September guarantee for 16 and 17 year-olds and the Youth Contract’s support for getting the most disadvantaged into a job or training or on to an apprenticeship scheme. Similar support needs to be offered to all young people struggling to find employment.

Throughout our evidence, we heard that one of the unusual aspects of this youth unemployment crisis is that it is affecting a wide range of young people, not just the most disadvantaged. Will the Minister say what the take-up of the Youth Contract has been? Has it improved? The initial figures show that between April 2012 and November 2013 only 10,030 wage incentives were paid to employers who had taken on an unemployed person, which is considerably less than the 160,000 available.

Inevitably, a great deal of the evidence we received was UK-specific, particularly the evidence we received from representatives of local bodies and from the noble Lord, Lord Heseltine, who worked with Birmingham City Council on its growth strategy in the aftermath of the publication of his government-commissioned report, No Stone Unturned: In Pursuit of Growth. We received much evidence that the best way of connecting with harder-to-reach young people is by using local specialised charities and other organisations. We were most impressed by organisations in Birmingham and Liverpool. It is easier for young people to connect with these grass-roots specialist organisations. Local authorities are in the best position to identify them. We welcomed the Government’s move toward greater decentralisation of funding and recommended that local enterprise partnerships, in partnership with local authorities, should be enabled to oversee the management and delivery of programmes. This would enable a move away from large-scale contracts towards the use of smaller service providers with knowledge of and, commitment to, the local area—in effect, localism.

In a Damascene moment, one that no committee member will forget, a member of the committee said, “We are investigating, discussing and taking evidence on youth unemployment, so we should take evidence from young people”. That was so true. We rapidly rearranged timetables, enabling the committee to schedule two visits, one to Birmingham and the other to Liverpool. Thanks to the great support of our committee staff and specialist adviser we set about remedying this problem. The young people were illuminating. There were open, no-holds-barred sessions. When the young people were asked about their attitudes towards various government initiatives, some of the language was unprintable and certainly unparliamentary. One youth witness commented that some of the policies in the area of youth unemployment would never have been put forward by a young person. The need to include young people in decision-making is another argument for localisation. It is easier for young people to be involved with local bodies, as they probably know some of the people involved. Young people prefer to stay in their own locality, where they have their friends as support groups.

There is certainly room for improvement in involving young people in decision-making. Local enterprise partnerships currently do not have to consult young people when making decisions about their youth unemployment strategy. We suggest that local enterprise partnerships should, as a matter of course, have to consult and involve youth groups about policies that affect them.

The final issue I want to touch on is skills mismatch. There are currently about 2 million unfilled vacancies in the EU. The digital skills area is a particular concern as nations in south-east Asia, India and many other areas appear to be far ahead. Skills mismatch is a particular problem in the UK. In its 2013 country-specific recommendations, the European Commission said that, despite progress in recent years, a significant number of young people did not have the necessary skills to compete successfully in the labour market. The Commission found that there was an oversupply of low-skilled workers in the UK and that the unemployment rate of low-skilled 15 to 25 year-olds in the UK was 37.2% in 2013, which was significantly above the EU average. We recommended that the European Social Fund be used to bolster skills training in this area and to ensure that young people get careers advice that matches their skills to the job market.

As an aside, I welcome the new House of Lords ad hoc Digital Skills Committee. I have to admit that I put it forward, and I am on the committee. We have our first meeting tomorrow, and I am truly looking forward to it. It will be chaired by the noble Baroness, Lady Morgan. If noble Lords were in their place during her contribution to the previous debate, they will know how fortunate we are. Digital skills is one area in which youth unemployment could be on the way to being solved.

I know I have stretched the House’s patience, but I thank noble Lords for being patient. I believe that there are four key changes which could ameliorate the current dreadful situation for the youth of the EU. There should be more of a focus on consulting and involving young people in developing youth unemployment policy. The Government should learn from best practice abroad and bring forward new ideas and initiatives, such as the Youth Guarantee. There should be a localised approach to devising and managing schemes that aim to address youth unemployment, which should involve local businesses, charities and specialist organisations. Finally, there should be better matching of skills to qualifications. I beg to move.

--- Later in debate ---

[Baroness O'Cathain]

My Lords, I thank everybody who has taken part in the debate. I particularly thank my noble friend the Minister. I gave him a slightly hard time—only slightly. I can be much more ferocious than that. His response was very good but, in listening to it, I reflected how confusing this whole issue is. We have so many different ways of looking at it. If I were 17 years of age with not much educational background, I just wonder how I would react having listened to this debate. Perhaps I would say, “There are the people in suits and dresses saying they are going to do this and that”. The Minister mentioned about 20 different and confusing areas that could solve the problem. Is it not just all too confusing? The final point that my noble friend made about the Youth Guarantee and the Youth Contract did not reflect the letter that I saw, which was much more along the lines of, “Oh well, okay, the Youth Contract is all right”, but people in Brussels were still saying that they really wanted the Youth Guarantee. Perhaps we should have another discussion about that.

In the mean time, I thank everyone who has taken part in the debate. I certainly want to say to my noble friend Lord Shipley that I am sorry he thought that the report was depressing. The fact is that it is a depressing situation.

[Lord Shipley]

I am sorry but I said that it was an impressive report, not depressing.

[Baroness O'Cathain]

I am sorry. That is the second time “sorry” has been mentioned in this House tonight. It is nice to be able to say sorry.

The situation is actually depressing throughout the EU but there are shafts of light coming in. One of the great things about the report is that it is not political. We did not mention parties and tried to work for the good of the youth of the whole European Union. We should, in particular, use the experience that can be observed in the member states and test it out to try to solve our own horrific problem—because it is a horrific problem. I go back to the right reverend Prelate the Bishop of Durham’s analysis in his maiden speech the other day. We have to remember that.

The Minister neatly glided over the situation regarding local enterprise partnerships and did not say whether he was prepared to consider whether they should consult young people, in groups or individually. We received most of our really good evidence from talking to those young people. After all, it is the young people who count. That is why we are doing this and why I hope we have made a difference to the future of these young people by exposing a lot of the stuff in this report.

I thank again all our staff. There are so many thanks going around this Chamber but I could not have done any of this without the terrific support that we received, and the members of the committee have been ideal. If noble Lords want them as chairmen of other committees, look at all of them. They do an excellent job, and I thank them.

Motion agreed.

House adjourned at 10.08 pm.