Jobseekers (Back to Work Schemes) Bill

Steve McCabe Excerpts

Tuesday 19th March 2013 Commons Chamber

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

It is an honour and pleasure to follow my hon. Friend the Member for Wansbeck (Ian Lavery). My contribution might pale into insignificance compared with his comments of the past 20 minutes or so. He has probably saved me some time, because he has obviously taken to heart what the Child Poverty Action Group has been telling us all about the inequity of workfare schemes in the past couple of years. However, my starting point will be some 15 or 16 years ago.

I want to compliment Department for Work and Pensions staff. We sometimes forget the job of work that people do in their day-to-day life, and how difficult it can be. I only have to look back to when I came into this place in 1997. At that time, DWP staff were doing excellent work and were up for the challenge, keeping in mind that unemployment levels were excessively high when we came into government. They took on board the task of delivering for the then Labour Government the whole concept of new deal: new deal for long-term unemployed, new deal for young people, new deal for lone parents and new deal for disabled people. It made a vast difference to the lives not only of individuals, but of families and communities the length and breadth of the country.

It is therefore disappointing when things go wrong and DWP staff get castigated—it is grossly unfair. In recent weeks, I have held a couple of welfare reform summits, with some 30 or 40 different organisations attending. A member of DWP staff attended, explaining fully the changes that are about to hit many families across the country. As I said to people at the meetings, “Do not shoot the messenger.” The member of DWP staff explained what would be happening. The fault does not lie at the door of DWP staff; it lies at the door of the Department and the Ministers who are pushing the policies that everyone is faced with on a day-to-day basis.

One worrying aspect of the Bill is that this is emergency legislation. The point has been made about the number of times the previous Labour Government pushed through emergency legislation, but my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) knows full well what that emergency legislation was about. I have to tell the House that it was not in the realm of what we are seeing today. The retrospective element of the Bill is galling. My right hon. Friend knows that yesterday I had certain difficulties with the Bill. I still do—I have to be honest with the House. However, I recognise that he has worked hard to secure concessions from the Government to make the pill just that little bit less bitter than it would have been had he not made any such attempt.

The element of sanction is important. There are sanctions in all walks of life. We live in the real world, not the ideal world. If we lived in the ideal world, we would not have to have sanctions at any time, anywhere. The fact of the matter is that not everyone co-operates and not everyone plays by the rules, and so there are times when people have to be taken to one side and told where they are going wrong. However, that is no excuse for what has gone wrong here. Lord Justice Pill stated:

“Claimants must be made aware of their obligations and of the circumstances in which, and the manner in which, sanctions will be applied.”

I am not saying that that has not happened in every case. I am sure there are cases where staff have made it abundantly clear to claimants exactly where they stand. However, when we talk about the best part of 300,000 people, I have some anxiety about how many did not know.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

In the case of one of my constituents, it took three months to determine whether he should be sanctioned, as it was not clear whether the responsibility rested with the manager of the placement or the jobcentre. At one stage I wrote to the Minister, and I cannot say that his letter made the matter any clearer. In that case, is it right that the sanction is maintained against my constituent? It is perfectly obvious that not only did he not know the conditions relating to the sanction, but neither did the manager of the placement nor the staff at the jobcentre. Surely the Minister is simply covering up an error, if he is allowed to do that.

[Mr Brown]

I thank my hon. Friend for that intervention. It is abundantly clear that the system is not robust. I made the point earlier that it is not only those who are out there actively seeking work or training who need to know the rules of the game. Every one of us in this House needs to know the rules, and the wider public need to know what is going on out there in their communities. When they see in their local press half a dozen vacancies and potentially 40, 50, 60 or maybe even 100 people applying for jobs, they need to know that systems are robust. They depend on good government to ensure that the legislation is correct.

--- Later in debate ---

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

It is a pleasure to follow the thoughtful contribution from the hon. Member for Dumfries and Galloway (Mr Brown).

A very simple principle underpins my remarks: if somebody works a shift for an employer, they deserve a fair day’s pay for their time and effort. I cannot think of any circumstances in which it is okay not to pay employees or to pay them a derisory sum below the legal minimum wage for the work they undertake. I am sure that a number of us feel that the Government’s back-to-work schemes have fallen short of that principle, but the critical point is that the courts have found aspects of the regulations and sanctions regime attached to the schemes to be unlawful. At stake here is whether it is acceptable to use retrospective legislation to clean up the mess left in the wake of these court rulings. I do not think it is. Instead, I think the Government should accept that they made mistakes with the original legislation, take responsibility for the consequences and use the opportunity to rethink their approach and find more effective ways of creating job opportunities for people entering or returning to the labour market.

Given that aspects of the existing scheme have been judged unlawful and that penalties have therefore been imposed on some claimants unlawfully, it would be wholly wrong to legislate retrospectively as the Government propose to do. That, frankly, undermines the judicial process and the rule of law. We might as well rename this Bill “Jobseekers (Make It Up As You Go Along Schemes) Bill”. Whether or not we agree with the approach of the schemes in question—I have made it clear that I do not—the key issue is whether backdating legislation is the right approach to deal with this. I do not think it is. One of the main reasons why the courts found against the Government concerned the information provided to claimants and the description of the scheme in regulations. As legislators, we have a duty to scrutinise these regulations, and if we go down this retrospective “policy on the hoof” route, that aspect of our role is compromised, and that gives me great concern not only in a general sense, but in relation to the particulars of this issue, because to my mind the use of unpaid labour by businesses requires careful scrutiny and proper accountability.

