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Unemployment (Halifax)

Volume 539: debated on Wednesday 1 February 2012

I am delighted to have secured this debate, and to serve under your chairmanship, Sir Roger. I also thank the Minister who will reply to the debate. Before I get to the heart of the issue, however, I would like to paint a background picture of Halifax and describe the social and economic situation in which we find ourselves today.

I grew up in Halifax and went to school there, and I know the people of Halifax well. It is a great place in which to live and work. No one wants to be out of work, but sadly far too many people are. People do not want handouts but the chance to do a good day’s work for a good day’s wage. People do not want to live in—and I do not want to represent—a town where levels of unemployment might be at 15% or 20%. I requested this debate to place on the record what is happening in Halifax, and say why something needs to be done.

Even if the possibility of 20% unemployment in Halifax sounds a little exaggerated, that is sadly where we could be heading unless something radical is done to get people back into work. In recent times, too many regeneration schemes have been axed and new projects scrapped, and too many policies have made the poor poorer, instead of giving them hope of work.

For many years, jobs in Halifax and Calderdale came from a number of industries that sadly are either no more, or are shadows of their former selves—I am talking about engineering, manufacturing and, going further back, the woollen industries. Over the past two or three decades, we have seen a steady decline in those industries that provided employment to key groups of people in my constituency. Today, the two biggest employers are the Lloyds Banking Group—better known to most local people as either the Halifax building society or HBOS—and Calderdale council. Other key employers include the hospital in Calderdale and the primary care trust, and other public sector employers.

Well-run private companies such as J&C Joel in Sowerby Bridge, Harveys department store, or Iplas recycling group in the heart of Halifax, together with many more small companies, provide much needed employment and are key businesses in my constituency. They are models of how to make a profit, provide employment and maintain a dedicated and motivated work force. Over the years, Halifax has relied on specific sectors to provide employment, but when those sectors declined, a vacuum was created. In Halifax, it has never been enough to rely on private sector jobs to fill the void that is created when public sector jobs are lost. The town needs much more than that, which is why regeneration schemes, investment in new schools and the new hospital, together with a strong public sector and the right macro-economic policies, have helped maintain levels of employment in the town.

I thank the hon. Lady for securing this debate. My constituency is also in the Calderdale district, and like her, we are all concerned about unemployment, although I think that the figure of 20% may be a little far-fetched. As MPs, we must do all we can promote the area for business growth, which we know to be the key thing. That is particularly true when 20% of constituents in Halifax and Calder Valley work in manufacturing.

Does the hon. Lady agree that although we are incredibly concerned about unemployment, we must also celebrate success? I highlight the example of JLA in Ripponden, which has spent £1 million; KT Hydraulics has recently spent £2 million, and Decorative Panels has invested £8 million. Boxford has recently moved from the hon. Lady’s constituency to mine, spending £6 million and creating many jobs.

I thank the hon. Gentleman for that intervention, and as I will show later in my speech, I do not intend to talk down Halifax—quite the reverse. I saw the Halifax Courier on Saturday night and read about the new jobs that have been created in Calder Valley. The Halifax Courier is a great source of local knowledge. It talks up Halifax and I have worked with it on many local campaigns, including that to get a direct train service to London, which we accomplished a couple of years ago.

Why have I called this debate today? It is not to make overt party political points, but rather to set out the background and put on the record the current unemployment figures in Halifax which, I am afraid, speak for themselves. I find such figures alarming and wish to seek answers and assurances from the Minister about what can be done. What can be changed, and what initiatives is he planning to ensure that levels of unemployment start to reduce in my constituency?

I congratulate the hon. Lady on securing this debate; the difficulties that she has expressed are mirrored in many of our constituencies. Does she believe that the onus should be put on apprenticeships and further education colleges to provide proper courses for what industry needs, together with a closer working relationship with organisations such as the CBI and the Federation of Small Businesses?

