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Welfare to Work (City Strategies)

Volume 475: debated on Tuesday 6 May 2008

I would like to begin by thanking the Minister and his officials for their assistance. We are working together very closely on welfare to work strategies and shall continue to do so. One Nottingham—the local strategic partnership—sees employment and skills as a key dimension of our attack on underachievement and deprivation in our city, and has made that a high priority. Partners across our city are working hard to reconnect the nine poorest wards with the new opportunities that Nottingham’s economic expansion has created.

Our employment and skills partnership includes Jobcentre Plus, the Learning and Skills Council, business, the voluntary sector and the city council. In July 2006, One Nottingham became the first—and only—local strategic partnership to win a welfare to work city strategy, which is run by our employment and skills board and has brought nearly £3 million of new investment into the city to help to get people back into work. That is matched by the employment and skills projects, which remain the largest spending item of the One Nottingham budget. We have not simply arrived at the conclusion that job creation, skills and employment are important in our city, but led the way by ensuring that the biggest spending in our admittedly rather meagre budget is on skills and employment.

The council leader, Jon Collins, and I, as chair of the local strategic partnership, have agreed four worklessness indicators in our local area agreement, which again underlines our commitment to this policy area. Progress is being made. Nottingham now has the fifth highest gross value added for residents in England outside London—£24,600 in 2005—and, in 2006, there were 8,500 more jobs in the city than in 2001, which represents an increase of 4.7 per cent. compared with a figure of 3 per cent. for England as a whole. That is a good record. We have begun the long-term process of changing our local economy from one dependent on low-skill and low-paid jobs to one dependent on higher paid, knowledge-based occupations. Again, progress is being made.

Nottingham now has a higher percentage of knowledge-based jobs than England as a whole—58 per cent. against 52 per cent. Between 2001 and 2006, the knowledge sector grew by 12.3 per cent. in Nottingham, compared with 7.6 per cent. in England as a whole. Of course, those are just statistics, but they indicate that, compared with the rest of the country, Nottingham has set out its stall and is already producing significant results. We are also well ahead in our city strategy target to reduce the numbers on working-age benefits. Nearly three quarters of the reduction came from supporting lone parents back into work. We are not picking off the easy groups, but we have a long-term strategy. However, if the improvements are to be sustainable, our long-term rate of improvement might actually have to slow down.

To deliver that change, Nottingham created one of the first employment and skills boards, which is now well established as a place in which all local partners can work constructively to tackle difficult problems. That has been successfully coupled to a robust local delivery mechanism known as “making the connection”, which has been adopted as a model of good practice in the regional economic strategy and elsewhere. It led to the establishment of a number of new, innovative programmes, some of which were funded by One Nottingham—my local strategic partnership. Some of our early successes include the introduction of learning champions, who are individuals from local communities who inspire others in those communities to take up training opportunities and to find work. They can be found in shopping parades, supermarkets and local markets. So far, they have engaged nearly 10,000 across the city.

Another early success has been the next step into work scheme, which provides careers guidance and helps people to apply for jobs. So far, some 2,000 people have been supported, 710 of whom have moved into jobs. Another success has been the work of partners such as Apricot Training Management Ltd, Enable, New college Nottingham and the training framework for care management, which collectively have helped nearly 1,000 people to achieve their first qualification. Nearly 200 of those helped on their journey back into work were lone parents, and more than 50 per cent. were from black and ethnic minority communities. Again, that is innovative, creative, interesting and original assistance, owing not least to the One Nottingham influence.

A small amount of money and a little magic dust helped that innovation to take place, which has since been supported fundamentally by the Department for Work and Pensions through the city strategy. So far, I think that we have done well. It has been a tremendous advantage to have the DWP completely engaged in what we have been doing. Working together—locally and nationally—we have managed to achieve a great deal. However, we are greedy in Nottingham and would like to achieve much more and to deepen and strengthen the existing effective partnership with the Department.

The city strategy programme is about more than just our small but perfectly formed projects. One Nottingham’s funding is the tip of the iceberg. The making the connection programme as a whole has seen more than 15,000 people and worked with 350 employers to help more than 975 long-term benefit claimants back to work. However, we are not complacent and know that our work in Nottingham must move to a different order of magnitude if we are to get thousands, rather than hundreds, into sustainable employment, which means that we must work effectively with local and national partners.

On a more personal point, those of us who work in this field must seek to simplify the plethora of titles and jargon if we are to communicate with the public and claimants, rather than with fellow professionals. Few would know that pathfinders, welfare to work programmes and city strategies are actually the same. The welfare to work plan does what it says on the tin. Perhaps the Minister and his officials will pay attention to the plea from me and colleagues who work tremendously hard in this field about trying to put this in plain language to connect with those whom we are trying to serve.

On a weightier point, I would like to put on the record my thanks to the Department, both at ministerial and official level, for such positive and encouraging advice and interaction, which we now need to take further. As part of the city strategy pathfinders network, we welcome that dialogue with the DWP and other Departments, which enables Nottingham to progress our ambitions, and with other city strategy pathfinders, from which we have been able to learn.

What are our next steps? We have some to take with the Department and our local partners, but others must be taken within the broader context of what we are trying to do in Nottingham as a whole. Last Monday, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Stirling (Mrs. McGuire), supported by a video message from the Prime Minister, launched Nottingham as the UK’s first early intervention city. The objective is to break the cycle of intergenerational underachievement—no more sticking plasters, no more little schemes, no more thousands of pounds here and there—and to get to the heart of the intergenerational cycle that often dooms people to a life on benefits. It becomes intergenerational in that there is the thought, “We are not going to be in work. We do not get the assistance that we need. We do not have the aspiration to break out of that intergenerational cycle.” In Nottingham, we have set ourselves the task of cracking through that cycle and starting a virtuous cycle, rather than a vicious cycle, in which people aspire to get into work, to do well at school, and to get qualifications, skills and a job.

That is easy to say, but difficult to do. We need to give space to people in Nottingham to ensure that they are not targeted into oblivion in the short term, but supported as they take a long-term view. That means that we can build on success rather than merely tick boxes this time next year. Like our partners in children’s services, health, crime and drug services, neighbourhoods and communities, and housing, our skills and employment partners know that it is far too late for them to operate with failed 16-year-olds. It is essential that we get in much earlier to ensure that the required social and emotional skills are in young people for an effective work-ready 16-year-old. Those skills need to be laid down before the age of three and polished through good parenting and schooling.

