Thursday 14 January 2010
[Mr. Clive Betts in the Chair]
Young People (Recession)
Motion made, and Question proposed, That the sitting be now adjourned.—[Kerry McCarthy.]
I am pleased to have another opportunity in the House to discuss young people and the recession. After my decision to call this debate, we in the Government were gazumped by the Opposition, who called a similar debate yesterday. Perhaps that explains why this debate is so sparsely attended. From my conversations with right hon. and hon. Members of all parties, I do not think that is due to lack of interest in the subject; rather, I think that it is because a lot was said yesterday and is going on elsewhere in the House and in Members’ constituencies.
During yesterday’s debate, we heard about the importance of education and skills to young people in this context, so I will not say much about that aspect. However, as a former Schools Minister for three years, I am delighted that the Opposition want to debate education. I hope that it means that they will now back the September guarantee of a place in education for every school leaver this year.
The Government have done much to improve young people’s options in the recession, not just in education but in training, volunteering, work experience and jobs. Before I outline what measures we have taken and their positive effects, I would like to impress upon hon. Members the value of young people to business, society and the UK’s economic recovery.
Businesses need to plan for the future and to develop today the people and skills that they will need tomorrow. They need to find now the talented young people who will be the leaders and innovators of the future. If they sit back and wait for the recovery, they will run the risk of missing out on the best new talent and being left behind by competitors who have planned properly for recovery.
Young people can bring new skills, new thinking and fresh ideas to a business, as well as bags of enthusiasm. My hon. Friend the Member for Bristol, East (Kerry McCarthy), who moved the motion at the beginning of this debate, entered the House at the last election, bringing new thinking, fresh ideas and bags of enthusiasm. Incidentally, she is considerably younger than I am. The vast majority of young people are eager to work, want to get involved and can reinvigorate a workplace. For society, having young people in work is obviously preferable to the alternative, but as well as the economic benefits to individuals and the public purse, there are also wider social benefits, such as the encouragement of responsible behaviour, better public health and a richer, more fulfilled society.
It is vital for recovery to get young people into jobs. We need to foster their innovation, develop their skills and ensure that as we move out of the recession, we can take full advantage of emerging markets and continue to be a leading economic power. Yesterday I met the Indian Minister of Human Resource Development. As is well known and documented, the future growth of India, as well as that of China, is a great opportunity for the people of that country but also a challenge for us in the globalised economy. Without the talents of young people, we will struggle.
We must nurture the talent of our youth. Businesses throughout the country are recognising that and signing up to the “Backing Young Britain” campaign. Firms such as BT and Marks & Spencer are saying publicly that they recognise the potential of that untapped talent, and they are offering jobs, apprenticeships and work experience to thousands of under-24s.
Our message is simple: now is the time to back young Britain. The Government cannot do it on our own. We are doing plenty, as I will discuss shortly, but the problem of long-term unemployment faced by young people is a challenge that we must all pull together to tackle. Business leaders across the spectrum are getting behind the campaign: Terence Conran, Peter Jones and Richard Rogers feature in our advertising inviting businesses to recognise young people’s potential.
Working with business, we need to develop a range of options, including education, training, work experience and, of course, jobs. The training and experience developed by Government and the private and voluntary sectors are crucial, ensuring that young people get the right skills for business and helping us to avoid a situation in which job vacancies arise and we do not have enough trained people to fill them. As a group, 16 to 24-year-olds can be particularly vulnerable to the effects of a recession. Starting out in the world of work during the worst global recession in 70 years can knock them sideways.
Beyond those reasons for doing more are the negative consequences if we do not. Young people can be among the first to lose their jobs when companies make redundancies, because their lack of the experience that businesses value makes them vulnerable during cutbacks. They may have started work only recently, and they can lose out from the “last in, first out” policy. Once unemployed, they can find it more difficult to get a new job. Higher unemployment means more competition for jobs, and young people are too often pushed out of the job market by people with more experience who, given the difficult labour market conditions, are willing to accept lower-level jobs for less money than before.
I do not suppose that anyone could dissent from what the Minister says about the value and importance of young people, but he has tried to give the impression that the global recession has caused the problem of youth unemployment. Will he backtrack to the period before he thinks the recession started—I do not mind what date he chooses; perhaps a couple of years ago—and tell us how many young people under 25 were not in education, employment or training before the recession, and how that number compares with the number before this Government came to power?
The headline figures for NEETs in this country, compared with the rest of Europe, have been particularly high for some time. There is a more complex picture beneath the headlines, and it is important for all of us who care about the issue—I do not deny the hon. Gentleman’s concern—to seek to understand it properly.
The NEET figures for 16 and 17-year-olds have improved significantly—they were starting to improve before the recession hit—because more are participating in education. Participation among 16-year-olds is now at 95 per cent. As a Schools Minister until six or seven months ago, I take satisfaction in that improvement. Indeed, I guided through Parliament the legislation to raise the participation age, which has not yet come into effect but is starting to galvanise improvement in the system. I was also responsible for negotiating with my friends in the Treasury, including the Secretary of State for the Department in which I now work, to secure funding for the September guarantee.
I was actually rising to help the Minister. I can give him the answer to the question posed by the hon. Member for Northavon (Steve Webb), because the Minister was kind enough to give it to me in a written answer at the end of November last year. I was told that in 2000, the earliest point for the data, the number of 16 to 24-year-olds not in employment, education or training was 629,000, or 12.3 per cent. In 2007, before the recession took hold, the figure was 782,000, or 13.1 per cent., a significant increase in both number and rate. That is the point that needs to be dealt with.
I was coming to address the point of 18 to 24-year-old NEETs. I note that the hon. Gentleman chose yet again not to back the September guarantee. I am not surprised about that, as I have written many times to his colleagues on the Conservative Front Bench to ask them to do so.
The NEET figures are certainly of concern, but as I said to the CBI at a round-table meeting on Monday, many of us in the House support the flexible labour market in this country. We have a much more flexible labour market than the rest of Europe, although perhaps not as flexible as that in the United States. I think that we have got the balance right in this country. We have developed the right balance to respond to globalisation while my party has been in power.
A negative consequence of that flexibility is the number of people who churn in and out of unemployment, particularly young people. The detail of the NEET figures for 18 to 24-year-olds shows that very few are NEET for long periods. The vast majority have short spells of unemployment and inactivity. That does not diminish the importance of continuing to do something about the issue, but we should view whether this debate is about NEETs with caution. There is a wider story about young people and recession than just NEETs.
Young unemployed people can find it more difficult to find a new job. Higher levels of unemployment mean there is more competition for jobs. Given the difficult labour market conditions, people with more experience are willing to accept jobs at lower levels and receive less money, which pushes young people out of the jobs market. Perversely, the responsible actions of employers and employees—shortening working hours and accepting pay cuts or pay freezes to reduce the number of redundancies— mean that as we move into the recovery, the additional work is likely to be taken up by existing employees first.
Without the additional support the Government have put in place, we would be in danger of once again losing a generation to long-term unemployment, as happened under Conservative Governments in previous recessions. Those long spells of unemployment knocked the stuffing out of young people, they lost their confidence and suffered the consequences for many years in the labour market. We are still dealing with the effects of the Opposition’s policies when they were in power during the recessions of the ’80s and ’90s. Their deliberate approach of shifting thousands of people on to incapacity benefits to make themselves look better has devastated families. By moving people further from the labour market and suspending signing in some offices—in essence, removing the requirement to look for work—the Government of the day created a generation of long-term unemployed.