I thank the hon. Gentleman for his intervention. I agree with his point about apprenticeship schemes. In fact, just last Friday, I visited Goodall Transport in Sowerby Bridge in Halifax. It has been there for quite a few years. It would like more money coming up north, because it sees money directed more to the south of England. Also, it struggles with paying VAT before it gets that VAT into the company. It might invoice someone today and have to pay the VAT at the end of February, but not get the VAT by then. Perhaps the Minister will reply to that.

I hope that the Minister agrees that the current levels of unemployment in the town that I represent are unacceptably high, that the current upward trend in the number of people out of work is alarming and that a worryingly large number of those people are in the key 18 to 24 and 25 to 50 age groups. For example, the number of people out of work aged 24 and under has gone up by more than 25% in the last year, and in the 25 to 49 age group, it is up by more than 15%. The overall employment rate is only 66%. That is an alarmingly low level. I hope that the Minister shares my concerns about those rates. Does he agree that under one in four of the active adult population out of work in Halifax is a damning statistic? Will he outline what initiatives can be taken to improve that situation and put in place job creation measures as a matter of urgency, not just at macro-economic level, but at a micro-economic level that benefits my constituents?

Earlier today, I was looking at the statistics from five years ago. The unemployment level in Halifax has nearly doubled in that period. Despite the stereotyping last week of benefit claimants, they are people who want to work and need to work. The whole social fabric of a town can collapse if unemployment levels get too high. Let me be clear: I think that one person out of work is one too many. Does the Minister share my concerns about the figures that I have mentioned? What policies can he introduce to help to stem the flow of job losses, which is rapidly becoming a torrent?

The current situation is fragile, and the campaign to save jobs in the town’s two biggest employers—Lloyds HBOS and Calderdale council—goes on. The knock-on effects for the town of more job losses at those two big employers would be devastating. As Roger Harvey of Harveys department store regularly says to me, “Many town centre businesses need and rely on these jobs.” The fabric of the town is held together by them, and we need both a strong public sector and a private sector in Halifax to ensure that the town’s economic and social base is held together. With the greatest politeness and respect, I say to the Minister that the Government might be misunderstanding towns such as Halifax if they think that a reliance on private sector jobs will create new jobs or replace the ones that are being lost and being lost at a rapid rate.

In that sense, every effort should be being made to protect all jobs at Lloyds HBOS. The Government own more than 40% of that company. Will the Minister tell me what input he has into the board of Lloyds and what he is doing to protect jobs in Halifax and other constituencies? Will he also tell me how shedding public sector jobs helps towns such as Halifax? Will he do all that he can to compensate for those losses and outline what measures he is taking to ensure that new jobs will be created?

Calderdale council is at the heart of the Halifax and Calderdale economy. The reductions in council budgets are hurting the town. Again, may I gently mention that towns in the home counties and other parts of the country can better absorb public sector job losses? When there is a private sector, or towns have grown up with more service-based industries, new jobs can be created much more easily. In northern towns such as Halifax, which have always had a strong and important public sector, that is much harder to do. I hope that the Government fully realise what makes the economy in places such as my constituency tick and how cutting the public sector, but not giving the private sector the means to create new jobs, leads to a damaging and shocking increase in unemployment.

I do not want to knock everything. There are success stories, such as those that I mentioned at the beginning of my speech. I recently visited the Iplas recycling company. The managing director, Howard Waghorn, has visionary and innovative ideas for his company. Likewise, the order book of J&C Joel in Sowerby Bridge continues to expand. However, those are well-run, long-established companies. The new industries and entrepreneurs with innovative ideas needed for the 21st century will not appear in towns such as Halifax simply through the waving of a magic wand and hoping that new jobs are created. I do not want to pretend that everything in Halifax is gloomy. It is not. We need to keep our self-confidence and hope. There are success stories. I am sure, or rather I hope, that the Minister will quote them back to me when he replies.

