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Employment: Long-term Unemployed

Volume 699: debated on Monday 18 February 2008

asked Her Majesty’s Government:

What measures they are taking to help the long-term unemployed to participate in the labour market.

My Lords, since 1997 the number of people claiming jobseeker’s allowance for more than one year has fallen by almost 75 per cent and for more than two years by nearly 90 per cent. The New Deal for Young People and New Deal 25 plus have helped over 1 million people into work. However, we recognise that there is more to do, which is why we are introducing the flexible New Deal to build on our success and to help even more people into work in the future.

My Lords, I thank the Minister for his reply. Does he accept the figures recently released by the Department for Work and Pensions that show that 800,000 people have been through the New Deal at least twice and that in some parts of the country half the participants have never been found employment? Does he agree that for some the New Deal is not a suitable vehicle and that intensive, basic education and family support are needed to get the hardest to help out of the deprivation of benefit dependency?

My Lords, I would like to answer the question against the backdrop of employment being up by nearly 3 million since 1997, with 1 million fewer people on key out-of-work benefits. However, in a dynamic labour market, it is inevitable that people move in and out of employment. It is right that the latest available figures on the New Deal for Young People show that the number of customers who have started the programme twice or more is just over a quarter of the total. That is why we are designing changes to the jobseeker’s allowance regime from 2009. The revised regime will introduce a flexible New Deal and will increase support to and expectation of customers the longer they are unemployed. None of that negates the support that we should give everyone, particularly young people, with regard to education, training and support in the community and in the family.

My Lords, having served on the National Employment Panel for many years, I have seen the Government’s efforts in getting people from welfare to work, including the several New Deal initiatives. However, the sad reality is that there are many areas of the country where generations of people have never worked. One of the main reasons is that they are scared of losing their benefits. What are the Government’s plans for removing the benefits trap that continues to persist?

My Lords, the benefits trap is, in fact, illusory in pretty much every circumstance—although not in absolutely every circumstance. There are misunderstandings and misconceptions. Work certainly needs to be done to show people who wish to move into employment that they will be better off in employment. That is why we are trialling a new in-work credit, which will demonstrate to people that they will be better off when they move into work. It is an important point.

My Lords, is the Minister concerned that some people pay effective marginal rates of tax of 90 per cent and more because of the withdrawal of benefit? If people have to pay very high effective marginal rates of tax, that will encourage them not to take up employment. Will he say by how much the number of people who are economically inactive has grown under this Administration?

My Lords, on the first point, yes, it is true that there are high withdrawal rates from benefits, but in aggregate they are less severe than they were under the Government in which the noble Lord served. On inactivity levels, the absolute numbers have increased since 1997 but the percentage rate of inactivity has fallen since 1997. If you extract from those numbers the number of students—we should be pleased that there are more students in our country—who feature in the inactivity levels, you see that the absolute numbers and the percentage rate have declined under this Government.

My Lords, the Liberals have not had a turn on this Question and the other three sides of the House have. I suggest that there is time for both speakers if we get on with it.

My Lords, the fall in long-term unemployment over the past 10 years is genuinely welcome, but there has been failure in dealing with the problem of young people, to which the Minister alluded. That situation has barely changed at all over the 10 years, while unemployment generally has halved. Why does the Minister think that that is so? What will he do to stop the New Deal being a revolving door for young people?

My Lords, there are issues for 16 and 17 year-olds, because most people do not come on to jobseeker’s allowance until the age of 18. Certainly, DCSF is revitalising its programme to look at the so-called NEETs. On the interface with New Deal, we will fast-track people under the new flexible arrangements so that those who have been unemployed for a period at the ages of 16 or 17 will no longer have to wait six months while they go through the first gateway into New Deal but can go on to that programme immediately. That will begin to make a significant difference. We should also recognise that, within the 16 to 24 year-old cohort, there are 693,000 more young people in full-time education. We should celebrate that.

My Lords, can the Minister advise the House what proportion of the long-term unemployed are of an age at which employers are reluctant to employ them?

My Lords, I have no specific statistics on that, but we and Jobcentre Plus have a good deal of engagement with employers to ensure that those most historically disadvantaged in the job market are able to access it. That has been done through, for example, the local employment partnerships, the city strategies and other local initiatives. A good deal of work is being done, but I have no overall statistics. If they exist, I will happily write to my noble friend.

My Lords, what is the Minister’s reaction to Oxford Economic Forecasting’s paper of October 2005, “Transforming Employment Related Services”? It says:

“Operating experience and international evidence on this particular problem”—

getting the long-term unemployed back into work—

“shows that the mixed procurement and provider role played by Jobcentre Plus inhibits best practice”.

While I am on my feet, let me just add that the figures that the Minister gave were of course for unemployment benefit. The figures for long-term incapacity benefit have actually risen under this Government by 270,000.

My Lords, on that last point, the number of incapacity benefit claimants has not risen by 270,000 under this Government. Since 1997, there has been an increase of, I think, 27,000. The number of people on incapacity benefit rose inexorably for two decades but has now started to fall; indeed, it has now fallen for 17 successive quarters and is at an eight-year low. On procurement, the department constantly focuses on the most effective way of procuring services to help people back into employment. The mixed model is the right one: Jobcentre Plus doing its job, the third sector doing its job and the private sector being engaged as well. Part of the new commissioning strategy on which we are consulting will make significant improvements in the job outcomes for long-term unemployed people.