I am quite sceptical about the value of such schemes, not just because if the jobs are there, they should be properly paid—at the very least at the minimum wage—but because I have seen very little evidence that they work. I am sure that many jobseekers will welcome every opportunity that comes their way, and some might even be able to use them effectively in the future, but there remain serious questions, mentioned by other hon. Members, about the practical outcomes of these programmes. I want to raise concerns about their long-term sustainability while the wider economy remains stagnant. There are real fears that schemes such as these actually inhibit recovery. Jobseekers might not be getting the skills that they need, but in the meantime they are depriving someone else, or even themselves, of a proper paid job opportunity. Also, while they are working for free, they cannot be out there looking for work that is appropriate to their skills and experience. Many will find themselves stuck in a sector that is wholly inappropriate and unsuitable.

To my mind, the schemes represent a poor use of our human capital. For example, they require graduates to stack shelves, yet we have invested thousands of pounds in those people’s education. They often have the confidence, skills and qualifications to enter the labour market, but if they are compelled to undertake low-paid, low-skilled work instead of looking for more suitable opportunities, what hope will that give to people who do not have high-level qualifications and who are trying to access a competitive labour market?

One question that has been raised today is: where is the money coming from? It is important to point out that that could well be a worst-case scenario. Other Members, particularly the hon. Member for Wansbeck (Ian Lavery), have mentioned section 27 of the Social Security Act 1998, and suggested that only some of those who have been sanctioned under the unlawful sanctions would have a case. Also, claimants would need to appeal, and there is no guarantee that they would all do so.

In regard to the question of where the money would come from, this is only a tiny proportion of the overall welfare budget. I am sure that there are as many ideas about where the funding could come from as there are Members in the Chamber today. There are lots of other places where the money could be found, according to one’s political priorities. My own personal bête noire is tax avoidance, which, even by the most conservative estimates, costs the UK billions in lost revenues every year. Ironically, some of the large corporations that have faced recent allegations of tax avoidance are the same large corporations that are participating in the unpaid labour schemes. So it is not just that they do not pay tax; some of them are now not paying wages either. I suggest that recouping unpaid tax might be one way of meeting the shortfalls in the budget. That might also bring a rather satisfying element of poetic justice to the proceedings.

The UK has a poor track record on cheap labour schemes, and we should learn from the mistakes of the past. As someone who came of age in the 1980s, I remember all too well the failures of the youth training scheme that afflicted many of my own peer group. It was essentially a cheap labour scheme for employers that exploited the hopes and aspirations of young people desperate for work, and it marched far too many of them up the hill, only to abandon them back on to the dole at the end of the scheme. Some were able to use the scheme as a springboard to something better, but for many, the quality of the training was highly questionable and it did nothing to help them to develop skills that employers wanted.

[Steve McCabe]

Does the hon. Lady think that the small number of Government Back Benchers present in the Chamber is indicative of the fact that they do not share her concerns about the quality of these schemes and about what happens to these people?

[Dr Whiteford]

It is very disappointing, but what disappoints me even more is that I suspect that we will be very lonely in the No Lobby tonight when we vote on this question. I urge everyone present who cares about this issue not to sit on their hands this evening but to stand up for people who are being asked to undertake unpaid work when they could be working for a wage in a proper job.

The worst aspect of the youth training scheme was that people were paid off from proper jobs in order to make way for YTS trainees on 20-something quid a week. Even in the 1980s, that was a derisory amount of money. It perpetuated dependency, sucked real jobs out of the economy and created huge resentment, not just among trainees who felt that they were being exploited, but from those who had watched their own wages and job opportunities evaporate.

The reality, then and now, was that people started getting jobs in significant numbers when, and only when, the economy started picking up again. Castigating the unemployed for being out of work entirely misses the point, and simply passes the buck away from those of us who have more responsibility for the state of the economy. The point about the state of the economy is as relevant today as it was in the 1980s, and it is particularly relevant with regard to the availability of work for people who do not have much work experience, or who face hurdles because of their health, because they lack skills or because they face other barriers to employment.

For several years now, I have taken an active interest in the programmes run by the Prince’s Trust in my constituency, which help young people who are some distance from the labour market to build the skills, the experience and, above all, the confidence and self-belief to find work and derive the many benefits that come with it. A work experience placement is an integral aspect of the Prince’s Trust programme, but as the economic recession has dragged on, it has become harder for staff to find placements, and significantly harder for the young people taking part to secure employment subsequently.

Oral Answers to Questions

Steve McCabe Excerpts

Monday 28th January 2013 Commons Chamber

[Mr Duncan Smith]

This is a matter that we are looking into. As my hon. Friend knows very well, it is caught under European law; however, the recent judgment that came out said that we had to make these payments. There might be other ways we may be able to limit that exposure, and I will be able to let my hon. Friend know later in the day.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

T5. Teacher Dawn Lewis in my constituency is one of 600 women who will lose out because of the perverse pension rule that my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) drew attention to earlier. Is the Minister at all worried that this looks like yet another coalition attack on working women?

[Steve Webb]

Just to be clear, we are talking about women who draw a pension significantly earlier than men born on the same day. The hon. Gentleman is shaking his head; that is a statement of fact. It is the case that present pensioners do not fall under the new system. I have explained why we cannot bring it forward, but I am delighted that the Opposition’s principal criticism is that we are not introducing our reform quickly enough.

Welfare Benefits Up-rating Bill

Steve McCabe Excerpts

Tuesday 8th January 2013 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I apologise for being absent for part of the debate while attending duties at the Home Affairs Committee.