In essence, I would like the Minister and the Government to recognise the underlying problem that exists in towns such as Halifax, not hide away from it. I hope that the figures that I have cited alarm the Minister as much as they have alarmed me. I would like to hear some answers about what can be done, not excuses for what has not been done. I would like the Minister to assure me that job creation and regeneration schemes will be targeted on Halifax. The initiatives from the Department for Communities and Local Government will help Calderdale council. However, we want not short-term fixes, but long-term solutions. Therefore, I would be grateful if the Minister outlined what his short and long-term plan is for reducing unemployment in Halifax today, before the terrible consequences of further unemployment become a crisis, with people out of work and the whole social fabric of the town ripped apart.

I congratulate the hon. Member for Halifax (Mrs Riordan) on securing the debate and on the very measured but passionate way in which she presented her case. I entirely agree with her that one person unemployed is too many and that the rise in unemployment in Halifax and other towns is absolutely a source of concern. She said that something must be done, and I entirely agree. I hope to use the few minutes available to me to set out what the Government are doing to deal with some of the very important points that she raised.

To set the context, for claimants of jobseeker’s allowance, the national average rate is just under 4%. The figure for the hon. Lady’s region, Yorkshire and Humberside, is 4.6%, but the figure for Halifax is 6.4%, so her town is above average in the region, and the region is above average in the country. I therefore take the point that she makes about the particular pressures on her town.

Part of the Government’s strategy is to move away from some of the schemes that unemployed people have faced in the past. The hon. Lady and I will both have met people who were sent on a scheme by the jobcentre and came away from it thinking, “What was the point of that?” It did not help them to get a job, yet the provider of the scheme got paid and went home happy. We want to change that. We want to move, and are moving, towards a system whereby the companies that we pay to help people from unemployment, from incapacity benefit and so on into work get paid only when they deliver.

The whole philosophy behind the Work programme, which is still gearing up across the country and gathering momentum, is that the providers get paid only when they get people into jobs and, specifically, when they get people into sustained jobs. The bulk of the money is end-loaded. They get very little money up front, and if they do not deliver for the people of Halifax, they do not get paid. That is a sea change from the sort of schemes that we have had in the past.

Let me give the hon. Lady a flavour of what is being provided in the west Yorkshire area, within which her constituency falls. In each area, we have two prime providers for the Work programme. They are the main contractors, and we have two because they have to compete against each other to do their best for the people of west Yorkshire. Each year, we look at how each provider has done, and if one is doing a better job than the other, more people are referred to it, so the successful providers that are good at getting people back to work receive more referrals and make more money from that. We do not mind them making money from it, because they are saving the taxpayer money and helping the individuals concerned.

The two main providers in the west Yorkshire area are Best and Ingeus. Best has a series of subcontractors that provide services to the hon. Lady’s constituents. One of the reasons that people get stuck on out-of-work benefits—not just jobseeker’s allowance, but incapacity benefits, employment and support allowance and so on—is that they have physical or mental health issues. Condition Management Partners, a subcontractor in west Yorkshire, helps such people to overcome their mental or physical health issues by providing cognitive behaviour therapy, motivational interviewing techniques and other such therapies. That is a voluntary third sector organisation working with a prime contractor to help people who have barriers to work.

We want to make sure that there is not a core of people in Halifax who have just lost touch with the labour market. The longer such people are out of touch with the labour market, the less chance they have of getting a job. We need to get them back in contact with the labour market. I entirely take on board the hon. Lady’s point that there needs to be jobs for them to go to, and I will say a bit more about that later. We want the people who have been on long-term benefits, particularly incapacity benefit and jobseeker’s allowance, to be effective competitors for those jobs. We know that jobs are being created and that vacancies will exist. There are hundreds of vacancies even now at the hon. Lady’s local jobcentre. We want the people who have been on long-term benefits to be effective participants in the labour market, so that when jobs come up, they can apply for them and get them, thereby breaking out of that cycle of long-term benefit dependency.

