Youth Unemployment and Bank Bonuses

Stephen Timms Excerpts

Monday 23rd January 2012 Commons Chamber

[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.

[Chris Grayling]

rose—

[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.

[Esther McVey]

When I read the title of today’s Opposition day debate, which mentioned youth unemployment and bank bonuses, I thought it was a list of Labour’s worst failings—youth unemployment up by 40% and a banks bonus culture developed under Labour and signed, sealed and delivered with a knighthood under Labour—so will not the right hon. Gentleman concede that where Labour messed up, the coalition is cleaning up?

[Stephen Timms]

We had some discussion in the debate about the future jobs fund. The Minister has awarded a contract for the evaluation of the Work programme. I welcome the fact that he has done that. He should read the evaluation of the future jobs fund carried out by the same organisation that he has commissioned to evaluate the Work programme. It points out just how effective the future jobs fund was and the crucial value for young people of

“a real job with a real wage”.

We need a new approach. We should repeat the tax on bankers’ bonuses to bring in £2 billion, funding 100,000 real jobs for young people. We need, once again, a temporary cut in VAT to rebuild momentum in the economy, as the VAT cut did before the general election. A further VAT cut on home improvements would give the construction industry, which is in a desperate state, the chance that it needs. We should bring forward investment in schools, roads and transport, and we should listen to the Federation of Small Businesses and give small firms hiring new staff a break from paying national insurance—five points that would give us, at last, a chance.