As the Minister is moving on to the more partisan section of his speech, may I ask him a question? When his Government were elected in 1997, one of their five pledges was to get 250,000 16 to 24-year-olds off benefits and into work. At what point in the last 12 years—I hope that is a sufficiently long time—has that pledge been fulfilled?
Part of that pledge was the new deal for young people. We funded it by ending the assisted places scheme, which helped some young people to access private education. The new deal was extremely successful in taking people off long-term unemployment. Indeed, current long-term unemployment rates show that considerably fewer young people are signing for more than 12 months. More than 250,000 fewer young people are doing so than in 1997. I do not know the exact date when that started to kick in, but we have a proud record of dealing with long-term youth unemployment. The rate is currently a 14th of what it was in 1997.
I remember the pledge very well. We pledged to set up the new deal for young people, which would get 250,000 young people off long-term unemployment and into work. That has been achieved.
As I was saying, by suspending signing and moving people further from the labour market, the Conservatives created a generation of long-term unemployed. We know that many of those people have never gone back into work. A key aim of this Government has been to work through the 2.7 million people on incapacity benefit, identify those abandoned by the Tory Governments of the past and start to help them to return to work.
The effects of the Conservative policy remain. There are still 1.87 million children in workless households in this country, some of whom have grown up thinking that being out of work is the norm. By massaging the figures, the Conservatives simply stored up problems for the future. That is why we are now assessing people not on the reason for not working, but on what they can do. That process is starting to work through new claimants for employment and support allowance. From October, we will start the migration of people from incapacity benefit to more active benefits.
The Minister is being very generous in giving way—as we are here, we may as well have a debate.
The Minister has talked about massaging figures and I know that he would not want to do that. He talks about a fall in long-term youth unemployment. Will he clarify something I have never been sure about? When the Department says that someone is not long-term unemployed, is that because the clock starts again? If somebody is unemployed for 12 months and goes on a scheme, which does not count as being unemployed, does the clock start at zero if they do not get a job when the scheme finishes? Is it actually quite difficult to be long-term unemployed because once a person is in that category, they go on a scheme and the clock is reset? Is that what happens?
Certainly it is the case that when people move on to the new deal for young people, they no longer count as claiming jobseeker’s allowance. Because I do not want to mislead anyone by massaging figures, I have looked carefully at whether that accounts for the significant fall in long-term youth unemployment following the introduction of the new deal. Even though some people churn back into the system, it is nowhere near the number that would take it up to the level of long-term youth unemployment that we inherited in 1997.
I am quite happy to write to hon. Members to furnish them with statistics on that matter.
We are investing £5 billion in helping people to get back into work and have maintained an active labour market policy with people signing on and getting professional, personalised support from Jobcentre Plus. That is why we are still getting about half of jobseekers back into work within three months and about 70 per cent. into jobs within six months. The turnaround is even faster for young people. We are getting young people into jobs every day. The long-term youth unemployment rate, as we have been discussing, is a small fraction of what it was during previous recessions.
The UK’s flexible labour market means that people move in and out of work very quickly, as we have discussed. We have to keep an eye on that churn. That is one reason why we are looking to move to sustained employment outcomes as measures of success for Jobcentre Plus. Young people are coming back into the system through that churn, but it is good that they are continuing to get jobs and build their skills, experience and CVs.
How are we doing in statistical terms? The additional measures we have brought in and the additional staff we have recruited to deliver them mean that across all ages, there are about 450,000 more people in work today than experts were predicting there would be a year ago. About 2.5 million more people are in employment than in 1997. We will never deliberately damage people’s potential by moving them off jobseeker’s allowance to make the figures look better. We will invest in potential—developing training, work experience and creating real jobs. When young people leave jobseeker’s allowance today, it is because it is the right thing for them, not the right thing for us.
We will continue to invest in potential through education. Today, there are more young people in education than in 1997. Last September, an additional 55,000 places were created for the September guarantee. We are committed to a better education for all because we know the benefits it can bring, not only in improving job prospects.
Some young people look for part-time work to supplement their income while they study. As they are looking for work, they are identified on the International Labour Organisation measure as actively seeking work. They are therefore included in the unemployment figures. Of the approximately 950,000 young people who are counted as unemployed through the International Labour Organisation labour market survey, more than 250,000 are full-time students looking for a little part-time work to see them through. The headline figures therefore do not tell the real story. The figures are a useful comparator with the past and I do not duck them, but it is only the headline figures that interest the Opposition. They want the headlines; not the real story.
We have learned from the Conservatives’ mistakes, so in addition to all the support we have introduced to help people get back to work quickly, we have created specialist help aimed specifically at 18 to 24-year-olds. That is on top of the help available to unemployed people during the recession; for example, pre-redundancy support, help for professionals, accelerated day one assistance and support for people who want to start their own business. All of that is equally accessible to young people.
In addition, there has been engagement from businesses, as I have mentioned, through the Backing Young Britain campaign, and help from Government in the form of the young person’s guarantee in schemes such as the future jobs fund. All that support is funded from the £5 billion fiscal stimulus package, which, of course, the Opposition have constantly opposed. The inference is that they would not spend that money and would thus scrap the 170,000 jobs created for young people and those in unemployment hot spots through the future jobs fund. All that shows that the Opposition have still not figured it out—for them, unemployment still is the price worth paying.
The action that the Government have taken has kept unemployment below 3 million and has kept long-term unemployment lower. Incidentally, I need to clarify that when I talked about a 14th, I was making a comparison with the low point of the early ’90s recession rather than with 1997. I apologise for having to make that clarification.
We have had a dramatic fall in gross domestic product during the global recession. Output has fallen by 6 per cent. All predictions based on previous recessions were that unemployment levels would rocket much higher, as they did in the ’90s recession when output fell by 2.5 per cent. and unemployment rose by 3.4 per cent. The predictions that something similar would happen this time have not come true. Unemployment has risen, but nowhere near the levels anticipated.
The Opposition tell us that in the UK we have the worst youth unemployment rate in Europe. If we consider unemployment rates for young people, comparing like for like and taking the number of young people unemployed and not in education as a proportion of all young people, the figure is just under 10 per cent. That compares with the ’80s recession, when the figure was 13 per cent., and with the ’90s recession, when it was 12 per cent. So we are doing better than we did in the past and our unemployment rate is better than the EU average and better than the rate of many of our economic competitors—the US, Canada, France, Italy and, of course, Spain.
The ’80s may be having a revival at the moment, but we will not stand by and let unemployment reach 3 million, as it did almost 28 years ago to the day. The Opposition are not learning the lessons of the past. We have, of course, recently seen that the Leader of the Opposition is interested in the airbrush effect and, to some extent, his statistics show that. However, let us not forget that he is the same man who in 1991 was special adviser to the then Chancellor, who said that unemployment was a price worth paying.
The Opposition have economic policies that independent experts have predicted could result in unemployment being as high as 5 million—a doubling of today’s unemployment level. They simply have not learned from the mistakes in their economic policies. We have, and the support we have put in place has helped people to stay in work, find work quickly if they lose their jobs, and develop exciting opportunities for young people. We will continue to support young people through the recession and into recovery because it is not just the right thing, but the smart thing to do.
It is customary at this point in the proceedings to say that it has been an interesting and lively debate—I will have to cross that line out in my notes. None the less, notwithstanding the low attendance, this is a vital subject. As the Minister said, a related motion was moved yesterday, so some points have already been covered in the House in the past 24 hours. It is good to have a Department for Work and Pensions Minister introducing the topic, because we can raise some specific areas that come under his departmental responsibility. That is what I shall do this afternoon.