Another subcontractor of Best is Forster community college, which is a public sector organisation in the supply chain that provides help for Work programme participants with drug and alcohol issues. It also provides specialist support for ex-offenders and homeless people. For all those people, the danger is that their characteristics are such that they appear less attractive to employers. When private sector, or even public sector, jobs are created, they are always at the back of the queue and then get stuck on benefits. We want to make them as attractive to employers as everybody else so that they do not get stuck on benefits.

The other main provider in the hon. Lady’s region, Ingeus, has a series of subcontractors, including a group called Specialist Health Advisers, which is helping people with the basics such as exercise and healthy eating. The barriers preventing long-term unemployed people from being effective participants in the labour market include having got out of the habit of work, having got out of routines or not looking after themselves. We are trying to tackle many of those issues. Part of our strategy is getting people who are on benefit to be attractive to employers. I entirely take the hon. Lady’s point: unemployment has gone up. None the less, employment is still up compared with 18 months ago. There are more people working than there were 18 months ago. Somebody is getting those jobs, and the challenge is to ensure that help goes to the people of Halifax who are perhaps the furthest from the labour market and who are in most need of support and intervention. We pay extra for that. If somebody is unemployed but could probably get themselves a job, they do not come near the Work programme, but if they have been long-term unemployed or long-term sick, we pay extra money—in excess of £10,000 in some cases—to a provider to get that person into work. We must tackle what I call the supply side. We need to ensure that unemployed people are supported and enabled.

I am sure that the hon. Lady would be the first to say to me that that is not enough. Clearly, there have to be jobs available. She mentioned some successful private enterprises in her constituency. She mentioned an environmentally friendly company. We will shortly be launching the Green investment bank, which will provide money specifically for new enterprises and growth industries. This is not just about London and the south-east; it cannot be. We have a regional growth fund that specifically helps areas that are dependent on the public sector to make the transition to a better balance between public and private. There will always be an important role for the public sector in her area, but there is no reason on earth why, with the right support, Halifax should not have a thriving private sector as well.

Let me give one example of the incentives that we are giving. New businesses outside London and the south-east will be exempted from up to £5,000 of employer national insurance contributions for each of the first 10 employees they hire. That is a concrete and practical thing, which I am sure she will welcome.

We are also using deregulation as a way to help small businesses. I remember that at one point my local party wanted to employ its first employee. I was absolutely horrified by all the paperwork involved and the bureaucracy of running PAYE. There is a real barrier to taking on that first employee. We have said that all small businesses will be exempt from all new regulation for the next three years. Therefore, we are saying to people who start new businesses, “We are on your side. We want to give you support.” We are lowering the rate of corporation tax, with the small firms rate cut to 20%. Again, we are trying to ensure that, where a company makes a profit, it keeps more of it so that it can invest it in the local area.

We contacted the Jobcentre Plus district manager in preparation for the debate. I know that Jobcentre Plus is working very hard. Next week, for example, it is hosting a jobs fair to coincide with national apprenticeships week. I understand that the district manager would be very pleased to meet local MPs on a one-to-one basis. If the hon. Lady is happy to take up that invitation, he will talk through some of the issues that she has raised today that we may not have the chance to cover in as much detail. No one can supply as much local detail as the Jobcentre Plus manager on the ground.

The hon. Lady mentioned young people. I agree that unemployment is devastating for anybody, but at the start of somebody’s working life, it is a particular tragedy. That is why I am pleased with what the Government have been able to do on the apprenticeships front—an issue that was mentioned by the hon. Member for Upper Bann (David Simpson). My understanding is that, last year in Halifax, there were 1,150 apprenticeship starts. That programme is being expanded and we will update those figures shortly. Many people recognise that the apprenticeship scheme, which is linked to an employer and is about learning and applying skills, is a much better way of dealing with youth unemployment. It gives young people a focus and links to an employer. Although it does not guarantee a job, it makes someone more employable and gives them a reference. I am proud that the Government are doing so much in that regard.

