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Freud Report

Volume 458: debated on Monday 12 March 2007

1. What assessment he has made of the implications for his Department’s budget of the recommendations of the Freud report on welfare to work. (126359)

The Government have welcomed the publication of the Freud report and are giving careful consideration to its recommendations and their financial implications. We hope to respond more fully later this year.

I think that I thank the Minister for that reply, but could he please give us a bit more detail, particularly on his quantification of the risks that one or more of the prime contractors will fail to deliver what they are supposed to achieve? Does he agree that two substantive risks need to be both quantified and managed? First, the prime contractors may fail to engage with one or more important groups of vulnerable jobseekers in their area because they will have a regional monopoly. Secondly, as commissioning bodies, they may fail to develop the capacity of the local voluntary and third sector organisations that will deliver the services on the ground.

I agree with the hon. Gentleman about the risks involved in proceeding along the lines that David Freud has recommended, which is why we have not yet made any final decisions. The hon. Gentleman mentioned a number of those risks, and rightly so. It is worth reminding ourselves that, although David Freud proposed a network of regional monopolies, as the hon. Gentleman suggested, he felt that there could be some circumstances in which we should not proceed along those lines. Although tremendously exciting opportunities are opened up by Freud’s report to target more effective help and support on those who are hardest to reach and have proved to be the most difficult to get into employment, it is right that we look carefully at his recommendations. Obviously, we need to do some more modelling with the Treasury, but I am confident that we can find a way forward. David Freud was right also to suggest that the most sensible thing to do, if we can model the proposals and manage the risk carefully, would be to test the proposals in a number of pilots, and I think that is the right way to proceed.

Given the record number of new jobs under this Government and the record expenditure on welfare to work, how do the Government account for the only modest fall in inactivity rates?

I think that 1 million people have been taken off benefits and, as my right hon. Friend would acknowledge, as others have, including the Organisation for Economic Co-operation and Development, Britain has an outstandingly good track record on welfare reform. The significance of David Freud’s report is that although he has—rightly—charted the success of the new deal and other interventions that we made, his prescription, looking forward, is right and we must now target an increasing share of our available resources on the hardest to reach and particularly those who are economically inactive, such as lone parents and people on incapacity benefit. That is very much what we want to do, and I look forward to my right hon. Friend’s support when we do so.

If the Government are doing so well on welfare reform, why is the male employment rate in the United Kingdom now 10 percentage points below what it was under Harold Wilson, and why must we wait another six to eight years for David Freud’s proposals to be implemented?

There you have it, Mr. Speaker: the curmudgeonly voice of the Liberal Democrats. It is worth making the obvious point: we have never claimed that every problem has been solved, and it is clear from the Freud report that that is so. However, it would be futile and rather pathetic not to acknowledge the progress that has been made. The employment rate in the United Kingdom is now among the highest of all the developed countries in the world and is the highest for nearly 30 years. That is progress. I look forward to the day when the Liberal Democrats come here and celebrate that progress with us, although I suspect from the hon. Gentleman’s comments that that will be some time yet.

The Freud report stresses the particular challenges faced by lone parents not in paid employment who have disabled children. Can my right hon. Friend tell the House what measures the Government plan to take to ensure that there is affordable, accessible and appropriate child care for such lone parents and their children?

I am grateful to my hon. Friend, who will be aware that we have made a significant investment in improving access to child care since we came to office 10 years ago. There is a great deal still to be done, but it is important that that investment goes in. My hon. Friend will also be aware that as part of the work on the comprehensive spending review the Treasury is leading a project to look specifically at disabled children’s needs. My personal sense is that we should always look to do more to help families who are bringing up disabled children, and I very much look forward to the outcome of that piece of work.

There is no disagreement that those with multiple disadvantages need a great deal of input and help if they are to access the job market. David Freud recognises that that will cost a great deal of money. Does my right hon. Friend agree that the best people to get those with multiple disadvantages into the workplace may often be in the voluntary and third sectors, not just in the private sector? Will he ensure that the best quality of help is given to such people to make sure that they are not forced into work that is totally inappropriate for them?

I agree strongly with what my hon. Friend says. When it comes to providing the most effective help and support, we can probably leave on one side a lot of the outdated ideology. We should look for the providers that can make the biggest impact. It is significant that virtually all the programmes in the new deal for disabled people have been delivered by the private or voluntary sector—they have been a great success. I urge hon. Members on both sides of the House to approach this with an open mind. We will look to contract with the best providers that hold out the prospect of helping the most people at the best value for money. That is the challenge that David Freud has put down to us and we intend to pick it up.

The Secretary of State will know that concern has been expressed about the adequacy of the funding of the roll-out of pathways to work under the existing welfare benefits reform. Will he assure us that he will ensure that that is working properly before he embarks on the next phase? Has he held discussions with other Departments and the devolved Administrations about the cost of the child care that will be necessary if he is to push the programme for lone parents with children of 12 and over, especially those in the difficult group of the younger teens?

We will obviously have proper discussions with the Scottish Executive on how to take this forward because, as he knows, child care is a devolved matter. However, it is worth putting on record the progress that has been made in Scotland in the past 10 years or so. We calculate that the jobs dividend to Scotland has been 200,000 extra jobs. Most, if not all, of that progress would be put at risk if the Scottish people were daft enough to accept the hon. Gentleman’s advice and move towards independence.

Does the Secretary of State agree that as there is a common interest in sustained, long-term employment for these hard to place groups, it is absolutely essential that he does not close his mind to new and innovative organisations that might come along with something fresh to offer, or to specialist organisations that might operate either under the overall umbrella of commissioning or, in certain cases, independently, because of their specialist expertise?

I agree with the hon. Gentleman, and I do not want to close my mind to any of those things. The hon. Member for Weston-super-Mare (John Penrose) properly identified one of the risks. If we go down the road that David Freud has recommended, we will need to ensure that we do not compromise the ability of some of the specialist providers to make a valuable contribution to the welfare to work agenda. I will do everything that I can to ensure that that does not happen.

Freud has made several radical proposals, including a progressive reduction in the age of the youngest child at which a lone parent would be expected to seek work. However, in the Secretary of State’s speech to last year’s Labour party conference, he went further than that and spoke with admiration for the Clinton reforms in the US, a central plank of which was the time-limiting of benefits for lone parents. Will the Secretary of State clear up the confusion about his attitude by confirming to the House that he has specifically ruled out the time-limiting of lone-parent benefits?

I am surprised that the hon. Gentleman asks that question, because I have been asked it at least twice during recent Work and Pensions questions. On each occasion, I made it quite clear that we were not going down the road of time-limiting benefits.