2. What assessment he has made of the implications for his policies of the Office for Budget Responsibility’s forecast for unemployment in 2012. (84781)

In line with the weaker outlook for our GDP growth, the OBR has revised up the projected level of unemployment over the year term. In the autumn statement, we committed to important new steps to provide private sector job creation and reduce unemployment, such as nearly £1 million for the youth contract, an initial £1 billion for the regional growth fund, and a £21 billion package of credit easing to support small firms, which are an important source of employment in this difficult time.

With unemployment set to soar to 8.7% next year, according to the OBR, can the Chief Secretary explain how meeting the rising cost of out-of-work benefits helps to get public borrowing down?

The hon. Lady should also note that unemployment rose by nearly half a million during her party’s time in office. The fact remains that we have to deal with the enormous problem that was left to this country in our public finances by the previous Government. The one thing that would hurt the unemployed and the poorest in this country more than anything would be stepping away from our plan and letting interest rates go through the roof, causing mortgage costs to rise, business costs to rise, and costs to the country to rise. That would be the most significant cause of unemployment that we could have.

Will my right hon. Friend confirm that the independent OBR forecasts that there will be 1 million more people in employment by 2016, even including the reduction in public sector employment? Does he agree that the route to higher employment lies not through yet more borrowing but through getting control of our deficit and opening up opportunities and improving skills, not least through the apprenticeships that the Government are introducing?

I wholeheartedly agree with my hon. Friend’s assessment. He is right that the OBR forecasts the net creation of 1 million more jobs and the creation of 1.7 million jobs in the private sector over the forecast period. It forecasts that unemployment will fall to 6.2% by 2016, reflecting the fact that the commitments we have made will deliver for the British economy.

The Government have shown that they are very relaxed about unemployment more than doubling in constituencies such as mine and about their economic policies hurting the poorest and the most vulnerable the most. When will they turn their attention to companies such as Vodafone, which is allegedly failing to pay millions of pounds of tax? That is an affront to the taxpayers who do pay their share.

I am not in any way relaxed about unemployment increasing in the hon. Lady’s constituency or the constituency of any hon. Member. That is why in the autumn statement we set out a youth contract designed to help half a million young unemployed people to get into work and stay in work. I hope that she welcomes such measures.

Presumably, the forecasts from the OBR on unemployment are very sensitive to interest rates. Given that interest yields in Spain have hit 7% and its unemployment rate is 22%, is it not the case that unemployment in Kettering and across the country would be far higher if the Government relaxed their deficit reduction plan?

My hon. Friend is absolutely right in that assessment. A 1% increase in our bond yields would cost the country an extra £21 billion in debt interest, and a 1% increase in market rates would cost mortgage payers £10 billion and businesses £7 billion. That is not the right solution for this country and it would certainly lead to higher unemployment. That is what the Labour party are offering.

In 2010, long-term youth unemployment fell by 36%. Will the Chief Secretary tell us by how much long-term youth unemployment has fallen since January 2011?

The hon. Lady will know that youth unemployment rose by more than 40% during Labour’s time in office. It is precisely because of the rise in youth unemployment, which I do not regard as tolerable any more than she does, that we have set out the youth contract. Perhaps she recognises that her party’s strategy is not working. Perhaps she is the anonymous shadow Cabinet member who was recently quoted as saying:

“The simple fact is Ed Balls’ economic strategy is hurting but it isn’t working.”

I failed to hear an answer in that response. The shocking truth that the Chief Secretary either will not own up to or is not even aware of is that instead of declining, long-term youth unemployment is up by a staggering 83% since January this year. This tragedy is quickly becoming a national emergency. More and more young people leaving school, college or university are missing the chance to fulfil their potential and are stuck on benefits, their talents wasted and their hopes fading. It is no wonder that the Chancellor’s borrowing plans are out of control, with an extra £158 billion of Government borrowing. When will the Government change course, abandon their failed plan and support young people instead of throwing them on the scrap heap?

I did not hear a welcome from the hon. Lady for our youth contract, which will help half a million young unemployed people with real jobs, support through work experience and additional apprenticeships. If there is any tragedy in this House, it is the economic strategy of the hon. Lady and her party. I notice that she denies the deficit but does not deny the quote that I attributed to her. Perhaps I can recommend some holiday reading for her. “In the black Labour”, which was written by three of her party’s most successful activists, states:

“It is precisely the vagueness of Labour’s position over…the deficit that confirms the voters’ worst suspicions about the Party’s lack of commitment to”—

Order. We are grateful to the Chief Secretary, but we will move on to questions and, hopefully, answers that relate to the policies of the Government. [Interruption.] I do not need any gesticulation from anyone. That is the purpose of the exercise, and that is what is going to happen.