In Nottingham, we have targeted a package of proposals at those in the zero-to-18 age range. The proposals include the family-nurse partnership, and the SEAL—social and emotional aspects of learning—programme in every primary school. We are helping teenagers to understand relationship building and the significance of social relations so that they can make the best of themselves and their excellent schooling. That will ensure that we tackle the problems well before they have even happened. At the end of the day, no one will know that they might have happened. At the moment, all we do is swat the mosquitoes instead of draining the swamp.

Skills and employment partners know more than any of our other partners that this is about not just working with an ever-replenishing stock of “hard to employ”, but cutting off the supply much earlier in the life cycle. In employment terms, that means building aspirations, developing enterprise, and improving support for people who want to use work as the way out of poverty for them and their children. Employment and skills will contribute more policy proposals to our early intervention package. The package reads across from employment and skills into health, and crime and drugs. I will relay one or two of those ideas as my speech develops.

We have already had some success in harnessing the support of the regional development agency through our close connections with Greater Nottingham Partnership and the support of the business community. We have some 75 employers joining us in our fit for work programme. Our next step is to maximise working on health, crime and drugs, children and families, and housing. Other partnerships and agencies are jointly planning to deliver more integrated and cost-effective solutions. We all have our plans in different silos. The local area agreement allows us to start pulling that together and to drive forward partnership activity that complements, in this case, employment and skills policy. For example, we are working with the local health partnership to enable GPs and health colleagues to recognise that, for many patients, work is the best prescription for achieving an aspiration to work. Working with our crime and drugs partners will also help. As city police commander Beebe said:

“If we address attitudes to work and developing aspirations, we will also tackle one of the major contributors to crime.”

Many of us have used the catchphrase, “The best crime prevention measure is a decent job.” Our crime and drugs partners understand that as much as our employment partners. Derek Stewart, the chair of our crime and drugs partnership, has underlined the potential for improving the wraparound assistance that helps ex-offenders and problematic drug users so that more of them can get back into work.

This morning, I received an e-mail from the probation service in Nottinghamshire. It told me that through the Offender Learning and Skills Service, the European social fund and Jobcentre Plus projects, work placements that would be invaluable in assisting offenders’ return to work have to be turned down because attending the placement would contravene benefit regulations, which would mean that the offender would lose their rights to benefits. A paper is on the way to the Secretary of State setting out those issues and asking for dispensation, so that a pilot scheme can be trialled in Nottinghamshire to allow an offender to accept unpaid work placements without benefit sanctions. Those bright and constructive ideas, which Ministers and officials can assess to see whether they work, are emerging from my challenge to our partners to help address unemployment and skills. The sign has not gone up saying, “That is nothing to do with us; we deal with crime and drugs.” Our partners are reaching across to say, “We have an idea about that.”

We are working with our housing partnership and our arm’s length management organisation, Nottingham City Homes. We can provide skills and employment components to isolated 16-year-old single mums who require supportive housing. One might not think that that is an employment issue. However, if we can help those single mums by supporting them to live in a decent place and by reassuring them that their child will be cared for effectively by themselves or carers, they become available for employment and training opportunities. Again, we see that read across to a housing partnership. Next week, I hope to take the matter forward when the chair of my housing partnership and I visit officials from the Department for Children, Schools and Families and the Department for Communities and Local Government. Obviously, there is a read across and we will keep DWP colleagues informed of our impact there.

We are working with our children’s partnership to tackle child poverty and to beef up our 16 to 19-year-old agenda. Therefore, a web of assistance and support— through partnerships with crime and drugs, housing, and children’s services—is being installed to help our employment and skills partnership. It is overarched by the mission of One Nottingham—prevention, pre-emption and early intervention—to make a reality of our drive to become an early intervention city so that problems can be eliminated and reduced at source, rather than massive public expenditure being used to tackle the symptoms much later, much more ineffectively and much more expensively. If there was a reshuffle coming up, I would like to see my hon. Friend the Minister on his way to the Treasury. If that happened, he could base the next comprehensive spending review on the theme of early intervention. I would like to see a three-year package that fundamentally changes the way in which public expenditure is used so that we can tackle the problems rather than just calm some of the symptoms.

Whitehall is following our lead, and might follow even further. The Secretary of State for Work and Pensions will join us in Nottingham to see some of the things that we have achieved and, hopefully, to keynote a conference on 5 June, in which he can outline some of the next steps that the Department and ourselves can take in the coming years. Above all, we require his support to continue to break down any remaining silos or obstacles that hold back an effective city strategy. However, to do that well locally, we require national clarity about the post-Leitch and post-Freud settlement. We can adapt any strategy and make it work, providing that we know what it is, and there are a number of ways in which we would like to influence what it is.

I hope that my hon. Friend the Minister will ensure that the Secretary of State comes to Nottingham armed with responses to a number of issues that we have presented via the city strategy learning network. It has produced a rather lengthy document—necessarily so—entitled “Request for further enabling measures”. I do not know whether the Minister has seen it yet; I first saw it only about half an hour ago, so I shall forgive him if he does not have it at his fingertips. From a cursory glance through it, it strikes me as entirely constructive and positive. It contains a number of specific and sometimes technical points that will cut away some of the things that practitioners are finding difficult to deal with when helping people get back to work, which we would all like to see happen as expeditiously as possible.

There is a great deal in the document, including about leadership, how to align targets and how to improve employer engagement. There are also a couple of things that I wish to address specifically. The first is accountability, scrutiny and commissioning. We need to know whether those responsible for city strategies will continue to deliver programmes themselves, or whether they will loosely oversee private and voluntary primary providers. We can operate either system, or both, but some clarity will allow us to work more effectively, should we be requested to engage more strongly with private sector or voluntary providers.

Nottingham’s city strategy partners are particularly keen to see movement on the request for enabling measures on local scrutiny, accountability and commissioning. We feel that our employment and skills board already fulfils some of the necessary functions, including aligning funding in the city strategy commissioning prospectuses, but a more formal role would be welcome.