The starting point must be that young people’s potential and talents are going to waste on a massive scale, which, in a sense, is what the Minister said at the start of his remarks. As I tried to point out through my interventions, it is not simply a case of saying, “It’s just about the recession.” Even before the global downturn and before Britain entered into recession, as the hon. Member for Hertsmere (Mr. Clappison) helpfully pointed out, the scale of young people not in education, employment or training was vast and rising.
That is a crippling problem, and it is not amenable to simple or simplistic solutions. There are a variety of categories and circumstances of young people in the NEET group. I was surprised to read that a significant number of young people not in education, employment or training are either pregnant or involved with child care. I suppose one could argue that looking after a young child is a pretty active thing to be doing and the phrase NEET implies that people are doing nothing all day, which is not necessarily the case.
Even so, there are clearly large numbers of young people who have had prolonged periods out of contact with formal education. They have not been receiving training or being paid for work, and we are concerned that once a young person has a prolonged period out of contact with the labour market, it has a damaging effect on them—not just this year or next year, but in the decades to come. Professor Paul Gregg who advises the Government on these issues has said that, when someone is in their 40s, one can still see the impact of a 12-month or longer spell of unemployment when they were a young person in terms of depressed wage potential and so forth. It is a waste both economically and socially to allow young people to spend long periods out of work.
What can we do specifically about such young people? We knew that the Minister would list a whole set of initiatives—the January guarantee, the September guarantee, this fund, that scheme and all the rest of it. Governments have such initiatives; some of them work and some do not. However, a fundamental element is missing from all this: with the best will in the world, such schemes tend to cut in after a prolonged period of unemployment. I am aware, for example, that to qualify for some schemes one must have been unemployed for two years, for some schemes for one year, for others six months and so on.
When I quiz Ministers about that, they say, “You don’t need to worry because from day one, we’re giving people support.” I am sure they are giving people support from day one, but it is not on the scale needed for some young people. Indeed, if they were given the scale of support that I am talking about from day one, we would not have a three-month, six-month, 12-month or 10-month guarantee because there would be nothing to add—it would all be being done.
At present, support clearly steps up as someone goes through unemployment. Obviously, if we gave everybody everything on day one, that would be a big dead weight. As the Minister said, there would be a whole set of people who would have found a job anyway without help. Giving extensive, intensive support on day one to everybody is not a particularly good use of public money, when many people might well stand on their own two feet, find a job and not need such help. However, it is also not a good use of public money to wait for what in some cases, sadly, is the inevitable, and then to step in when the problem has got much worse.
That brings us to the key Liberal Democrat difference from the Government on the issue. The Government tend to say they will ratchet up support as the problem gets worse—the longer someone has been out of touch with the labour market, the more help they will give—but they never seem to say from day one that they know the risk factors likely to lead to the young person still being in the system 12 or 18 months down the track. I appreciate that the matter is not without controversy, because we all know what the risk factors will be. Giving enhanced support to groups with particular risk factors would be contentious, but it might be the best thing to do.
For example, a young person who has left school notionally at 16, but who has in fact probably dropped out when they were about 13 and a half, might come into a jobcentre. They might have been put on schemes and now be aged 18. They might have already been out of contact with the system for some time, have few or no formal qualifications and have poor literacy and numeracy. If the jobcentre they walk into is in a jobs blackspot or if they live in a remote rural area, one can start to think about the risk factors, such as poor public transport, a lack of an independent means of getting to and from work and so on. Why do we have to wait 12 months for what someone once called “the bloomin’ obvious”—I think that was the phrase—when we know that we can intervene early?
We could intervene early for those at the highest risk of being long-term unemployed and have much better value for money as a result, because merely being unemployed for a further 12 months makes intervention harder. People get out of the habit of getting up, making themselves presentable and having routines and discipline. That is not true universally, but when it has been a while since someone has had a job, been on a course or done something for which they have had to be in a particular place at a particular time, it is almost inevitable that things will slip. We know that people’s mental health tends to suffer during prolonged periods of unemployment.
All that is true in general, but it is particularly true for the young unemployed, who are the focus of the debate, because although a year of unemployment is bad enough for anyone, it is catastrophic for those whose adult life has only been a year long, because it becomes all they have known as adults. That heightens the reason for early intervention for those with the highest risk factors. I do not think that the Government are totally hostile to the idea, and there may be elements of what I am describing in the current arrangements, but they clearly do not go far enough.
There is a question about whether we can spot people on day one. One cannot identify with 100 per cent. certainty which one of 10 people who come in will still be unemployed in 12 months’ time, but statistically significant risk factors are involved. We need an objective basis; we cannot have a jobcentre adviser just looking at someone and saying, “Well, we know he’ll be back in a year’s time.” We would have to be scientific about it. I believe that there are statistically significant risk factors—they relate to the local labour market and the demand side, and the qualifications and skills of the young person—that would enable one to identify high-risk groups, for whom early intervention would yield a higher return and represent money well spent.
My second consideration relates to early intervention in schools. When someone leaves school with limited qualifications and poor job prospects, we say that the rot has already set in, but we need, in the spirit of early intervention, to intervene to prevent people reaching that point. The Minister mentioned higher staying-on rates at age 16, which is obviously welcome, but clearly we must also talk about intervention much earlier in the educational process.
The Department for Children, Schools and Families, the Minister’s former Department, has commissioned research on more than 15,000 people on the drivers and barriers to educational success, and it has found strong links between poverty and poor outcomes, which we need to break. For example, it found that for the poorest fifth of the young people we are talking about, only one in five gain five or more A* to C grades at GCSE, including English and maths, compared with three quarters for the richest fifth. Are poor children stupid? No. Are poor children disadvantaged by the system? Absolutely.
What should matter in educational outcome is not parental income, which probably provides the best guess for outcomes—if one wants to know how a child will do at school, knowing how much their parents earn is probably the simplest way of judging that. It should not be like that. We need to do far more to reduce educational inequalities by doing more to support children from deprived backgrounds and in deprived areas.
Another example is that 15 per cent. of the poorest fifth of children are not in education, employment or training at 17, compared with just 2 per cent. of the richest fifth, so a child from a poor family is seven times as likely at 17 not to be in any of those activities as one from a rich family. I do not want to read out a whole stream of statistics, but I will give one further example that relates to aspirations: 76 per cent. of the parents in the poorest fifth would like their child to stay in full-time education beyond 16, which sounds quite high, but the figure is 91 per cent. for the richest fifth. There are differences across the income scale even in terms of what parents want for their children.
How do we redress that situation? It is tempting to say that it has always been thus and that is how society works, and there is an element of truth in that. However, we can gear funding for education not just to deprived areas, which school formula funding already does to an extent, but far more to deprived children. Therefore, the Liberal Democrats have proposed the concept of what we call a pupil premium, an enhanced level of funding. We would withdraw tax credits from those on above-average earnings to pay for it, so we are being entirely clear about where the money will come from. By finding that money and spending it on children from disadvantaged backgrounds, we can raise the funding for those children close to private school levels—that is the scale of funding we are talking about. We believe that would have a transformative effect on the outcomes for children from deprived backgrounds.
For example, schools in a particular area might hitherto have exercised what one might call covert selection, by discouraging children from the wrong side of the tracks from coming to their school because they will drag down the league tables. Suddenly those children would look much more attractive because they would bring with them a funding level that enabled the school to do more overall. The money would not have to be spent on an individual child, but the child would bring the funding. In deprived areas, that would certainly boost the level of funding and enable us to do much more.