The one inescapable fact is that however much the Chancellor talks about shared pain, we are discussing real cuts to benefits at a time when he thinks it is okay to prioritise tax cuts for millionaires. We should no doubt be grateful that pensioners have been spared this cut in their benefits, but that is probably down to Lord Ashcroft having identified what a key group they are and putting their benefits off limits.

I am afraid that these proposals look like an ambition to create division between those who have little and those who have less. That sits comfortably with the values and politics of a particular kind of Conservatism. This is called an uprating, but 1% rises over three years really represent a cut of 4% in the spending power of those already struggling. Citizens Advice estimates that when we take tax changes into account, a family with two children paying £130 per week in rent and earning just above the minimum wage will be almost £13 per week worse off. That is before we take food and energy inflation into account. No wonder people are being driven into the arms of payday loan sharks.

Income transfers for those on modest incomes, for example, are recognised throughout developed economies as exactly the kind of fiscal stimulus needed when recessionary pressures are highest, but the Chancellor is doing the exact opposite. A total of 4.6 million women will lose their tax credits, including 2.5 million working women and more than 1 million who care for their children while their partner works—the same people who are also having their maternity benefits cut. Lord Ashcroft calls them “suspicious strivers”. In his words, they fear they are one more redundancy, one interest rate rise or one tax credit change away from real difficulty, and they would not want to rely on a Conservative Government if they found themselves in trouble.

[Mr Stewart Jackson]

For the record, 42,654 people in the Peterborough constituency will be better off under the tax changes in April. Is the hon. Gentleman not ashamed that under his Government, who presided over 16 years of economic growth, more than 1,000 people in my constituency were parked on invalidity and incapacity benefit for more than 10 years. That is shameful and it is his Government’s record.

[Steve McCabe]

I cannot wait for the hon. Gentleman to have to meet all those people who are better off at his advice centre.

The International Monetary Fund regularly warns about the dangers of cutting the automatic stabilisers in these economically fraught times, yet that is exactly what is happening. It is estimated—the IMF is the source —that these benefit cuts will contribute to a £40 billion reduction in the country’s output when we desperately need the opposite to happen.

As well as implementing benefit cuts that defy economic logic, the Chancellor has set up a special hotline for Tory MPs who are confused about his benefit changes. Special hotlines for Tory MPs, Government cars to cushion Ministers from rail-fare rises, and specially arranged meetings to cover the transport costs if they want to watch the European cup final—yes, they are definitely all in it together.

My contention is that these decisions do not make economic sense, are not fair and will punish the very people who are striving and struggling to make ends meet while the Chancellor’s millionaire friends are prioritised for tax cuts. That tells us all we need to know about this Government’s values.

Jobs and Social Security

Steve McCabe Excerpts

Wednesday 28th November 2012 Commons Chamber

[Mr Duncan Smith]

The figures have been published. This is about start-up costs and the money that is paid for every job. If the hon. Gentleman wants to do the mathematics, he will find that it adds up quite well.

Under the Work programme, companies are paid only if they keep people in work for six months for the most part, and for some 13 weeks. Under Labour’s programme, 40% of the total budget or about £500 million, as I said earlier, was paid just to sign up people. That is the difference. We save the taxpayer the money, and we will produce a programme that gets people into work. It transfers the risk. In future, we should be able to shift market share from those who do not succeed to those who succeed.

Many of the same companies are used as were used under the previous Government, but the difference is that they are now being examined to show how successful their programmes are. Whereas under the previous Government they could simply sign up people, now they have to get them into work and sustain them in work, or they do not get paid.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

If I accept the Secretary of State’s proposition and that of the Minister of State, the hon. Member for Fareham (Mr Hoban) in his letter yesterday that it is a bit early to judge the programme, when is it reasonable to judge it? Can we expect to see a substantial improvement in the figures next year? If we do not, will the Secretary of State admit then that he has failed?

[Mr Duncan Smith]

I happen to believe that the people who will admit that they failed are the Opposition. I hope that within a few months they will be eating their words over all this. Over many years, while the hon. Gentleman’s party was in government, we saw welfare bills soaring. By the time that Labour left office, there were 5 million on out-of-work benefits, one in every five households had no one working, 2 million or so children were living in those workless households with no chance that they would ever see anyone go back to work, and youth unemployment was up by 40%. Unemployment was at 7.9% and inactivity at 23.5%.

What a contrast with the situation now. In recent months, there have been more women and more people overall in work than ever before, up 734,000 since the election. There are 1 million more jobs in the private sector. We have seen four consecutive quarters of rising jobs growth and three consecutive quarters of falling unemployment. Not one word about that from the Opposition; not one congratulation to those who have found jobs. Excluding students, youth unemployment is down 65,000 on the latest quarter and 15,000 since May 2010. There are now 190,000 fewer people claiming the main out-of-work benefit and the inactivity rate is close to the lowest in a generation.

Thirteen months after coming into office, this Government introduced the biggest payment-by-results programme that the UK has ever seen. It is succeeding. It will succeed. We have heard nothing from the Opposition today. It is a pathetic motion from a pathetic Front Bench team and I will oppose it tonight.

Oral Answers to Questions

Steve McCabe Excerpts

Monday 23rd April 2012 Commons Chamber

[Chris Grayling]

I am very pleased to tell the House that since May 2010, the total number of people in this country on out-of-work benefits has fallen by 45,000.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Is the Minister familiar with the recent freedom of information request that revealed that 1,100 employment support allowance claimants died between January and August last year after being assessed as fit for work? What steps is he taking to investigate this rather large number of deaths, and how come so many of those people were assessed as fit for work?