Through our opportunities as a pathfinder, we have been able to influence local partners to engage more effectively in DWP commissioning. Forthcoming European social fund activity will be delivered by a new and innovative private-voluntary sector partnership, and we are keen to take up further opportunities to influence the DWP’s future commissioning activity in our area. We are also interested in exploring options with the DWP for joint commissioning as equal partners, and particularly how we can add value to larger DWP programmes through our local discretionary resources.

Another matter on which further work is necessary is data sharing. That applies particularly to our efforts to create an early intervention city. We would like proper data tracking of families, from the point at which unborn children are at risk of falling into a cycle of underachievement. We could start tracking through the midwife, then through the health visitor, the primary teacher and Sure Start and children’s centres, to get intervention to a young person at the earliest appropriate moment. The golden rule is that the earlier the intervention, the more effective and cheaper it is. When tackling drug abuse, for example, if we can get effective parenting skills to a mother and effective drug education to her child for £2,000 a head, that will save £200,000 a year on often forlorn efforts at rehabilitation, which has a very poor sustainability rate, at the age of 18. Little expenditure can be more effective if it takes place earlier.

Similarly, data sharing enables public, private and voluntary sector organisations to intervene early. That is why it is fundamental to what we are doing and to the employment and skills part of what our broader partnership is intended to do. We would welcome greater opportunities to use the collective authority and accountability of the employment and skills board to analyse the performance of providers of mainstream and discretionary provision locally and, crucially, to enable us to customise provision to provide a better fit with local need. To achieve that, it is crucial that the DWP and the LSC sign up to much more effective data and performance sharing.

The Minister would be surprised if I concluded my remarks without mentioning the 16-hour rule, and I shall not disappoint him. The current lack of flexibility in that rule is critical to our ability to respond effectively to employers’ needs. Making the connection partners are working with employers to develop training packages and secure guaranteed interviews, but they often find that they cannot deliver to the employers’ time scale, as training has to be extended over many weeks to work around the 16-hour rule.

A good example of the impact of the rule is our current work with E.ON and Working Links. We hope to deliver a significant making the connections package to ensure that we move as many priority group customers as possible into the 400-plus jobs that are being created. Flexibility in the 16-hour rule would enable our response to be much more effective and more relevant to such a major Nottingham employer and to our communities. We would be interested in engaging in more detail with the DWP and Her Majesty’s Treasury on reducing the unintended job-destroying consequences of the rule.

Of course, we would want any relaxation of the rule to be clearly linked to specific employer-led pre-recruitment activity, with guaranteed interviews and sustainable outputs. We do want not a way around the 16-hour rule that would allow thousands of students to claim; rather, we want to finesse the application of the rule so that it can do the job that I know the Department wants it to do. The devil is in the detail, and we believe that we can help the Department to work through that detail and make the rule more effective.

Much of our partnership’s work is on community engagement and raising aspirations. We see that as critical to being able to turn up the pace of addressing worklessness in our most disadvantaged communities, and we would welcome a cross-departmental making work pay forum to examine some of the practical barriers to people going back to work. The remit of that group must go further and consider attitudinal barriers and perceptions.

I am sure that my hon. Friend the Minister knows that I am not attempting to claim that mine is a typical English constituency—far from it. We have the highest number of teenage pregnancies of any constituency in the UK and the fewest young people going to university, so it is clearly unusual. The ridiculously tight boundary that has been drawn around the city of Nottingham also makes it unusual, since its statistics are not leavened by figures for any suburbs, rural areas or green space. The area is tightly bounded around the inner city, with its problems, and the outer-city estates that I represent, with theirs. That makes a mockery of Nottingham’s position: it is always low in league tables merely because we do not have a nice, comfortable band around Greater Nottingham that would put the city in the middle of most league tables, as we would wish. I hope that this is not a sore point, Mr. Martlew, but that is apart from Nottingham Forest being at the top of the league table that our local clubs share. My apologies for mentioning that.

Anecdotal evidence from our local communities and from our focus groups with clients suggests that misconceptions about the working tax credit and other in-work incentives may be another barrier to people going back to work. The Government’s pledge to deliver a “better off in work” guarantee is welcome, but further work on perceptions, which can sometimes be pervasive and damaging to local confidence, could be the forum’s key role. That would enable us to be locally sensitive, particularly in areas of chronic underachievement or deprivation such as the one that I represent. The One Nottingham organisation and our skills board also hope that the forum, in which we would be delighted to participate, would be able to take a longer-term view of welfare to work initiatives, and not least of the intergenerational scope of early intervention, to prevent problems from recurring.

I have spoken at some length, but I had anticipated that other hon. Members would join me—perhaps they are still travelling back after the bank holiday. I know that the Liberal Democrat and Conservative spokesmen want to speak and that the Minister will reply, but I will continue for a few minutes, if that is in order Mr. Martlew, because I want to use the time effectively and put one or two other matters on the record.

The city strategy learning network comprises all those cities that have a city strategy welfare to work programme. The cities involved have made several points, which I do not expect the Minister to answer today, but I urge him to read the document, because it contains some good ideas. One such idea is an adult advancement and careers service, and the document identifies priority areas for developing and piloting the new service. Will he consider whether such pilots could be used to test how assessment can be enhanced from day one of a claim, with more in-depth assessment for disadvantaged groups? Where possible, information on assessment should be shared across providers and other agencies, to contribute to the customer journey.

The delivery of a wide range of information and advice should be further co-ordinated and closer links should be forged with Jobcentre Plus. Perhaps unified branding should be developed across the service delivery partnership, which returns us to the confusing number of organisations. Even as someone who is on the inside and who is trying to help people to navigate their way through the system, I find that that issue recurs, and I am sure that clients have experienced it, too. We need more proactive approaches to supporting clients, such as skills health checks.

When I mentioned exploring the 16-hour rule with the Government, I should have discussed the inflexibility regarding eligible activity for Train to Gain funding. While I am at it, I want to throw in the extension of the education maintenance allowance and the cessation of the standard training allowance, which sometimes make it problematic for young people to start employment and access training rather than stay in education. The partnership could be used to improve those arrangements.