We cannot go on with the current level of inequality and the fact that parental income shapes a child’s outcome. What should matter is a child’s talent and effort and the input of the school, not simply whether one is from a prosperous background. My first point about early intervention is about identifying the high-risk groups on day one when they hit the unemployment system, and the second is about the need to ensure that school funding favours disadvantaged children in a much more geared way than at present.
I will talk more about the interesting point the hon. Gentleman raised on the relationship between poverty and educational outcomes in my winding-up speech. I understand his point about the pupil premium, but one of the measures the DCSF has taken to respond to the challenge is free one-to-one tuition for children, regardless of background, who are falling behind in English and maths. Obviously, that will disproportionately favour those from disadvantaged backgrounds, for all the reasons the hon. Gentleman has given. Does he support that, and will his party commit to continuing it, should they be in a position to influence those spending decisions in future?
I am grateful to the Minister, who has highlighted the sort of things that can be done when funding is in place to help disadvantaged children, whether specific catch-up classes on literacy or numeracy, or one of 1,000 things a creative school can do when it has the funding and has been set free to deliver what is right for the individual child. If a school decides that the right thing to do is to spend that funding on one-to-one catch-up lessons, it would be free to do so, and that is entirely welcome. However, we would want schools to tailor the support they give to the individual child, so we would free them up to do that, rather than having central Government say, “We are putting some extra money into the system but it always has to be spent in this way, regardless of the needs of the specific child.”
Clearly, a danger in the coming years, if the Conservatives take power, is that the rhetoric about unemployment would start to become very much on the supply side, and not the demand side. Historically, Conservative Governments have tended to say that unemployment is principally about the willingness of the unemployed to seek work and take jobs, so they have regarded the demand side essentially as a given. I do not mean that uncharitably, but as a reasonably accurate characterisation of the difference between a Conservative Government and other Governments. The focus of activity for a Conservative Government tends to be on things such as incentives and sticks and carrots for the unemployed. Right-of-centre Governments tend not to think that Governments can create jobs or do a great deal to affect the demand side of the economy.
One of the differences of the Liberal Democrat approach is the notion that Governments have a great ability to influence unemployment, because they have massive spending power and can use their money in a way that is job-rich or job-poor. An example is the temporary VAT cut introduced 12 months ago. I think, from memory, that it cost around £14 billion. In any case it was a vast sum of money, yet there is precious little evidence that it had a serious impact on unemployment. I accept that it was a one-off amount, but a capital sum of that amount could have been spent, and in our plans would be spent, on creating a significant number of jobs, such as environmentally sustainable green jobs. For home insulation, which is a classic example, funding could go far beyond what the Government are doing.
Home insulation is labour intensive, can be started straight away and, critically, yields a long-term return. It would not be, as Keynes famously said, like paying people to dig holes and then fill them in again; it is a very constructive activity. It would involve people of all ages being trained up and acquiring skills. It would benefit people whose homes were insulated, because their fuel bills would be lower. It would improve the infrastructure of the housing stock. It would lower fuel poverty and carbon emissions. It would be a real win-win. The Minister will say that the Government have all sorts of schemes to deal with home insulation, and I am sure they do, but the scale of what we need is vastly greater than the scale of the Government’s ambition, given that fuel poverty is at very high levels. In areas where the Government identify that they will use their spending power, therefore, they can introduce such measures, which are job-rich, good for the long-term health of the economy and environmentally sustainable.
When the Liberal Democrats publish their manifesto at the next election, it will include a year-by-year spending plan and we will identify the various things that we would not do and which would save money in each year of a future Parliament. We will also identify some of the things that we would do, including introducing the pupil premium. One imagines that it would take at least a year to legislate to get such things in place. We envisage, right at the start of the Parliament, that we could spend the proceeds from the things that we would stop doing on job-rich activities. There would be a payback because we would employ unemployed young people and others, there would be an environmental payback and the economy would be stimulated. We are therefore very much of the view that the Government can use their spending muscle to generate jobs. Clearly, the private sector is the ultimate generator of jobs, but the Government buy services and decide what to spend their money on, and they can do that in job-rich ways. That is what we want to see and that is the third key difference in the approach the Liberal Democrats would adopt.
When I intervened on the Minister earlier, we talked about churn—people going through programmes again and again. My understanding is that more than a third of the people who started the new deal in 2009 had already participated in programmes at least once. One in three of those people are not coming into the system fresh; they have already been through it, they have not got a job at the other end, they have had a period as a normal jobseeker and they have come into the system again. I was talking to a young unemployed person in my constituency recently, who said, “January’s coming, and I’ll be back on the new deal.”
Clearly, we do not just write people off, and if one programme does not work, another programme will be a good thing. However, some people have suggested—the Minister is perhaps more careful than many with his figures—that long-term unemployment has almost been abolished, and the Prime Minister may have implied that on occasion. That grossly misrepresents what is going on. As MPs, we all know people who have been out of work for prolonged periods but who do not crop up in the right column of the figures. The problem is greater than Ministers have sometimes—in the past at least—led us to believe.
Another issue is how the new deal will cut in for the long-term unemployed and how providers will be incentivised to help those whom it is hardest to get into work. The Liberal Democrats have concerns about the structure of some of the contracts with flexible new deal providers. The Government have told people that they will have a provider in a particular area, who will get a certain amount of core funding as a reward for getting people back into work, as well as enhanced funding—as the Minister said—for getting them into sustainable work, which has to be the goal. The worry is that the funding does not distinguish different groups. Some people would have got a job in any case, although I appreciate that the number among the long-term unemployed is low. However, it is not nil, and a percentage of people, even after being unemployed for 12 months, will still get a job in the next three months by their own devices, and the funders will get the money, even though those people would have got jobs anyway.
The Minister will be familiar with the issues of parking and cream skimming. With parking, people are shunted to one side because they are expensive to deal with, and the cost of sorting them out does not match the money available per person who returns to work. The obverse of that is cream skimming. Someone will look at their intake and will, rather as I said earlier, immediately spot the people they can immediately slot into a job with a little support and the people who will need a lot of hard work. There is a positive incentive to go for those who will be easy to fit into a job and a negative incentive to park those who are difficult and who have complex problems.
What do we do about that? The Liberal Democrats favour what we call accelerator funding. For the first person we get back into employment, the funding is pretty modest, but as we work our way deeper into the pool of unemployed people, the reward is enhanced. There is a good argument for taking that approach from the point of view of ensuring value for money for the taxpayer. We get nothing back from the provider for the first person they find a job for, because that person would have found a job anyway. However, if they really dig deep into the pool of unemployed people and help those who are hard to help, they will start to get serious rewards. That will probably save the taxpayer money because even an enhanced level of per-head reward for helping someone who would otherwise have been unemployed for another three or five years and who would have been on benefit or something similar probably results in a net profit for the Government, particularly when we take account of the tax that people might pay when they return to work.
That is quite hard-headed economics. We are saying that the marginal return to the taxpayer is pretty low for people who would have got a job anyway, but pretty high for those who are hard to help. If the funding matches that, the incentive structure for the company—the new deal provider—will match the return to the taxpayer. That seems logical, but it is not a feature of many of the flexible new deal contracts, although I am happy to be corrected on that and—
The hon. Gentleman is right that such a provision is not currently a feature of the flexible new deal contracting process, but it is a feature of the personalised employment programme, which we will start piloting shortly—we are going through the procurement process at the moment. We completely accept the argument, but as with most things we do, we want to ensure that the model is right, because of the risk that we will take things to the market that may not work, or have to pay a premium for the provider to manage the risk themselves.
