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Unemployment in the UK

It is only understandable that Labour Members will not like being told the truth about the Government's record on employment, but if we are to address the problem of rising unemployment, we should at least start by recognising the scale of the challenge. The reality should not be buried in the small print. A perfect example is the Government's claim that long-term unemployment has been ““virtually eradicated””. In fact, they have made it statistically impossible to be long-term unemployed. Young people who claim jobseeker's allowance for six months and over-25s who claim for more than 18 months are automatically referred to the new deal, and if they fail to find a job initially on the new deal, they are referred to a period of mandatory training. At that point, claimants are moved off JSA and on to a training allowance, and are removed from the Government's official claimant count. At any one time, about 40,000 people are hidden from the Government's official claimant count in that way. About one in three people leaving the new deal return straight to benefits, at which point they rejoin the claimant count, their previous claim is wiped clean and they appear to have only just become unemployed. Under the Government's current system, it is possible for people to be have been unemployed for more than two years, but for them to appear to have been on benefits for only two days. Some of the other hidden statistics are equally worrying. According to official figures, 700,000 people who would like to work full-time are working part-time because they cannot find full-time work. Employment among British-born, British nationals is falling fast; 250,000 fewer UK nationals are in employment than two years ago. Until now, this Government have got away with their failure to address the underlying weakness in our labour market, but it is about time that they stopped denying that there is an unemployment problem in this country and started listening to those who are already struggling. We know that the consequences of those employment failures are not just limited to adults; child poverty is up for the second year in a row. The UK has a higher proportion of its children living in workless households than any other EU country. Almost 1.3 million young people aged 16 to 24 are not in work or full-time education—that is a 19 per cent. increase on the 1997 figure. How should we begin to tackle the problem? First, we must do everything possible to help those who are unfortunate enough to lose their jobs. An important first step would be to accelerate the process of welfare reform—to turn some of the things on which the Secretary of State and I have agreed into reality now, rather than in two years' time or more. People think that talking about welfare reform at a time of rising unemployment is a contradiction in terms; how can one introduce big new changes to the welfare-to-work process when the number of jobs is falling? That is not the right view to take, because we know about the experience from the other side of the Atlantic. When I went to New York in January to look at welfare schemes, I asked people about coping during the recession of the early 2000s. I was told that the introduction of innovative employment programmes, which helped to match people and their skills with the opportunities that were available, helped to make a difference to the rise in the claimant count. The rise in the number of unemployed was less pronounced than it had been in previous recessions. We understand that times have changed and that Britain is facing a tougher economic climate. If anything, that makes the case stronger for a fairer, more active welfare system. With the publication of our green paper on welfare reform in January, and the Secretary of State's subsequent decision to adopt both David Freud's proposals and ours, there should be cross-party consensus on what needs to be done—so why the wait? The Government will have our backing if they accelerate the reform process, and now is not the time to be timid. People who lose their jobs will need individualised support to reflect their needs. They will need tailored employment programmes that offer, among other things: job search facilities; specialised training to increase suitability for work; personalised career and recruitment advice; interview training with employers; and CV-writing techniques. The reforms that we have all discussed would lead to the creation of a world-leading back-to-work system, through centres all around the country delivering the necessary support. We have some of those skills in Britain already, but as the Government's amendment so clearly reveals, the programmes that are in place barely scratch the surface of the challenge we face. That is why we need to accept the accounting changes that allow the use of benefit savings to help pay for the programmes that get people back into work—the so-called DEL-AME, or departmental expenditure limits-annually managed expenditure, switch. It is no good piloting that change sometime after 2010, because it is needed now. Without it, we cannot build the scale of programmes needed to meet the nature of the challenge we face. The biggest problem with the Government's Green Paper in the summer was that everything seemed to be timetabled for years down the track. I offer the Secretary of State our support in changing that and getting on with things now. We need to do more to protect the jobs that we have. In the last recession, I worked for a small company in Winchester. Out of the blue, our biggest customer went bankrupt and we did not even have enough money to pay the salary bill at the end of the month. It would have been easy for the bank to pull the plug, but we were lucky and it did not. With a real team effort, the business pulled through, but many others in that position are not so lucky. Loans can be called in and businesses can collapse almost overnight. We need to take steps to protect good businesses that suffer a sudden problem of that kind.