I must admit that I am not an expert on Halifax. I was not aware of the full details of the hon. Lady’s constituency. I should say, however, that normally my right hon. Friend the Employment Minister would be responding to this debate, but with the Welfare Reform Bill going through the House, he has had to be in the main Chamber. I had a look at some of the figures for Halifax, which I am happy to leave with the hon. Lady. I have a chart that shows the number of people who have been on out-of-work incapacity benefits for the last decade in Halifax. What struck me was how the number had not moved. For 10 years, despite the booms and the busts, there was the same number of people—obviously not all of them are the same people but many are—stuck on the list. I entirely take her point that we should not stigmatise or parody the position of people on benefits. Although many people are on benefits through no fault of their own, we have allowed ourselves to get to a situation in Halifax and in many other such towns in which nearly 5,000 people have consistently been on ESA or incapacity benefit for the last 10 years. The question is: are we doing right by those people? Many of them will be in their 50s. If we just left them alone because there are not many jobs, we would be saying, “You can be on incapacity benefit for another 10 years and then you can have a pension, but it won’t be much of a pension because you haven’t been working.” We can do better than that, which is why we are keen to have these Work programme providers incentivised to help the long-term sick and disabled to overcome the barriers to work which get greater the longer people are out of work.

The hon. Lady asked about the Government’s macro strategy. She mentioned public sector job losses. She would accept, I think, that a substantial rebalancing of public spending had to be done. She was not unduly partisan in her remarks, so I will not be in my response, but it is commonly known that substantial public sector savings had to be made.

Given that—this is from memory—roughly two thirds of everything that Government spend is spent on pay, and that is certainly true if we exclude social security benefits, we cannot scale back public sector spending without significantly scaling back public sector employment, particularly if we are going to protect pensions and so on. It can be done partly through pay, as the Government have obviously done, but it will also imply a smaller public sector. It is therefore doubly crucial that we assist towns where the public sector—the local authority, the hospital and others that the hon. Lady mentioned—has been a major employer.

The hon. Lady described what has happened to the private sector and how the wool industry among others is in long-term decline. The public sector will not fill that void. Across Europe, Governments are retrenching, so it would be dishonest for me to say that the public sector will take up the slack. I think that she and I are agreed that the vital thing is to facilitate a vibrant private sector, but I also agree with her that that will not just happen. Part of the solution is about skills and training—I have mentioned apprenticeships—part of it is about unsticking the folk who get stuck on benefits and part of it is about the overall macro-economic position.

To give one example, the hon. Lady mentioned her local department store, which needs people to have spending power in their pockets. My right hon. Friend the Deputy Prime Minister has been pressing for a rise in the tax threshold, and the Government are committed to that. Instead of low-paid people paying tax after roughly £6,500, as they did last year, by the end of this Parliament they will not pay tax until after £10,000. That extra £3,500 at a basic rate of 20% is an extra £700 a year in their pockets, and I know that it would be very welcome if we moved faster on that.

People at that level of income tend to spend it. We know that, if we put money into the hands of those on lower and modest incomes, they will spend it. When we faced difficult decisions before Christmas on what to do about benefit levels for the coming year, there was a lot of debate about consumer prices index inflation peaking at 5.2% in the year to September. That very high figure has come down significantly since, so what was the case for using the full 5.2% for jobseeker’s allowance, ESA and all the main benefits, as we did? One of the things that convinced us that it was the right thing to do was the fact that those people would spend that money, thus boosting the local economy, and that decision will have helped the hon. Lady’s constituency, where benefit income is a significant part of income.

We agree with the hon. Lady: something must be done, and it is being done at both the macro and micro level. I hope that she will continue this conversation with her local Jobcentre Plus district manager, who, I am sure, will be pleased to meet her.

Sitting adjourned without Question put (Standing Order No.10(11)).