I am encouraged to hear that the Government are piloting that programme. I hesitate to describe my remarks in the House as eternal truths, but what I have just said must always be true: in any given pool of unemployed people, some will get a job anyway, some will be hard to help, some will be cheap and some will be expensive, but if we structure the payment to match the cost, we will get the incentives right. That must have been true 10 years ago, and although I can see that there are a few practical things that one might need to pilot, I am not sure why we need to tiptoe around quite so much in year 13 of a Government. The flexible new deal contracts could, for example, have been structured as I described. None the less, what the Minister has outlined is probably a step in the right direction, and I welcome it.
It is easy for me to look at these things through a financial, fiscal and economic lens—it is the “My name’s Steve, and I’m an economist” thing—but it is easy to lose sight of the non-financial aspects of helping young unemployed people. We have had a helpful briefing from the charity Catch22, which was principally focused on yesterday’s debate. It talked about the needs of young people in terms not only of identifying jobs, but of providing financial support with the cost of training, books, course materials and transport, which we all know can be real barriers. It also talked about emotional and practical support, which the voluntary sector is often very good at providing. The charity talks about its Skills For Working Life course, which
“helps young people find out about the working world”
and gives them
“a broad-based set of life skills.”
The course has a high success rate, with people getting qualifications and going on to further education, training or jobs.
One of my questions to the Minister is whether he is happy that the flexible new deal process is tapping sufficiently into the skills of the voluntary and charitable sectors. When the idea of contracting out services was first mooted, I was instinctively wary of it, but one reason why I thought it was worth giving a go was that the niche charity and voluntary providers, which really know specific client groups, would be brought in and would use their talents and their knowledge of client groups to help in a way that bog-standard Departments could not. However, the contracts have tended to go to big corporations—I do not know whether we would call them multinationals, but they are certainly big national corporations. Almost all the contracts have gone to for-profit providers.
The question is how the small, niche and specialist voluntary and charitable sectors fit in. Ministers tend to answer that it is through subcontracting. The big contractors will get the charities and the voluntary sector on board. However, I wonder what assessment the Minister has made of how that is working. How much hard cash of the money that the Government are spending on the new deal is filtering through to the voluntary and charitable sector? Often those sectors have the motivated volunteers and the expertise with a client group and area that a commercial provider might not have, to such an extent. Yet one always worries that what to a small charity is a vast contract is a relatively small part of the contract of the big provider that hands it out. The big flexible new deal provider and the little local or specialist charity will have unequal bargaining power.
The Minister might say that that information is commercially sensitive, or that the flexible new deal providers do not have to tell the Department, but has he asked how much of the big sums earmarked for flexible new deal providers will end up in the income stream of the charities and voluntary sector bodies on which, at least in part, the programme was founded? If the Minister does not know the answer, I hope that his Department will monitor the matter to ensure that we get best value for money. Charities such as Catch22, which I have mentioned, are particularly good with young people and understand the complexity of their needs, which a large private sector provider might not. I hope that they get their share of the cake and can build on their experience.
My key emphasis has been on early intervention in education—pre-school education and so on—and at the point of entry into the job market or unemployment, instead of waiting until young people become long-term unemployed. I have talked about incentivising scheme providers, so that they assist not just the easiest to help, but the hardest. I have also talked about youth unemployment being a matter not just of lack of jobs. I have discussed how Government can help on the demand side, but also the need to deal with the complex issues that lead to long-term unemployment, and the need for the expertise of the charitable and voluntary sector. I sense that some of those questions are present in Government thinking, or thereabouts, but I would like them to be given greater prominence.
I welcome the opportunity to speak in the debate, which is of great importance and will interest many of our constituents. I find that I am summing up for the Opposition a single speech—that of the hon. Member for Northavon (Steve Webb), who speaks for the Liberal Democrats. He made a wide-ranging and interesting speech, in which I found some common ground with him, on generalities if not on specific prescriptions. His points were mainly general ones, but there were worthwhile points among them.
In some respects I agree with the hon. Gentleman about the value of early intervention. We have stressed it in our criticism of the Government’s plans, to which I shall come in a moment. However, it is also part of the thinking set out in our plans: in particular, we have emphasised early intervention when specific needs are identified.
The hon. Gentleman was also right to mention helping those who are hardest to help, and providing incentives to ensure that they get help. That may in some cases go wider than a discussion of young people in the recession: we recognise that large numbers of people are languishing, if not on jobseeker’s allowance then on other benefits, and are out of work and economically inactive, and that many of them wanted to work and did not receive the necessary help. Those people—the hardest to help—were in that situation before the recession, and we can all think of such people. They have the greatest barriers to working: they might have health conditions, or their past might have been difficult, perhaps because of housing problems or conflicts with the criminal justice system. In trying to design a system, it is reasonable to adopt the objective of ensuring that those people, too, receive help, and that they are not parked to one side while those who are easiest to help get all the attention and resources.
In response to the points made by the hon. Member for Northavon about the demand side of the economy, which were perhaps even more general, it is important that, whatever the level of demand in the economy, whether from the public or private sector, there should be people with the skills and training to meet it. Our recent economic history raises issues about that, particularly about how demand has been met in some circumstances. I can find common ground with much of what the hon. Gentleman said about those points, and about setting out objectives that we need to keep in mind.
I think I can also find common ground with the Minister on his remarks early in his speech: before dealing with the topic of young people’s difficulties in the recession, it is right to say that young people today have great value, and we should commend their value to society. There is great potential there and we share the objective of getting those young people into work and realising their potential, for their benefit and that of the wider economy—and older people as well.
I am encouraged by the move to consensus on the importance of the matter, although such consensus should not be surprising. I should be delighted, in the light of that consensus, if the hon. Gentleman would endorse and sign up to the Backing Young Britain campaign to encourage employers to do their bit to give young people a chance in the recession, through apprenticeships, the future jobs fund, work experience, internships and so on.
We have set out our plans and our intentions for doing that, and we stick by them. We would tell people in this country that young people here have great potential. The question is how we help them, through the education and training that they receive, to meet the demands in the economy.
At this point I must diverge from the Minister’s views, because I was a little perplexed about the philosophical approach behind his response to the issue—and it is a big issue for young people. It is not clear to me whether the Minister was saying that there is a great problem for young people, who have been hit very hard by the recession, or that things are not that bad, and they have not been too badly hit: that if we look at statistics in a certain way the problem is not that great. I am not sure whether he is saying that there is a great problem, to which the Government have answers, or that there is not a problem at all. We need to be a bit clearer about that, and to recognise that young people have been hit hard by the recession.
That fact has been evidenced by the steep rise in the number of young people aged 16 to 24—that is our definition of young people for the relevant purposes—who are unemployed, whether we use the International Labour Organisation’s definition or the claimant count. Whatever measure is used, there has been a very steep rise. The issue is not just that there are young people who are unable to find work: behind that there are other young people who are struggling in the recession and who may have found work but have had to compromise their ambitions. They may be in employment but waiting to fulfil their chosen career path.
It is widely known that many firms froze recruitment last summer. Even those who have had the good fortune to obtain a job in their chosen field have sometimes found their entry to that work deferred. There are many reports of companies and professional bodies deferring graduate level entry of young people to whom jobs have been offered. We must recognise that there are young people who are unemployed and in need of help, and others who have been hit by the recession. We need to help all of them, but of course our particular focus is on those who have been unable to find any employment at all. The Minister needs to recognise the scale of the challenge.