Nationally, the partnership effort should be assisted in Whitehall. The Department for Children, Schools and Families should consult city strategy partnerships on the implementation of the children’s plan to ensure that effective links are forged with extended school and child care provision, and the child poverty unit should prioritise city strategy areas for the proposed child poverty pilots. I hope that such links, including those to housing and health provision, are made more evident by the interaction between partnerships and the Department.

On making work pay, specific attention should be focused on a number of groups. For example, eligible child care costs are currently capped for large families; the level of housing benefit loss on taking up employment is prohibitive for homeless people housed in emergency accommodation; and non-working absent parents face potentially high immediate increases in maintenance payments on taking a job. There are many other such groups, including those who are using part-time work as a stepping stone into full-time work.

We must develop a more serious cognitive behaviour therapy arm of the city strategies. If we were enabled to do what we want to do locally, there would not be enough cognitive behaviour therapists in the private and public sectors to make the breakthroughs that we need. That issue affects individuals who may not need serious assistance with profound mental health problems, although some may need such help, but who need less skilled interventions—such people may need a friend, a helper or someone to motivate and encourage them in difficult times.

We have made a sound start in Nottingham, and we have developed imaginative proposals—we want to be at the cutting edge of what happens nationally, and we are. The city strategy welfare to work scheme is helpful, and I am delighted that it was advanced by the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Barrow and Furness (Mr. Hutton), continued by my right hon. Friend the Member for Neath (Mr. Hain) and is now being taken forward by the current Secretary of State for Work and Pensions, my right hon. Friend the Member for Stalybridge and Hyde (James Purnell). If the DWP continues to listen to those on the ground who are trying to make the system work, a series of possibilities will open up, which will allow the implementation of the detail to make the proposals work. For example, when antisocial behaviour orders were introduced, they were regarded as a good thing, but it took several years of Members of Parliament, as much as anyone else, interacting with Ministers to make ASBOs reliable and effective.

There has been a good start both locally and nationally, but we need to know where the Government want to take us on this journey. I assure the Minister that wherever the Government want to move the welfare to work programme, those of us who care about under-skilling, under-training and under-employment in our constituencies, whether or not we work within local strategic partnerships, will be at his shoulder trying to make those programmes work. Again, I thank the Minister and his officials for all that they have done in putting the first phase of the city strategy in such good health.

I congratulate the hon. Member for Nottingham, North (Mr. Allen) on securing this debate. I do not know whether, as he has said, the bank holiday means that many MPs are still on their way to work, but the topic and this debate are important.

Although the hon. Gentleman has mainly discussed the city strategy debate and what is happening in Nottingham, he has raised a number of broader issues, which I want to consider. In addition, I represent an area of Rochdale that is still experiencing rising unemployment, and I hope that the Minister will address the issues around that.

After 11 years of this Labour Government, more than 9 million people of working age are unemployed or receiving benefit. More than 2.5 million of them are on incapacity benefit, of whom more than 1 million suffer from mental health problems. The figure for incapacity benefit has risen dramatically since 1979, when it stood at only 800,000. It is clear to me that successive Governments, both Labour and Conservative, have used incapacity benefit to mask unemployment. Although there is now a broad consensus that that is wrong, we are dealing with the legacy of that under-investment in people.

Liberal Democrats believe that work is good for most people. It is the best route out of poverty, and it provides benefits in terms of confidence and mental well-being. In the past 10 years, policy has been driven by the Treasury, and, as the hon. Gentleman has said, it has not been joined-up.

A holistic approach is required to deal with particular problems in our industrial towns and cities. That is apparent when one looks at the Public Accounts Committee report that shows that, except for the pathways to work programme for disabled people, which has been underfunded, and the jobseeker’s allowance for the over-50s, the programmes to tackle unemployment have failed to be a cost-effective solution. Similarly, the recent National Audit Office report showed that the likelihood of exiting JSA varies from 4:1 to 20:1, depending on the location of the jobseeker. The average likelihood is 9:1 and for people over 25 and the long-term unemployed, it is 40:1. Those statistics are entirely unacceptable and show clearly that, despite their rhetoric, this Government have not succeeded in dealing with some of the longer-term problems.

When announcing a review of the welfare to work strategies on 18 December 2006, the then Secretary of State, the right hon. Member for Barrow and Furness (Mr. Hutton), said that the review would address

“How we can tackle the ‘can work, won’t work culture’”.

I hope that the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), will tell us today where that review is going. However, I have to say—I am sure that many hon. Members who are not here today would, too—that it is not just the “can work, won’t work” attitude that needs to be tackled, but the “can work, can’t find a job” attitude. Earlier this year, the Daily Express did a large piece focusing on part of my constituency—the Falinge area—showing that more than 75 per cent. of the people there were on benefits and not working. I know from talking to a good many of those people that that is not because they do not want a job, but because the support they are given is inconsistent and short-lived, is not tailored to their individual needs and does not deal with some of the serious problems that many of them have; in addition, when they have gone through all the processes and are ready for a job, there are no jobs available. In my constituency, unemployment is still rising, and a recession is likely to ensure that it rises even further. There is a need for far more imaginative strategies and greater acceptance by the Treasury of the fact that, sometimes, we must invest to save.

I know that the Government have responded to the Freud review and the Leitch report and that we are seeing change. Jobcentre Plus offices are being changed, which the Liberal Democrats broadly welcome. We want Jobcentre Plus to become a “first steps” agency, responsible for benefit claims and for identifying suitable employment support, rather than for providing longer-term support. We support the Government in their efforts to involve more private and voluntary sector organisations in tailoring provision better to the needs of unemployed people. However, we are concerned about the way the contracts are being let; we are not convinced that large-scale regional contracts, especially if they might be taken by overseas companies that have a strict profit motive, are necessarily the best approach. There is a place for small-scale, local providers and we do not want such provision to be driven out. We accept the need to tackle skills gaps, which is why we believe support should be far more tailored and should not be short term—13 weeks or a similar period. People who have been unemployed for four or five years may take longer to get a job and need to be given enough time.