[Chris Grayling]

I am afraid that we cannot simply extrapolate one of those facts from the other. Sadly, we are all mortal, and circumstances arise that we do not expect. As I said to the hon. Member for Hayes and Harlington (John McDonnell), we always look very carefully at individual cases, but the Government are doing the right thing in trying to provide support to help people to get back into work. The worst thing for their health and well-being is for them to be on benefits for the rest of their lives if they do not need to be.

Welfare Reform Bill

Steve McCabe Excerpts

Wednesday 1st February 2012 Commons Chamber

[Mr Byrne]

I shall come on to that directly, but I agree with the hon. Lady on one important point. It is important to take local factors into account. If we take out the pension system, the housing benefit bill is something like a quarter of the overall benefits spending. It has been localised for something like 70 years. Admitting a degree of localisation in the way we set a cap sounds as though it could be perfectly consistent with her proposals, although I have not read her pamphlet.

Let me give the House one more illustration of why this is so important. Perhaps the problem of the five-child family in London is included in the hon. Lady’s pamphlet. Almost half the benefits received by that family will consist of housing benefit, as opposed to only about a third of the benefits received by a family in similar circumstances living in a different part of the country. Pretty often, incidentally, that money goes to the landlord rather than the family in question. I believe that we should have a cap that is different in different parts of the country, but takes account of differences in housing benefit.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Would not a much simpler and more cost-effective solution for London be to do something to control the excessive rents that landlords are pocketing? Then we would not have to transport pensioners halfway around the country.

[Mr Byrne]

My hon. Friend is right, and what has been noticeable by its absence this afternoon is any argument from any Government Member relating to what we should do about private landlords.

Disabled Young People (Support)

Steve McCabe Excerpts

Wednesday 7th September 2011 Westminster Hall

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am pleased to be able to take part in the debate. I congratulate the hon. Member for Eastbourne (Stephen Lloyd) on securing it. We can never devote enough time to the subject in this place.

Like others, I want to begin by asking about the personal independence payment. I have to say that I like the concept of an independence payment, and it sounds attractive. Like others, however, I am not quite sure what it will mean in reality. I do not want to end up with a crude, Orwellian sleight of hand, whereby the word “independence” results in a set of arrangements that mean the exact opposite. I do not say that that is the intention of the Minister or the Government, but I hope she understands the concerns many Members and organisations representing disabled people have about how the provisions will work in practice. Like others, I hope that she will be able to give us a bit more information and that we will be able to secure a promise that she will provide more information to people across the country, because it is important that she does so.

It is important to recognise that having great support needs does not mean that dependence and exclusion are inevitable, but that depends very much on how we choose to approach people and on whether we give the right kind of support—support that facilitates independence and assists those who are trying to help them. In an intervention earlier we heard about the pressure that is sometimes put on parents. I read a recent study looking at young disabled people who seemed to have made quite a success of their lives, in that they had secured employment and found a place to live independently. They highlighted the fact that their parents had been critical in helping them through those different phases. As in many other areas of life, it is true that good parents—parents who provide the right support—are a great help. However, where we are talking about parents who are coping with children with disabilities—often quite severe disabilities—we should never underestimate the pressure they are under, and that was illustrated in the example given by the hon. Member for Eastbourne. We should never underestimate the pressure on parents, how easy it is for one final incident or episode to be the straw that breaks the camel’s back or how insensitive agencies can be at times to the pressures on parents.

I want briefly to mention two groups. The first is young soldiers. I obviously see a lot of young injured service personnel at the Queen Elizabeth hospital in Birmingham. The lives of these young people will be changed beyond all recognition from what they would have anticipated when they joined the services a few years ago. As we think about the support and provision that will be available in future, it is important that we do everything to assist the independence of these people, to whom we already owe an enormous debt, and who have every right to expect to lead a fulfilling and independent life. We can either assist or hinder that process by the way in which we shape the support and services we make available.

The other group is young people with terminal illnesses. In the past, they would tend to die at a relatively young age—perhaps before or in their early teens. Quite often, the support we provided was limited to a bit of hospice provision and a bit of social services or other independent agency provision at critical times in the illness. Nowadays, youngsters with terminal illnesses tend to live much longer, into their early 20s or early adulthood. Like every one else making that transition in life, they have all sorts of demands and expectations, and they want to go to college and have jobs. Quite often, they are capable of doing those things, but they need different kinds of support and services. We need to recognise that there will be an increasing demand for that in the years ahead, so the more we can shape and prepare services now, to cater for those young people, the more we will be able to help them, and the more we will get ahead of the game, rather than playing the traditional game of catch-up.

I want to mention two issues, the first of which is mobility. It seems to me that that is the key to any sense of independence. If someone cannot decide for themselves where to go, when to go there, and how to organise their life to achieve things, their independence is severely restricted. I hope that as the Government think about how to reshape support and benefits, they will think about mobility for young people, particularly those in residential establishments. It is not right, when they are trying to make the transition to adulthood, that they should be dependent on someone else deciding what time they will get to go out socially or visit the shops. They need some degree of independence.

To go back to the issue of parents, it is extraordinary how insensitive agencies can be to the needs of parents and disabled youngsters. Birmingham city council, which is trying to save a bit of money because of the budget predicament—and that is perfectly understandable—recently introduced a proposal to restrict school bus access for children going to special needs schools, subjecting them to the same arrangements as other children. I cannot remember the exact distance now, but I think that they must live further than something like a quarter of a mile away. Of course, the reality is that children going to special needs establishments have special needs. Some of them do not like massive changes and disruption; they need a predictable route. Some of them could not possibly travel by themselves on public transport. It would not be feasible for them to get taxis, because that would cost the local authority more than the existing transport provision. The parents found out about the change through a blanket letter from the council to all parents, informing them of the intention; so of course we had people phoning up in floods of tears, saying “What am I going to do next week?”