I heard what the Minister said about the ILO measures of unemployment. He knows that its figure for 16 to 24-year-old unemployment in this country is about 1 million, and even if one takes out young people in education the number is still substantial. He can contradict me on this if he wishes, but, for the sake of his argument, even if one subtracts from the figure young people who are in education looking for work, a significant number are still unemployed, and certainly a much higher number of 16 and 17-year-olds and 18 to 24-year-olds than in 1997. That was the situation in 2008, and I believe that it is still the case. If the Minister has different figures, I would be grateful if he produced them, but we must stop looking at statistics as a way of getting around the problem. Instead of trying to find some explanation for them or trying to put a gloss on them, we should just face up to the scale of the problem.
Another thing that is evident, even in some of the material produced by the Government on youth unemployment—the hon. Member for Northavon touched on this point—is that there was a problem with youth unemployment in this country before the recession took hold. We need to face up to that fact. It is serious and needs to be reflected on when we come to choose policies and the means by which we try to get young people back to work.
It is worrying that youth unemployment seems to have been creeping up, certainly on the ILO’s statistics, since about 2003, which was obviously long before the recession took hold. I am looking at the figures that the Government chose to put in their White Paper, “Building Britain’s Recovery: Achieving Full Employment”. Their statistic on youth claimant unemployment, as opposed to the ILO’s measurement, would appear to tell the same story of declining effectiveness of Government interventions to try to get young people back into work, and of youth claimant unemployment starting to creep up after about 2003. There will be interesting issues for economic historians in explaining how that came about, but it is important that we learn lessons from it, and from the policies that were put in place to help young people but which manifestly failed to do so. That includes learning lessons from what has happened with the new deal, because with unemployment affecting about one in five young people, we cannot afford to continue with approaches that have failed in the past.
I heard what the Minister said about his chosen historical perspective. He mentioned the last two recessions. The White Paper selected the worst periods of the last two recessions, in 1985 and 1993. I heard at one point in his address the suggestion that the problems we face today are somehow the responsibility of the previous Conservative Government. I shall pass over that, but I think that we have to be careful about how far we go back on such matters.
I remember—you may as well, Mr. Betts—that we used to have a programme on independent television called “All Our Yesterdays”, which selected things that had happened 25 years earlier. In the 1960s, my age group watched things about the second world war. I am afraid that the Government’s policies and thinking seem to be about all our yesterdays. It would be better if they looked at what has happened in the immediate past, and the failures that there have been, and learned lessons from that.
The reason why it is relevant to make comparisons with previous recessions is that we have just gone through a year in which we saw output fall dramatically, and everyone knows that there is a strong relationship between falls in output and falls in employment. A reasonable measure of how successful we have been in tackling recessionary effects on unemployment is to look back at other periods when employment fell sharply. It did not fall as sharply last year as it did during the 1990s recession—it fell by only 2.5 per cent., compared with 6 per cent.—but the effect of the global recession in the past year has been profound, and we need to look at how we have managed unemployment through recession, compared with previous Governments.
That is helpful. The Minister needs to look at the statistics that his Government produced in their White Paper about the change in the level of unemployment following the early 1990s, which he has been pleased to choose as the peak for the last recession. If he studies that, and looks at what happened after that period, he will see that from about 1992-93 onwards, there was a steep fall in unemployment among young people. That continued throughout the later part of the 1990s but began to level out relatively shortly after the present Government took office. It levelled out altogether by January 2000, which was not a period of recession. After that, youth unemployment stuck at a certain level and then began to rise again in 2003.
If the Minister looks at those periods of history, he will see that youth unemployment was declining much faster before the present Government took office and introduced the new deal, which we have heard so much about, and that it then began to level out. That is hardly a picture of a policy working tremendously satisfactorily. It would seem to indicate that under the policies that have been pursued, in particular the new deal, there was a stubborn problem with the persistent level of youth unemployment, which the Government were unable to get down, and which started to rise again.
I would be happy to give way to the Minister at any time if he would like to intervene and tell me at what point since 1997, and on what measure, the Government have achieved their stated objective of getting 250,000 young people off benefits and into work. That was one of the key pledges made in 1997, which was said to be funded by a windfall levy on privatised industries. The case is that at no point since 1997 has there been a fall of anything like 250,000 in youth unemployment. Today, it is several hundred thousand higher than it was in 1997, whether one uses the ILO measurement, the claimant count or any other measurement.
We need to learn lessons from the fact that the new deal has failed in those respects. I believe that the Government have recognised the failure of the original new deal for young people because they have, in effect, abolished it and replaced it with the flexible new deal, which retains the name but employs a different set of policies for helping young people. We need to learn lessons from the long-term failure of the policy to reach its stated objectives.
My party has set out in detail proposals on how we wish to help young people. First, we believe that help that is made available should make a real difference to a young person’s life prospects, not lead to a revolving door between temporary work and new benefits claims on a repeated basis. The hon. Member for Northavon made that point as well. We need to drop claims about abolishing long-term youth unemployment or youth unemployment on the basis of changes to someone’s status as a claimant. What should change is getting the young person in question into a job.
We also want to ensure that there is timely help for young people. At six months from the point of a claim, we want specialist help to be provided by dedicated case managers and mentors who will offer help on an individual basis. We have set out proposals for how we wish such help to be provided for young people.
We want to see longer-term success coming from policy interventions. For young people in particular, we feel that it is important to provide support after an individual has found work, to help them cope with some of the problems that they encounter once they have found work. We have set out proposals for a more rigorous approach to what constitutes sustained employment in the first place, and we have set out plans for ensuring that young people get personalised mentoring and help after that period. They need help to stay in work, not just to find work in the first place.
As I said, we want to eliminate the revolving door between welfare-to-work help and the jobcentre. To help young people through the recession, a key priority must be to provide them with the skills that they need for the future. We have set out proposals on that. We have said that we want to take a great deal of action on the skills and training front—the Minister will have heard this yesterday—to help young people into apprenticeships, for example, and also to help them acquire functional numeracy and literacy skills and social skills that will enable them to undertake apprenticeship level training. Again, we have brought forward proposals on those matters.
Many young people have high ambitions and aspirations, and there is much evidence that the present system of education and training has failed to equip all of them with the skills they will need to succeed. We are clear that far more needs to be done in future. On apprenticeships, particularly, we need to shift the focus towards a higher level of achievement, towards level 3 rather than level 2 qualifications, and we want to make it more appealing to small and medium-sized enterprises to take on apprentices. We also want there to be support for pre-apprenticeship training. In the present circumstances, we want to focus pre-apprenticeship funding on young people who have been on jobseeker’s allowance for six months or more.
We welcome such changes as have been made by the Government as fit in with our plans, but we feel that far more needs to be done and that they have failed to provide young people with the help they need. It was we Conservatives—the hon. Member for Northavon, the Liberal Democrat spokesman, will remember this—who argued that help should be made available for young people at the six-month point of their claim, rather than leaving them until 10 months. We noticed that in the White Paper, the Government have come to accept six months as the right point and have changed their plans, but they need to go far further than that. Far more needs to be done.
There was evidence that we were not doing well enough before the recession struck. Certainly now, in our present straitened circumstances, with youth unemployment on the scale it is and with young people facing the challenges and stresses that they do today, we need to do far more than is being done under the present Government. We went into this recession without being sufficiently well prepared for it and we have to see the Government’s future promises in that light.
We are clear that if young people are to fulfil their potential—we agree that they have tremendous potential—far more needs to be done. We cannot afford the individual and collective waste that would result from failure to properly and effectively help young people who are trying to start their working lives in the present difficult circumstances. The present Government’s policies are tied to the failures of the past and have not worked sufficiently well. We need much more new thinking if we are to help our young people realise their potential in future.
With the leave of the House, I shall respond to the debate.