We welcome Dame Carol Black’s report on health and worklessness; her work on that important link needs to be developed. The Government have not given sufficient support to that type of initiative in the past, although that work is now being done. On Saturday, I spoke to a constituent who is on incapacity benefit; he had gone back to work, but was unable to stay in the job because, owing to periodic relapses, he was unable to continue to work full time. The Government should consider what the hon. Member for Nottingham, North said about the 16-hour rule. If we are to get the more than 1 million people who suffer from mental illness in its various forms back into work, we must accept that they need more support, and their employers and the benefit systems must recognise that there may be times when they are not able to work full time or when they need time off.

We have to look at how someone’s inability to work can lead to a sudden loss of income, as their housing and other benefits are affected, or to their being told that they owe money. The whole benefits system needs to be reformed. It is far too complex and acts as a powerful disincentive to getting back into work. We believe that there should be a single working age benefit that “does what it says on the tin” and is not loaded with caveats about what individuals can and cannot claim and how they can move forward. Within that, we want a single minimum wage, without the different rates that are paid to people depending on their age, which we believe are unhelpful.

There are many barriers to work. Some 1.7 million people face withdrawal of benefits at marginal rates of more than 60 per cent. if they return to work. When people return to work, we want some of that benefit to continue to be paid to them, with perhaps some paid to their employer as a subsidy—a guaranteed investment in their job.

I hope that the Under-Secretary will outline today the commitment involved in the city strategies and how the Government envisage their development. We believe that it is not only cities, but towns such as Rochdale that need a strategy. We are considering as a borough what we can do to tackle the problems in Falinge. There is something else that the Government can do to overcome the “can work, can’t find a job” problem and to help people to find a job that lasts.

I agree with some of the points that the hon. Gentleman has made, especially on the interaction of benefits and taxation. I am not sure whether the 20p rate makes that easier or harder. Does he agree that, if city strategies are to be extended to towns as he suggests, we need to know, as a matter of urgency, that the current city strategies will continue for a couple of years, as that would provide the basis for any expansion?

I agree entirely. We need a commitment from the Government. The review of the welfare to work strategies announced in December 2006 by the then Secretary of State will enable the Under-Secretary to give that commitment to those cities that are already operating a city strategy, thus enabling the programme to be rolled out further. That is what I would like to see happen.

In my borough over the next five years, £2 billion of private and public investment is being spent. That is a combination of money through housing market renewal; Building Schools for the Future; other projects such as Metrolink, which is coming to Rochdale; the local improvement finance trust, or LIFT, programme for health centres; and £200 million that is being invested by the private sector in regenerating our town centre.

When there is such large-scale public investment going on, I would like to see the Government encouraging employers to take on board and train people who are currently unemployed. That is why it is important to shift some of the benefit that is being paid to people in Falinge to sit at home when they want to work; I could take the Minister round to people who will tell him that they want to work but cannot find a job. If we look at the unemployment rate in Rochdale, that is patently obvious; as a major manufacturing town, we are still continuing to lose employment. However, it would be good if we could get some of the money that is being invested to enable unemployed people to go into some of the major projects. For example, the housing market renewal investment going in could train people to become bricklayers, plasterers, plumbers or electricians.

Similarly, the work that is going on in Building Schools for the Future would benefit local people. That work is not all about building, because in these new schools the IT infrastructure is being put in, along with private finance initiative programmes that will enable private sector providers to deliver that infrastructure. So people can also be trained in IT.

If we could see such joined-up government, which could use the leverage that public sector and private sector investment have to alleviate unemployment problems, that would go a long way towards improving matters. That is an awful lot of what the city strategies, such as the Nottingham city strategy chaired by the hon. Member for Nottingham, North, are trying to do. It is joined-up government. It is not all about putting everything out to the private sector; it is about the private and public sectors working closer together.

That is why it is important that the Under-Secretary give an early indication of the Government’s thinking on city strategies and that the city strategies programme be rolled out. Rochdale is not a city, although we are part of Greater Manchester and we have been involved in the city strategies programme. There is a great need to develop these policies.

Unemployment, including the number of employable people who are not employed, remains stubbornly high, certainly in industrial blackspots such as my constituency. We need new thinking and we need a commitment from the Government to long-term investment, not short-termism. We also need the Treasury to begin to understand that it is possible to spend to save. If we could have such a policy, we will go a lot further than we are at the moment.

It is a pleasure to serve under your chairmanship again, Mr. Martlew, and I will not spoil things by mentioning football; we in Gloucestershire tend to play sports with a different-shaped ball, so we will stick to them.

I also offer my congratulations to the hon. Member for Nottingham, North (Mr. Allen) on securing this debate. I must say that, at the beginning, I was a little surprised by the fact that he was sitting behind me, and I wondered whether he was announcing something about his political affiliations. However, having listened to his speech, I am sure that the Under-Secretary is overjoyed to learn that he was not doing so, and that the hon. Gentleman is still on the Government Benches.

I listened with great care to what the hon. Gentleman said and I have followed a number of the things that he has said on these issues. I know that he takes very seriously the idea of joined-up government and indeed, in his own constituency, he is rather an exemplar of that approach, chairing his local strategic partnership and, as all MPs do, banging heads together locally, within both local agencies and Government agencies, to ensure that those agencies work together effectively.

The hon. Gentleman referred to the position of Nottingham in the sector of welfare to work policies. I have done some research for this debate and therefore I know that in his constituency and elsewhere in Nottingham there is a challenge, for example, in terms of the households that are claiming out-of-work benefits. As he said, his constituency of Nottingham, North has the unfortunate status of being in the top 20 nationally of constituencies that have children in households claiming out-of-work benefits, with a figure of 38.6 per cent. Again, if one looks at the number of children in those households, one sees that 8,265 children are affected. Indeed, all three of the Nottingham constituencies are right at the top of the league table if one looks at the east midlands as a whole. So he laid out extremely well the challenge for welfare to work strategies and the importance of having all the different agencies joined up.

The hon. Gentleman also made the point about the intergenerational cycle of deprivation, which is why I referred to the figures about children in households on out-of-work benefits. It is certainly the case that, if a child is brought up in a household where nobody works and in an area or estate where perhaps very few people work, that child is brought up in an environment where the norm is that people do not go out to work. I think that that is what the hon. Gentleman was referring to, and that is the problem that we have to try to crack.