That is the kind of thing that came up in the exchange between my hon. Friend the Member for Edinburgh East (Sheila Gilmore) and the hon. Member for Eastbourne: far too often the agencies are inflexible with their rules. They are oblivious to the needs of the population they are trying to serve. I think that perhaps, without any more cost, a bit of Government guidance and direction about the way in which the agencies must perform, both in providing services and when there is any intention of changing them, could make a significant difference.

That brings me to the other issue I want to raise, which is schooling. I am dealing with a situation concerning a young woman in my constituency who is on the far end of the autism spectrum. She has a great deal of personal need. At times she self-harms. She is challenging at home and gets very frustrated; she often attacks her parents and the other children. She is a challenge. Her parents have coped with that for 14 years, as well as bringing up two other children. They have done a remarkable job. However, in the past year, the secondary school that she attends in Birmingham, which is not a special needs school, has decided that it cannot cope with her. It has come to the conclusion that it is not the right place for her.

I do not blame the school for that decision, which is possibly a quite professional one, if those concerned have genuinely looked at the situation and thought about it; but of course the parents need to know that now that that has happened the authorities will take a good, honest look at the situation and come up with a proposal that will serve the needs of that young girl. What they have done instead is to withhold the minutes of the initial meeting that took place; they appear to have edited them to exclude some of the things said at the meeting, and have now come up with a set of proposals insisting that she return to the school—which the school rejects. They are essentially making those decisions on cost grounds; there is no doubt about that. As a result, although other children are back at school this week for the start of the new term, the girl is at home with her mother, who is at the end of her tether. Of course, every time her father must take time off work to try to deal with the crisis, he loses money, which plunges the family further into financial difficulty.

That seems to me not only insensitive but a completely unprofessional, unacceptable and irresponsible way to deal with people. I am happy to discuss the personal details of the case with the Minister. If there is anything that she can do to help I would appreciate it; but generally I want to say that local authorities must be given clearer direction on such issues. I do not think that it is entirely a matter of money. I am aware of the budget pressures that face Birmingham and other authorities; if money is a consideration, so is the way in which people behave, and the way in which they treat those they are there to serve. I do not think that the state of affairs I have described is remotely acceptable.

I thank the hon. Member for Eastbourne for obtaining the debate. I hope that the Minister will respond to some of the issues raised, and that we shall have many more debates like this one, so that we can shape some provision in a way that genuinely reflects the needs of the people we hope to assist.

[Mr Philip Hollobone (in the Chair)]

If the Front Bench speakers split their time, they have about 12 minutes each.

Youth Unemployment

Steve McCabe Excerpts

Wednesday 22nd June 2011 Westminster Hall

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Thank you, Mr Caton, for calling me to speak.

I am delighted to have this opportunity to make the case for more to be done to help young unemployed people in this country. I begin by welcoming the drop in the unemployment figure for the 16 to 24 age group in the past three months, although I think that the Office for National Statistics attributes most of that drop to student behaviour, and it is fair to say that the overall claimant count for May for that particular age group is the worst for two years.

The purpose of this debate is to try to raise awareness of the scale of the problem of youth unemployment and to warn against complacency. In the early ’80s, I worked with unemployed young people in Wolverhampton. They were the usual assortment of youngsters: some high on ambition but unsure where or how to get started; some low in confidence but with obvious talents that needed encouragement and a chance to be developed; and some already despairing for their future.

During the long ’80s recession, it became clear to me that a generation of young people were being denied the chances and opportunities that they deserved. There were some success stories, because we should never underestimate the resilience and drive of youngsters and their capacity to cope with the things that life throws at them. However, some turned to crime and ended up in prison; some ended up on anti-depressants; and many ended up on long-term benefits. In some cases, those youngsters are now the people the Government say should be reorientated to the world of work, because of the difficulties that they experienced in the ’80s—in particular, the fact that they never got into the pattern of work.

During the ’80s, youth unemployment continued to rise for four years after the end of the recession, and I am very anxious that we guard against a repeat of that situation now. A recent poll for The Independent on Sunday revealed that eight out of 10 people believe that it is harder for a youngster to get a job now than it was 20 years ago. Three quarters of the people who were surveyed called for a tax on bankers’ bonuses to fight youth unemployment, and two thirds of them said that they thought that the Government’s economic policies threatened to leave a generation of young people jobless and that not enough was being done to help young people into work. If we want to avoid a repeat of the tragedy of the ’80s and of the lives that were wasted then, we need to act now. Otherwise we risk having another lost generation of young people. I do not think that any of us who remember what happened in the ’80s are willing to stand by and see that happen again.

I know that there will be endless arguments between the Labour Opposition and the Government about the origins of the recession. The politician in me is not really surprised that the coalition wants to pin the blame on Labour and trot out the familiar and ready-made excuses, especially when it is confronted with doubts and allegations of unfairness about some of its policies. But however the blame is apportioned, there is one thing that we can be certain of—the group that is not responsible for the difficulties we now face is the next generation of people seeking work. Their only crime is to come of age at a time of austerity and limited opportunity, and for so many of them the mantra sounds less like, “We’re all in this together,” and rather more like, “It’s everyone for themselves.”

[Mr Andrew Turner (Isle of Wight) (Con)]

Does the hon. Gentleman agree that a great deal will depend on the quality of schools and education for those young people coming into work?