We have had an interesting, if intimate, debate between three of us about an important subject. I enjoyed the other contributions, which were characteristic of both the hon. Members who made them. The hon. Member for Northavon (Steve Webb) gave an interesting speech containing many points with which I agree and I shall go into them in a little detail as there appears to be a bit of time to do so. The hon. Member for Hertsmere (Mr. Clappison) gave a coherent criticism of what was going on, without really offering any policies at all.
It is important that we intervene early. That is why in April we changed policy so that if there is evidence that young people who start claiming at 18 have been NEET for six months previously, they are fast-tracked to what would normally be the six-month point in the claim. There is a clear reason why we should take action much sooner when someone is at high risk of moving into long-term claimant unemployment. Six months is the point at which people go into the gateway for the new deal, which is even more relevant now that we have moved, as both hon. Members said, from 10 months to six months for the young persons’ guarantee.
The hon. Member for Northavon mentioned what in jargon terms people call segmentation: being able to do some analysis of individuals as they come through the door to work out the likelihood of them becoming longer-term unemployed, so that provision can be accelerated or so that the rewards to providers of getting them into sustained employment outcomes can be priced differently. There is a logic to that.
I will talk through some of the measures in the White Paper, because I held a few things back from my opening remarks on the new measures for young people that we have included in it. We talk in the White Paper about the importance of considering how we develop segmentation tools. I do not advocate going as far as Australia has: from day one it uses a segmentation analytical tool to send people straight into the private sector, externalising the provision and support so that there is no state-run equivalent to Jobcentre Plus. That is too early in a claim, when there is a lot of vulnerability, because that tool has some problems in dealing with individuals and their different needs. In the White Paper we discussed combining the use of that sort of tool with the learned experience of working with an individual through our personal advisers in Jobcentre Plus—seeing whether we can combine objective and subjective measures to come up with something more accurate. That would happen in the context of introducing more flexibility in Jobcentre Plus.
When I came into this job last summer, I was surprised by the disproportionate amount of debate about the use of providers. In terms of the work it does, and considering that it deals with 90 per cent. of jobseekers, Jobcentre Plus does not get anything like 90 per cent. of the attention compared with the provider sector, which deals with 10 per cent., although admittedly that 10 per cent. is harder to help.
I wanted to be able to introduce more flexibility in Jobcentre Plus and to learn not only from experience internationally, but from our private providers, and I want to give some of that to people. The hon. Member for Northavon knows that the Jobcentre Plus district that he represents in Gloucestershire will be one of the pilot areas for flexibility for Jobcentre Plus. Our managerial staff will be able to use much more flexibility to do what works on the ground to get people back in, as long as they do not veer away from the fortnightly sign-on. If that means bringing forward provision in the ways he has mentioned, that is what they will do if they are confident enough that they can get the outcomes in exchange.
In the family intervention projects that the Government are pursuing, we identify those who have the most chaotic lives in our communities—where family members might be responsible for much of the crime in a community, and unemployment and truancy might be significant problems. We focus on those families to provide much more intensive, holistic support to help them get back to doing some of the right things, thereby reducing the problems they cause our communities, but, importantly, giving them a much better opportunity to get on.
In the White Paper, “Building Britain’s Recovery: Achieving Full Employment”, which we published last month, not only did we set out in the final chapter the vision for Jobcentre Plus and some of the changes that we want to make in the delivery, but we set out new provisions for young people. We shall bring forward the young person’s guarantee for 18 to 24-year-olds to six months. There will be 100,000 Government-funded additional training, internships, work experience and job opportunities on top of the 300,000 we have already pledged for the next 18 months, to help us deliver that guarantee. There will be access to a dedicated, named personal adviser from day one of the jobseeker’s allowance claim for young people, with the ability for them to fast-track to the support available from six months if they think that is appropriate, which is along the lines the hon. Member for Northavon set out.
There will be Jobcentre Plus support for 16 to 17-year-olds to help them access apprenticeships or jobs with training in addition to the normal support from Connexions, thereby giving a much closer relationship with the Connexions service, which some criticise for signposting people into education more readily than into employment—there will be more of an employment focus in its work. There will be a graduate guarantee so that all those who graduated last year and are still unemployed after six months will have access to one of the internship, training or self-employment places. There will also be a new subsidy of £2,500 for up to 5,000 employers to offer new apprenticeship places for 16 to 17-year-olds, which shows that we are listening to what the CBI has asked us to do in respect of encouraging apprenticeships for younger people.
I have much sympathy with what the hon. Member for Northavon says about early intervention, and we are coming forward with the appropriate policies. Self-employment will be a way out of the recession for people. Bringing the self-employment credit to three months will work for all people, not just young people, and will be another part of that help. The individual skills accounts and the skills pot will also help to further the integration of employment and skills, as set out in the White Paper.
The hon. Gentleman mentioned education. The link between poverty and education outcomes could be the subject of a three-hour debate. Clearly there is a link, and as all Members would expect, I looked at it in some detail as Schools Minister. I also looked at the effect of the funding arrangements that we introduced. Since 1997, we have substantially increased the revenue funding for schools—by well over 50 per cent. When comparing local authorities that have higher levels of deprivation and disadvantage with those that have lower levels, it is interesting to see that the gap in educational outcomes has narrowed significantly. Funding went disproportionately to local authorities with higher levels of deprivation, and that measure has worked well.
At school level, the gap has also narrowed significantly, according to the various quartiles. At pupil level, however, the gap has not shifted so much—although it has shifted a little—so it might be tempting to rush to the “pupil premium” or a funding formula that focuses simply on the individual pupil. As the House knows, we have gone through a process. The consultation period is closed, and consideration is now being given to the new funding formula that will kick in for a three-year period starting in April 2011. That formula is being considered, and the intention is to find ways of measuring deprivation at a more fine-grained level. If the gap has narrowed at school level but not at pupil level, we must ask whether the measures that the hon. Gentleman mentioned regarding school level would be the whole answer.
During my period as Schools Minister, I concluded that the biggest single determinant of a child’s success in school is the involvement of their parents in their education. That is why there is such a strong link between poverty and educational outcomes. How do we raise the aspirations of parents and make them confident to help their children with their homework? If parents had a poor experience in school, how do we break that cycle of low educational achievement? That is one of the reasons why I introduced measures to improve parental engagement in schools through better reporting to parents, extended school activities that include more engagement with parents, and opportunities for parents to improve their learning through schools. There were also area-level aspiration-raising measures such as the Black Country challenge and the Manchester challenge, which built on the success of the London challenge. From the woeful state they were in some time ago, London schools—and London pupils—now outperform the national average.
Last year, or the year before, more than 70 Education Ministers were in London. It was the equivalent of this week, when Education Ministers are in London for the BETT fair in education technology, in which this country takes a global lead. A couple of years ago we took those Ministers on study visits to schools in Tower Hamlets. In 1997, no Government would have taken visiting Ministers anywhere near schools in Tower Hamlets. It is a demonstration of the success of the London challenge that schools are doing so well in Tower Hamlets, the most deprived education authority anywhere in the country.
We agree that one-to-one tuition is one of the ways we can get at individual pupils and their aspirations, and try to help them achieve their full potential. When the GCSE figures were announced yesterday, I was pleased to see that the number of young people getting five A* to C grades at GCSE, had moved from around a third, to just shy of half—49.5 per cent. That is considerable progress, but clearly there is more to be done.