I was also very pleased to listen to what the hon. Gentleman was saying about early intervention. In a different incarnation a few years ago, when he was shadow Home Secretary, my right hon. Friend the Member for West Dorset (Mr. Letwin) made similar points. My right hon. Friend used different phraseology; he talked about a “conveyor belt to crime”. However, he was very much looking at identifying families and the situations that did not give people a very good opportunity to avoid trouble, and he also considered what we could do at an early stage. The hon. Member for Nottingham, North laid out those problems and possible solutions very clearly.

The hon. Gentleman also laid out the importance of looking at benefit reform, particularly benefit simplification, and its interaction with our welfare to work strategies. It is very clear that the benefit system is very complex; it is difficult enough for Ministers, shadow Ministers and Members of Parliament to understand it sometimes. Therefore, I sometimes wonder how those claiming the benefits and those thinking about whether they would be better off in work are supposed to do things. Although there are some good calculations now for single parents on out-of-work benefits who are looking to go back into work, those calculations are not done universally for everybody on out-of-work benefits. The calculations can be very complex for people when they are trying to work out if they would be better off in work.

The hon. Gentleman raised a number of other issues, not just with the benefit system but with the Child Support Agency and the situation of absent parents paying for their children; all the sorts of things that can impact on whether someone moves back into work.

I agree with much of what the hon. Gentleman has said. There is one specific area where the benefit system interacts most negatively with people’s desire to work. That is where we are forcing someone who wants to take a job to gamble with their future benefits. If someone takes a job, comes off all their benefits and that job then falls through, they would have to start from scratch again with all the form-filling and bureaucracy. It could take many weeks and months to recoup the position that they had before they took that gamble of taking a job. Removing that “gamble” element from our welfare to work programme would be one of the key measures that both major parties could address and work on together.

I am grateful to the hon. Gentleman for making that point. He is absolutely right; one of the challenges that we face is how we can design benefit systems to recognise the fact that most people are honest, decent and want to work, and that the number of people who will abuse those systems is relatively small. How we correctly design those systems to reflect the facts, without leaving ourselves open to those people who would abuse them and take the taxpayer for a ride, is the challenge that we face. However, the hon. Gentleman is quite right; we need to design benefit systems so that they give people who want to work every encouragement to do so and do not leave them feeling that, if they take that gamble and make that leap of faith, they will come off so much worse afterwards.

One of the things that we really need to do is embed working. I think that all parties agreed today that work is generally better for people than not working. It is not just better for their financial position, but for their health and general well-being. Embedding that idea is something that we need to do when we look at these issues.

I am very pleased that earlier today my right hon. Friend the Member for Witney (Mr. Cameron) made it clear that a future Conservative Government would have welfare reform and welfare to work strategies as one of their three priorities. The hon. Member for Nottingham, North outlined the scope of that challenge.

One of the key things that the hon. Gentleman and the hon. Member for Rochdale (Paul Rowen) alluded to was the funding situation for many of these programmes. Perhaps the Under-Secretary would cover that in his remarks, as I am still not entirely clear how some of the programmes are funded. I understand that, to a limited extent, the savings that are made as people come off benefit and move into work can be reinvested in programmes and strategies, certainly city strategies, but that is not the case across the piece. At present, savings from benefits cannot be used to fund the programmes. In effect, that limits the scale of the ambition of the Government’s welfare to work strategy.

[Frank Cook in the Chair]

My hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor, made it clear that a Conservative Government would allow the Department for Work and Pensions to use savings from benefits to invest in the programme and therefore be much more ambitious about getting all those on incapacity benefit who can work back into work. In the Budget this year, the Government alluded to doing that, but it is not clear whether they have. It would be helpful if the Under-Secretary commented on that. The hon. Member for Nottingham, North touched on the extent to which getting people back into work can help alleviate poverty.

I welcome you to the Chair, Mr. Cook, but just before the hon. Gentleman moves on to his next point, will he say whether he believes that it would be possible, were people to be retained in employment, that any bonus payments made to companies that had achieved a six-month, one-year or 18-month period of employment would not necessarily return to the DWP but would either be retained by the private company or voluntary sector organisation delivering the service or by the city strategy organisation? In other words, will the localities be rewarded for supporting such initiatives, rather than the Government taking a cut if the localities are successful?

That is an interesting question. I believe I am right in saying that the hon. Gentleman’s strategic partnership or a similar local organisation is actually one of the Government’s welfare to work providers. Indeed, he said something that my party made clear in its strategy. We want to use the private and voluntary sectors and pay by results if they get people back into work for a sustained period. The work that they will have to put in and how we will measure that may depend on the amount of effort required for an individual—it is clear that one size does not fit all. In the design and detail of contracts, we will have to look at where the resources stay.

The hon. Gentleman’s suggestion was a good one for two reasons: first, local providers—in his case, his local strategic partnership—would be given an incentive to do the work; secondly, and importantly, the money would stay in the locality. No doubt we will be thinking over the next couple of years about the extent to which welfare reform can be done locally and not just nationally.

An interesting outcome of the trials in the United States, where such things can be tried at a federal and state level, was that doing things locally drove success. It was not a great big federal bureaucracy trying to do everything from the centre, but pushing power and programmes down not just to the state but to the city and town. That is one of the things that has not been done very well in this country. The hon. Gentleman’s question and some of the things that he is doing in Nottingham may well indicate how we could do that and how welfare reform and welfare to work strategies could be carried out more successfully at the local level in future.

It is interesting that, despite the Government’s focus on poverty and their making it a priority, the number of families in severe poverty, which is defined as below 40 per cent. of median income, has grown from 1.4 million to 1.8 million since their baseline year of 1998-99. That is on their own figures. Indeed, the number of families below 60 per cent. of median income has gone up by 200,000 in that period. Clearly, that is the national number, and it applies to places other than cities. The Department has admitted that it will not hit its child poverty targets, and it is clear that a more successful welfare to work strategy will be crucial in doing so.

I have one or two other questions for the Minister. In a previous question session, I asked the Secretary of State about the Government’s policy of reassessing all existing incapacity benefit claimants between 2010 and 2013. How many extra pathways to work opportunities will there be over and above those that have already been announced? The Secretary of State was not able to answer that, so it would be helpful if the Minister did so.