[Steve McCabe]

The education and skills base of young people is very important. Increasingly, however, employers talk about work experience and preparedness for work, which are slightly different from academic achievement or results at school. Nevertheless, I take the hon. Gentleman’s point.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this debate. On work experience, does he agree that we need more work experience for young people? Education is good—there is no doubt about that—but it is no guarantee that young people will get a job. If we can get more work experience for young people, it will help them to make up their minds about what they want to do. Does he also agree that the further education colleges and universities need to supply courses that are relevant to the needs of industry today?

[Steve McCabe]

Yes. I welcome any initiative that is designed to help people to be better prepared for work and to help young people to get that first foot on the work ladder. I absolutely agree with the hon. Gentleman on that point.

[Mr Iain Wright (Hartlepool) (Lab)]

I congratulate my hon. Friend on securing this debate, which is very important. His experience in Wolverhampton in the 1980s is very similar to my experience in Hartlepool in the 1980s. Following the two previous interventions, does he agree that the cancellation of the education maintenance allowance is a detrimental step in helping people to stay on in education? In addition, the abolition of the future jobs fund, which helped scores of people in my constituency and elsewhere, will also stop interventions that help young people gain work experience, which is so vital for their future careers.

[Steve McCabe]

I feel quite strongly that, so far, what we have seen from the Government is the cancellation of initiatives. I hope that during this debate we might hear something about a fresh initiative. However, I personally think that the wrong time to withdraw support is when we are in the depths of a recession and youth unemployment is rising. That is patently wrong.

I am not alone in expressing my concern about youth unemployment. The CBI has recently voiced its concerns about the rising trend of youth unemployment, a trend that it fears. There are about 31,000 more young people chasing work now than there were last summer. Youth unemployment is hovering around the 1 million mark. That means that one in five of our young people are without work, which is an awful lot of talent and potential for any country to write off.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I am grateful to the hon. Gentleman for giving way. I hope he will forgive me for intervening so early in the debate, but I want to ask him to place on the record something that I think is material to the overall headlines, if not to the issue of youth unemployment itself, which we all agree is very serious. Will he accept that of the number of young people who are unemployed—a number that went close to 1 million and then came back down again—277,000 are full-time students who are looking for a part-time job alongside their studies? Those students are not “unemployed” as we would understand that word in its conventional sense.

[Steve McCabe]

I have acknowledged that students are part of the figures that we are discussing, and I am happy to accept that point. I will say a little more about both students and those who are not in education, employment or training later. However, I am happy to accept the Minister’s point that there are some students in the youth unemployment figures. Of course that is true.

In Birmingham, the youth unemployment figure is now about 13,000, which is quite a high figure for that city. OECD data show that Britain compares poorly with its competitors in terms of youth unemployment initiatives. NEETs are also part of that problem. That predicament not only has an effect on young people themselves, but is bad for the country, adding to the Government’s borrowing at the very time when they are concerned to reduce it. Over time, we will pay the price of this lack of activity. It has been estimated that the young people themselves suffer a long-term wage scar, earning between 8% and 15% less during their working lives than they might have done. The CBI tells us that youth unemployment costs the country about £3.6 billion per year, which is not a sum of money to be trifled with. A failure to provide initiatives or opportunities can lead to some young people disengaging completely, which clearly has a long-term impact on their employability. Persistently high unemployment, especially among younger and less skilled workers, leads to the problem that the Minister is now trying to grapple with. That problem involves people who are out of the labour market for so long that their potential to rejoin it reduces with each passing month, which explains, at least in part, some of the long-term benefit problems that he is attempting to deal with.

[Jim Shannon (Strangford) (DUP)]

There is a clear need for better co-operation and co-ordination between further education colleges, businesses and the Government to explore jobs, options and opportunities. Not everyone can be a hairdresser or a beauty consultant, but there are opportunities for engineers and in food processing. This week, Bombardier Aerospace announced a substantial investment on the home front, so the opportunities are there. Perhaps there is now a need for the Government, the further education sector and businesses to work together more closely to identify the opportunities, so that young people can gain skills and do training to get those jobs.

[Steve McCabe]

I entirely share that view. Part of my purpose here today is to argue that a greater effort is needed to respond to this problem rather than to collapse under its weight.

I was suggesting that the danger of persistent unemployment is that it makes people less employable. I was a struck by a young woman called Laura McCallum who came to see me at my advice centre the other week. She is 22 and has an excellent degree from Sheffield university, but she has been unemployed for two years, despite hundreds of applications and a number of interviews. I am told that she has an interview in three weeks’ time, so I hope that we will all keep our fingers crossed for her. Strangely enough, she wants to join the civil service—there are obviously lots of optimists around. Laura is a classic example of someone who has done everything right so far, but as the months go by her CV looks worse, because of this gap that she cannot plug.

If we look at people at the other end of the scale—not graduates but NEETs—we see a much bigger employability problem. We know that NEETs are three times more likely to end up in prison, that 50% of them are likely to suffer poorer health, that 60% are more likely to develop a drugs problem and that female NEETs are 20 times more likely to become teenage mums. Those figures were produced by the Prince’s Trust, on whose authority in this matter I am happy to rely. These young people lose out, but the country loses out, too. The most recent OECD figures suggest that joblessness in this country is more than double that in apprenticeship nations such as Germany, Austria and Switzerland.

The Minister mentioned earlier that if we look at figures we have to take account of the fact that students make up a proportion of them. I accept that, and it is also fair to say that if we look at NEETs, there are indications that some of the youngsters have additional hurdles, problems or difficulties that make it harder for them to access jobs, and I have no doubt that that is a factor. None the less, the numbers are worrying. The figure for NEETs in the west midlands is about 20%, and it is going up steadily—it currently stands at some 4% above the UK average. NEETs are a particular problem in our region.