The hon. Gentleman talked about the power of the Government as an employer through their procurement policies. I strongly agree. One of the reasons why we brought forward the fiscal stimulus in response to the recession was so that we could use Government investment to help save jobs and, where possible, to create them. Building Schools for the Future, for example, as managed by Partnership for Schools, insists that contractors agree to new apprenticeships as part of the deal. We are extending that approach across Government, because one of our three priorities in procurement policies is to protect skills and jobs, as well as creating new jobs.
As the hon. Gentleman knows, schemes such as Warm Front, managed by the Department for Environment, Food and Rural Affairs, helped insulate the homes of vulnerable people on lower incomes. There is the new boiler scrappage scheme, Building Schools for the Future, and new hospitals and roads. All those things benefit from the investment that we are putting in, which would be cut under Conservative plans, and have all been important in creating jobs. The building of the wonderful new Weymouth relief road has created 300 jobs, and I am pleased that at least 100 of them are local jobs. In my constituency of South Dorset, we have five new schools and four new children’s centres. Recently, there have been three major lottery bids, two new roads and, of course, the Olympics will be coming to Portland. All those things have brought significant new jobs for my constituents.
The hon. Gentleman mentioned the structure of the programmes, and in an intervention I pointed out the importance of the personalised employment programme as our way of testing the accelerator funding model. We are also piloting invest to save, so that we can proceed on the basis of an understanding of risk that is shared between us and our contractors, and gets the best possible price and outcomes. There are reasons for piloting the accelerator funding model. If we are to use segmentation, for example, we must understand how well segmentation tools will work. If we price according to the distance that someone is from the labour market—to use the jargon—we must understand how accurately we will be able to predict that distance.
I am grateful to the Minister and appreciate his going though the arguments carefully and responding thoughtfully. In a sense, the accelerator model that I described does not require us to segment, because the providers will do it for us. They know that they will not get much money for the first person they get back, so they have an incentive to work their way through. In a way, we do not have to guess; the incentives are right and will have the outcome we want.
I accept that, and the accelerator model we would use would do the same. However, it remains the case that one must understand enough to work out how to price the various volumes as they mount up. One needs to understand the state of the labour market at the time and how to anticipate changes, which would affect how the pricing was varied. All sorts of variables and risk are attached, and we would need to test them carefully. As I said earlier, the market will not do that, or if it does, it will be at great cost.
I am concerned about the Conservative proposals to rush to implement invest to save because there is a risk to the taxpayer. Our invest to save pilot will start in, I think, four areas. We shall consider those who are on incapacity benefit and how we use the invest to save model for contractors in those four areas initially. If we were to go national, the challenge of correctly predicting how many would come in would put at risk £20 billion-worth of benefit. Ultimately, invest to save takes something that is demand led—benefit payments—and transfers that money to something in which we try to predict the effect. A lot of risk is attached to that, and it would be irresponsible to go ahead without testing it properly first, because ultimately we might have to pay out twice, which would break the bank of the Department, the provider, or both.
The hon. Member for Northavon talked about supply chain management in the flexible new deal. I was talking about that just today to the British Trust for Conservation Volunteers, as one of the medium-scale providers. I meet voluntary sector representatives regularly, both individually and at times collectively, to discuss how they are doing with the flexible new deal as part of the supply chain, because the hon. Gentleman is right to identify the niche capability and the importance of the niche capability in some of those smaller providers.
We have a pre-procurement dialogue with our prime contractors about how their supply chain will work. We have a code of practice for that part of the contract, about how that supply chain operates. We are introducing something called the Merlin standard, which we are agreeing with both the prime providers and the smaller providers and which they are collectively agreeing among themselves as a form of voluntary regulation, further to improve that relationship. I think that is regarded by the third sector as probably the best example across Whitehall of trying to get the supply chain relationship right for the smaller providers. I reassure the hon. Gentleman that we are mindful of the need to continue to work to get that right.
I was disappointed that the hon. Member for Hertsmere did not instantly want to sign up to the Backing Young Britain campaign. Perhaps he will want to have a look at the website and see whether he can do that. He wanted me to be more consistent in answering the question about how bad the situation is for young people. Clearly, this recession and the increase in unemployment during it are bad for young people. I am in no way complacent about the scale of the challenge that they face and that we need to address in government to protect them from the worst effects of recession.
However, what I have been saying is that the situation is considerably better than it was in previous recessions and considerably better than the predictions that independent forecasters made at the time of the Budget in April or at the turn of the year. All the signs are that active government works; the Government working on the side of people, alongside people, is effective. I reiterate that the percentage of young people who are unemployed—excluding those who are in full-time education and are therefore active, but in a different way—is currently 10 per cent. In the recession of the 1990s it was 12 per cent. and in the recession of the ’80s it was 13 per cent. We can also look internationally. I reiterate that we are below the EU average in respect of unemployment.
People may want to consider the statistics for long-term claimant unemployment among 18 to 24-year-olds—those unemployed for more than six months. Currently, the figure is 108,800, in 1997 it was 169,000, in 1993 it was 415,000—nearly four times higher—and in 1985 it was 600,000, which was more than five times higher. We can consider that in percentage terms. Currently, 21.9 per cent. of 18 to 24-year-old claimants are unemployed for six months plus. In 1997, it was 42 per cent., in 1993 it was 51 per cent. and in 1985 it was 57 per cent. We have a good record. I have just been referring to unemployment of six months. Often, we consider long-term unemployment to be unemployment of 12 months, but I do not have those statistics before me. Those are all signs of the effectiveness of the Government interventions during this recession, which many independent commentators and academics acknowledge are working.
The Minister went through those last statistics at rather a gallop. Do the statistics that he has cited about long-term unemployment include those who have come off the new deal—who are at the end of the new deal—and who have then been classified as a new claim? Is that being taken into account? Are those people being removed from the long-term unemployment figures?
I have said that I will drop the hon. Gentleman a line on the new deal and those coming into and around it. I discussed it with officials just a few weeks ago, so I am happy to drop him a line about it, as I said earlier.
The hon. Gentleman talked about six-month support, and he is right to say that we have brought forward our support for young people and our young persons guarantee to six months. I compare that with the Opposition’s support at six months, which is to refer them into a Government programme in effect—to providers. He does not support the real jobs that are a live part of the young person’s guarantee. He does not support the funding for the future jobs fund, creating at least 120,000 new jobs for young people. That is probably for the reasons discussed by the hon. Member for Northavon: ideologically, the Conservatives are against that kind of thing. I do not know whether the hon. Member for Hertsmere supports the routes into work to create tens of thousands of jobs through a pre-employment training route into sectors such as care, hospitality and retail.
I was surprised that there was no mention of or response to the charge from independent economists and forecasters such as Professor Blanchflower that unemployment would double if the policies of the hon. Member for Tatton (Mr. Osborne) were allowed to have their way. The hon. Member for Northavon talked about the Conservatives being ideologically opposed to thinking about the role of Government in any of this, in terms of being positive about creating jobs, but the hon. Member for Tatton is not addressing the consequences of rushing to tackle Government debt and Government deficit and wanting to do that much faster than we are seeking to do it. If he does it in such a way that all the investment that we have been talking about today is turned off, there would be a significant unemployment effect, as predicted by economists. It simply makes no sense. We cannot turn off the tap on public sector employment without private sector employment growing. There is no sense in that in economic terms whatever.
In our own way, we have had a good debate this afternoon. It has shown some of the consensus and some of the difference between us as parties. There was also some good technical discussion, thanks to the hon. Member for Northavon. I look forward to continuing the debate at least for the next few months, in the run-up to any general election—well, the general election that will inevitably be called sooner or later. I am sure that the issue of young people in the recession, because it is so crucial, will play an important part in that debate.
Question put and agreed to.