The hon. Member for Rochdale briefly touched on the age profile of people on incapacity benefit. The Government have said—obviously, this is important for cities as well as elsewhere—that they want to get 1 million people off incapacity benefit by 2015. At present, about 650,000 to 700,000 people on incapacity benefit are aged between 57 and 64, and they will have retired by 2015. Can the Minister confirm whether 700,000 of the target of 1 million will be achieved purely by the passing of time—700,000 people will have retired and therefore will not be eligible for incapacity benefit—or whether the 1 million are over and above that? It would be interesting not just from a city perspective but from an across-the-country perspective to know that.

The House owes the hon. Member for Nottingham, North a debt not just for raising this issue but for the work that he does locally, as that will provide an interesting opportunity to look at how effectively city strategies can work and how effectively local organisations and the central Government can tackle deep-seated challenges in cities across our country.

To pick up the point on which the hon. Member for Forest of Dean (Mr. Harper) ended, we do indeed owe a debt to my hon. Friend the Member for Nottingham, North (Mr. Allen) for bringing this debate to the Chamber and for reminding us what a difference it can make in a constituency and an area if the local Member of Parliament is fully engaged with service delivery, as he is in Nottingham and other Members are in other areas.

We are also indebted to my hon. Friend for ably illustrating just how effective the city strategy is when everyone gets behind it and innovation is allowed to come through. That is exactly what we had in mind when we launched the strategy. To pick up another point made by the hon. Member for Forest of Dean, as anybody would expect, it is one thing for the Government to write the general rules of welfare provision and to provide the framework, but individual areas have different and distinct needs and aspirations. The secret is to have the mix of standardised broad rules and a good deal of flexibility at the point of delivery, so that the system is better targeted and more effective in dealing with specific local issues. I pay tribute to my hon. Friend the Member for Nottingham, North for securing this debate, for his personal engagement with the subject, and for playing a leading role in the work in his own city.

My hon. Friend said that he was reviewing progress so far. He asked for more and confessed that Nottingham was being greedy as a result of his doing so. I do not think that that is true. What he expressed is not greed, but ambition on behalf of his city and the people of Nottingham. It is absolutely right that he should have that sort of ambition for his city and it is right that he comes to the Department and the Government generally to ask, “Having learned from what we have done already, how do we take this further, achieve more and make even more progress?” That is exactly the right way to respond, and if he thinks that that is being greedy, I encourage him to go on being greedy.

I would like to put the matter in context before I address the issues that my hon. Friend and others have raised. It is true to say that, so far under our Government, employment has risen throughout the economy to a record 74.9 per cent. In the course of achieving that, we have helped 1 million people to come off out-of-work benefits and to move into work. There have also been big improvements in relation to the employment of some of the most disadvantaged groups in society—for example, there have been big gains in employment for lone parents, older people and people with disabilities. Although real progress has been made towards achieving higher levels of employment and moving people off welfare and into work, as my hon. Friend and other hon. Members have said there has not been enough progress, and I would echo that. Of course, more needs to be done—he is right about that. Despite the successes that we have had, as he has described in Nottingham, there remain pockets of significant disadvantage and worklessness where extra support and perhaps a different approach will be needed to reach the target of 80 per cent. overall employment.

A recent report on Nottingham showed that we will not succeed in tackling deprivation until we raise the aspirations of young people and adults throughout the area. As he said—I agree with him on this—there remains a culture of underachievement in too many communities. That point was also made by the hon. Member for Forest of Dean. That culture of underachievement is often combined with a strong sense of dependency that becomes deeply ingrained and pervades generations. We must break that cycle and move it into the virtuous cycle about which my hon. Friend spoke.

That is why I am so pleased that Nottingham is an early intervention city—my hon. Friend was right about that. My Department has emphasised and supported that work and shares his ambitions about what it might deliver for his city. In that regard, he rightly emphasised the importance of data sharing. In pathfinder areas, we have put in place a memorandum of understanding between all parties that is designed to assist data sharing. As he knows, we have problems with that in terms of security, but once those problems are resolved satisfactorily and we are making good progress, data should flow smoothly between different bodies, which is essential to making the whole programme work.

As I have said, we have launched the city strategy pathfinders in areas such as Nottingham, and through innovation, improved partnership working and aligning resources, the pathfinders are making a real difference to tackling unemployment in such areas. In all pathfinder areas to date, lone parents, people from ethnic minorities, people claiming benefits because of health problems and older workers are receiving more specifically targeted support that is relevant to their circumstances to help them to find work. All the partnerships have agreed on targets of reducing the numbers on benefit by 3 per cent. by May 2009 and increasing the local employment rate by an exactly equivalent amount. Those are pretty stretching targets that will be met only through successful partnership working.

Pathfinders have already made great progress in successfully pulling together the right mix of organisations and employers so that they can meet their employment targets. For example, Jobcentre Plus advisers are already working with Prison Service and other agency staff to help ex-offenders to move directly into sustainable employment. In Liverpool, the pathfinder is working in partnership with Connexions and Halton council to deliver an information and communications technology apprenticeship programme that is targeted at 16 to 18-year-olds who are not in education, employment or training. They are provided with training and a placement in a local company, which means they are immediately picked up and supported at the critical time.

My hon. Friend asked about progress to date and in the future. I am pleased to say that an interim evaluation report on progress in all the pathfinders will be published soon—this month, in fact. Following on from that, the full report will be available by October, so he and others will soon be able to see the Department’s analysis and evaluation of how the pathfinders are progressing. I can add more to that: already, the pathfinders have highlighted the importance of local partners working closely with central Government to deliver successful local solutions to employment issues. Those involved with pathfinders are already emphasising a point that my hon. Friend made: that it is important to make connections run wider than the issues and services that are seen as immediately relevant to employment. For example, services could be linked to organisations that deal with health, criminality and disorder. It is not just about ensuring that there is joint working locally and centrally; working needs to be extended widely across each of the pathfinder areas.

City strategy status provides the pathfinders with the credibility and status to deal with matters that had not previously been satisfactorily addressed—for example, by local strategic partnerships—as well as additional resources, such as a dedicated £4 million from the regional development agency budget, to tackle worklessness. The work of the partnerships is beginning to unlock other avenues that were not previously available. Throughout the next year we will continue to discuss options for the future with all the pathfinder areas.