I recognise that there are some special problems that require attention. About 10% of NEETs probably find it difficult to join the job market because they are either pregnant or parents with very young children. About 6% of them might be students on gap years, and it would therefore be reasonable to argue that we would not want to include them in an unemployment breakdown, and at any one time about 4% could be in custody. We should not, however, be complacent and say that we can discount those figures; we should instead say that we need not only measures on which everyone works together but, for particular youngsters, even more intensive measures to ensure that their potential for the job market improves.

Labour’s proposals for tackling youth unemployment merit serious consideration. It has never been entirely clear to me, as it has not been to my hon. Friend the Member for Hartlepool (Mr Wright), why, even allowing for the scale of the cuts, the incoming Government were so keen to scrap the future jobs fund and the guarantee of work or training. When there is so much public support for it, I do not know why Ministers do not look again at the idea of a tax on bankers’ bonuses, especially as the bankers continue to take money they have not earned and show, in my view, little by way of contrition for the problems that they created for all of us, which have caused the suffering of the young people that I have discussed. If we chose to tax bonuses in addition to having the bank levy, we would have the money for the kind of employment programmes that some hon. Members have already mentioned. We estimate that £600 million would fund opportunities for at least 100,000 young people—perhaps more—which might mean that as many as 10,000 youngsters in the west midlands would benefit. That is not enough, but it is a start, and it is a lot better than the present situation.

These folk are our next generation; they are the people we hope will pay taxes, produce growth and finance pensions and health care. They are the people to whom the Minister for Universities and Science claimed we have a contractual obligation in his excellent book, “The Pinch”. We are not fulfilling that obligation at the present time, but instead we are denying those people jobs, pricing them out of higher education and threatening their ambitions by preventing them from getting a foot on the ladder.

I am sure that when the Minister replies he will itemise some of the things that his Government are doing to tackle the problem, and I hope that he will also tell us what will happen to the young people’s careers advice and support agencies now that the Government have decided to abolish Connexions. I want to make it clear that I welcome some of the Government’s initiatives. The national citizen service, which launches this summer, is to be commended. It will offer about 10,000 places for 16-year-olds, although it lasts for only six weeks. It is a step in the right direction, but it is too little.

The Government say that they want to create 100,000 more apprentices, but I am not clear how they expect to do that with so few incentives for businesses to take on more apprentices. I appreciate that this is not strictly the Minister’s responsibility—the Minister for Further Education, Skills and Lifelong Learning made it clear to me last night that everything to do with apprentices is in his domain. If there are criticisms, perhaps I should direct them at him. I am sure, however, that the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), has some views on the matter, as he thinks about the more general issue of youth unemployment.

I think that we could do more to make apprentices attractive, especially for smaller companies. The Federation of Small Businesses has argued for two specific measures. It thinks that some kind of national insurance holiday and some measure of wage support would be helpful. Its members have also made it clear that one of the biggest problems that they face is managing the administration and bureaucracy of apprenticeships. Interestingly, they are keen on apprentice training agencies, so will the Minister say something about that? Those agencies were initially a Labour initiative, but he does not have to set his face against every such thing. If it makes is easier for him, I think they originated in Australia, so he should not worry about the affiliations. They are something that the FSB wants.

It is important to recognise that only 8% of small businesses have taken on an apprentice in the past year. The figures for 2008 show that half of all apprenticeships were in companies with fewer than 50 employees, and it is vital that we make inroads in that regard.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing this debate. He is making a very important point about youth unemployment. In many parts of the United Kingdom, it is the small business sector, whether it involves the FSB or other groups, that will deliver for young people, rather than large, inward investment projects—we all love to see such projects, but their days are probably over. Does the hon. Gentleman agree that the small business sector needs promotion and assistance, and that it can offer some prospect of employment to young people?

[Steve McCabe]

I totally agree. As I have said, the figures for 2008 show that about 50% of all apprentices were in small companies. Moreover, if we look at micro-companies, we see that they are the businesses that need things such as an ATA or some sort of support or incentive. I think that that is where we will find the extra apprenticeships.

I did not call this debate to totally damn the Government, but I want the Minister to recognise that I am not alone in thinking that not enough is being done. The National Institute of Economic and Social Research argues that the current funding for apprenticeships is simply not sufficient to tackle the scale of youth unemployment. Its director told the Treasury Committee in March that neither apprenticeships nor work experience were sufficient to tackle the scale of the problem.

Of course, there are some good news stories, as is the case in all such situations. I received a letter in advance of this debate from Emma Reynolds, the government affairs director at Tesco. I know that Tesco does not always get a wonderful press, but it is the largest private sector employer in this country. It is worth noting that 25% of its almost 300,000-strong work force are under the age of 25. This year alone, it hopes to create 10,000 new jobs. It has provided 3,000 work experience placements, and last year, despite all the difficulties, it was able to take on 335 graduates. It also has a regeneration partnership, which means that it works with Jobcentre Plus in areas in which it is developing new stores or centres. I hope that I can work with it on that, because it has submitted a planning application in my constituency.

Not to be outdone, the Co-op has also announced that it plans to create 2,000 more apprenticeships over the next three years. It is worth noting that its chief executive, Peter Marks, joined the company at 17 and knows exactly what it is like for someone to get their first foot on the ladder and work their way through the company.

I urge the Government to think again about an immediate jobs and training programme. Like many other people, I believe that it could be funded, or part-funded, by a tax on bankers’ bonuses. I also think that the Government need to establish proper arrangements for careers advice and guidance for young people. Although it is welcome to see examples like the big retail chains— we should encourage more of that and I am all for it—we need to listen to what the FSB is saying and to recognise its problems, particularly in relation to ATAs. If the Minister can indicate that the Government are willing to take some of these things on board, we might be in a situation whereby the accusations that we do not care would not be so loud, and the likelihood that we repeat the things that happened in the 1980s would diminish significantly.

--- Later in debate ---

[Chris Grayling]

I have issues generally with the way some of the ILO’s data are collected. Perhaps the right hon. Gentleman or some of his colleagues would like to request another debate, and we can consider the question at length. What pleased me most fundamentally about the last set of figures was that the drop occurred not in the group of those in full-time education, looking for a part-time job, but in the group of those not in full-time education or employment. That is a welcome development.

There is a big challenge for us.

[Steve McCabe]

I do not want the debate to get bogged down in the question of figures, but I am not quite sure I understood that last point. I thought that the Office for National Statistics said that 61,000 of the 88,000 drop was accounted for by students becoming economically inactive because they are in full-time study. It is not true in that case to say that the bulk of the drop could be attributed to non-students. The reverse would be true.

Pensions Bill [Lords]

Steve McCabe Excerpts

Monday 20th June 2011 Commons Chamber

[Mr Duncan Smith]

We are committed to reviewing that year by year, so I can assure my hon. Friend that we will constantly take it forward and not leave it static.

Introducing a waiting period of up to three months, which has been widely discussed and debated, will ease the regulatory burden on employers. We had many representations from employers. In view of the present circumstances and the difficulties that many of them face, it is important to recognise the key considerations that we had to take into account in framing the Bill.

Workers will retain the right to opt into the system if they consider it to be in their best interests to do so. That is important. Although we are allowing a let-out, if workers want to enter they will retain the right to do so. The Bill also amends legislation to enable employers with defined contribution schemes to self-certify their scheme. That is simple and straightforward. It makes it easier for employers with an existing scheme to try to align that. If it is aligned closely enough, the scheme can go ahead, saving employers the complication of having to change and engage in a new scheme. That is fairer and more reasonable.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Given that the vast majority of the 600,000 people who will be excluded from getting a pension under the raised threshold are women, is the Secretary of State at all worried that the Bill is beginning to look as if it discriminates against women?

[Mr Duncan Smith]

I recognise the hon. Gentleman’s concern. We are not blind to the issue, but we have decided to strike a balance between making the scheme work from the beginning and avoiding driving people on very low incomes into sacrificing too much and therefore not seeing the rewards. It is important to make the point that in the Green Paper, as the hon. Gentleman will have noticed, we talk about the single-tier pension, from which there will be very significant benefits to women. We hope that in due course that will achieve a balance.

I do not dismiss the hon. Gentleman’s considerations. We keep the issue constantly under review and will watch carefully to see what happens. It is important that we get auto-enrolment off the ground in a stable manner. I hope hon. Members on both sides of the House recognise that these are balanced decisions—sometimes nuanced decisions—that we have to take, but we will make sure that we review them.

Welfare Reform Bill

Steve McCabe Excerpts

Wednesday 9th March 2011 Commons Chamber

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I beg to move, That the Bill be now read a Second time.

The Bill before us today covers a number of areas, but I hope that it sets a new course for the welfare state. I believe it will enable us to reach out to some of the groups of people who have become detached from the rest of society—trapped, too often, in a permanent state of worklessness and dependency. For the sake of the House, I will go through the relevant clauses of the Bill. I am sure that colleagues on both sides of the House will want to intervene. I hope they will recognise that we shall get to most of the clauses that they want to discuss, but I will take interventions as and when they come.

The problem is that although from 1992 to 2008 this country saw some 63 consecutive quarters of growth, and 4 million more people were in employment by the end of that period, before the recession had even started we still had some 4 million-plus people on out-of-work benefits. The question is: where did all those jobs go? Under the previous Government, over half of the jobs created went to foreign nationals. This is not an immigration point; it is a point about supply and demand. There were a group of people in this country completely unable, it appears, to take advantage of that long period of growth and job creation. In essence, the key point about the Welfare Reform Bill is that it is intended to help that group.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am grateful to the right hon. Gentleman for giving way so early. I wondered whether, at the outset, he would like to comment on the reports in today’s Telegraph that the cancer charities are warning that his proposals for employment and support allowance will penalise those who do not recover soon enough. How could anyone think that that is a fair approach, in a Bill like this?

[Mr Duncan Smith]

I think the report was in The Guardian. I do not know whether it is in The Daily Telegraph.

[Steve McCabe]

The Telegraph too—you’re famous.

[Mr Duncan Smith]

I read The Guardian; he reads the Telegraph. What can I say? Times really are changing.

I have read the report, and I think that a number of elements in it are simply not altogether correct. I say that rather carefully because the point about the cancer aspect is that, as the hon. Gentleman knows, we inherited from the previous Government a process of reform and change to the employment and support allowance, which included the work capability assessment. We supported that, with the previous Government, because it was the right thing to do—to look at the 1.5 million people on incapacity benefit and check them over. We did not inherit any real allowance for cancer sufferers. It is important to make this clear. The Employment Minister, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), immediately accepted the internal reviews, but went further. He asked Professor Harrington to conduct a review of what we did regarding cancer patients and others, and the hon. Gentleman, being a generous individual, will know that we then incorporated a big change, so that a person in cancer treatment—chemotherapy—who is between treatments will go straight on to the support element. Thus the contributory aspect will not affect them, because while they are on the support element they will continue to be supported when they are out of work.