My hon. Friend mentioned the important matter of commissioning and I would like to deal with the points he made. That matter was also mentioned by the hon. Member for Rochdale (Paul Rowen), and a question was asked about how local partners can play a larger role in the commissioning of services. The Department’s new commissioning strategy is a major step forward in modernising and strengthening the welfare to work market. By incentivising and rewarding providers for securing sustainable job outcomes, we have opened the door for local partners, such as city strategy pathfinders, to play a more active role in the commissioning process. We hope that that will ensure that local providers have the discretion to deliver a more flexible and personalised service to customers. I can already report that consortium leads have worked with my officials during the commissioning process for new pathways, new European social fund contracts, and the new deal for disabled people. In fact in the roll-out of the private sector-led pathways to work, local providers are contractually obliged to work with the city strategy pathfinders. That has been taking place since the first phase of the work was rolled out in December 2007.

The hon. Member for Rochdale pleaded for contracting to be pushed down to local level, as he feared that otherwise the contractors might be too large to respond to local needs. I urge him to revisit the document that we published on commissioning. He should understand the distinction between the lead providers that oversee large areas and the plethora of smaller providers with local ability to which the leads might sub-let work. The advantages of both need to be drawn together. It is not the case that there will only be providers that are large enough to handle the tasks involved but perhaps not sufficiently fleet of foot to deal with local circumstances. The way in which the system has been constructed should answer his point.

Hon. Members rightly drew attention to the 16-hour rule and stressed features of the rule that cause concern. I believe that everyone understands why we need such a rule; indeed, no one suggested that we should not have one. However, mention was made of the consequential difficulties that can arise under a 16-hour rule and the rule’s ability to trip us up in respect of welfare to work. I can tell my hon. Friend the Member for Nottingham, North that Ministers wrestle with the issue pretty regularly, so I fully understand the points he made. They form part of my daily agenda, and I sometimes feel that I am working more than 16 hours trying to solve the issue.

I agree that it is vital that those claiming jobseeker’s allowance should be able to take up the training that they need to help them to enter employment. The employer-led pre-recruitment packages that my hon. Friend mentioned are a perfect example of the training opportunities that we want to encourage. We want to engage with any sector or employer that could provide such training through a local employment partnership. It is a promising area, and I am pleased that my hon. Friend placed the stress on it that he did. It has great potential.

Interestingly, we do not need to relax every aspect of the 16-hour study rule in order to enable people to take that type of training. We already have the flexibility to transfer an individual taking up such an opportunity to a training allowance. That removes the requirement on them to be available and actively seeking work, while still protecting their benefits. For example, the employability skills programme offers a mixture of basic and vocational skills to JSA customers; it will be available to support 11,000 people in the way I described. Those customers will not receive a lesser amount of money. In fact, they will receive an additional training premium, and they will usually get help with child care and travel costs.

As we announced last November, we will increase access to such training allowances for individuals who have been unemployed for more than six months, to enable them to undertake full-time, employment-focused training for up to eight weeks. That is a significant increase on the two weeks of full-time training allowed under normal jobseeker’s allowance rules. We expect to test that new flexibility in the west midlands later this year, and to roll it out nationally in 2009-10, using the lessons learned from the west midlands pilot.

I assure my hon. Friend that we are continuing to consider a range of ways to increase access to full-time training for jobseeker's allowance claimants, including further specific relaxations of the 16-hour rule if it helps to support their move into employment. I hope that I have reassured my hon. Friend and the hon. Member for Forest of Dean regarding the importance of continuing work on the 16-hour rule.

My hon. Friend also mentioned establishing a forum on making work pay—another interesting idea. I note the suggestion for a forum in his area, but I think that he envisages it being deployed more widely. The idea has already been suggested by a number of the pathfinders. I agree with my hon. Friend that it would provide a better understanding of how to tackle the practical and attitudinal barriers faced by a number of disadvantaged groups.

The 15 pathfinders have established a network that enables them to share good practice and promote innovative thinking between themselves. In the light of that, I have asked my officials to meet representatives of the pathfinders to establish how that network can further help my Department to develop policies to tackle worklessness among the most disadvantaged. While still adhering to universal rules, which we must have, we can engineer additional techniques to ensure that those rules, for which there are perfectly defensible reasons, do not trip us up when dealing with groups that have specific needs.

Hon. Members have spoken about the difficulties that people can have when considering a move from benefit into work. My hon. Friend was right to say that it is a gamble that people have to take, but we must be able to reassure people who are considering potential jobs that if things do not work out, they will not have to go back to square one and face the prospect of a complete lack of funding for the family while the benefit system kicks back into action. It is about defining the run-on of benefit, or a quick reclaim should a job not work out after a certain time. Elements of that are already in place. It is already possible for people to get support quickly should a job not work out.

My hon. Friend is right to say that such reassurance is essential. First, we need to be able to demonstrate when a job becomes available that it will pay and that the person will be better off taking the job than remaining on benefit. Secondly, and especially if a person has been out of the labour market for some time and is nervous about moving into work, we can add the reassurance of an ongoing support mechanism should things not work out. As a result, taking a job will be less of gamble. Access to a range of local partners across England, Scotland and Wales, in the private and voluntary sectors, has already proved an invaluable source of information to my Department; it is informing us on how to take the work forward.

The city strategy pathfinders are already working successfully. My hon. Friend believes that, and the spokesmen for the other parties seem to endorse his view. We understand that if we are to reach that important and stretching 80 per cent. employment target, we will need to do more to encourage the sort of partnership working that we have seen evolve in the pathfinder areas. It is not enough to have universal aspects of welfare provision; they must be supplemented by specifically tailored support. We have to facilitate that, but we have to allow local organisations and local partnerships to deliver it.

For the Government, that means working more closely with other Departments than has often been the case. That is why we introduced the working neighbourhood fund, which brings together £1.5 billion of funding from my Department and the Department for Communities and Local Government to tackle worklessness in England’s most deprived neighbourhoods. That funding has enabled 65 local authorities to engage in exactly that sort of programme, each of them working in areas that face the greatest barriers to employment and encompassing 1,000 of the wards in which unemployment is the most important challenge.

Partnership working also means encouraging and facilitating more co-ordinated working by employers, local authorities, third-sector organisations—