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Work and Skills

I agree. I was going to make the point that level 2 does not really hack it, and that we need to provide apprenticeships at level 3. We must move people at level 2 to level 3 if we are to achieve gains in employability and the amount they can earn, which is increased by having better qualifications. At the outset of my contribution, may I make a point about topical debates? I was a member of the Modernisation Committee, and I am a strong supporter of topical debates. However, they depend on the Leader of the House choosing a topic that the House wants to discuss and considers topical. The Minister should report back to the Leader of the House on today's feeble attendance. Work and skills was a subject that Labour Members used to debate the whole time, particularly when the economy was doing better and the labour market was stronger. Today, to have literally one Government Member giving a speech, when the Leader of the House herself chose the subject, is not good enough, and it will lead to topical debates dying out if things carry on like this. The Minister may like that idea, but I do not. I have followed the labour market a good deal over the years: I served on the Employment Committee, I was Conservative spokesman on the subject, and so on. Earlier this year, I was concerned that the quarterly survey published by the recruitment industry showed that the industry was robust in finding short-term positions for people, but that permanent positions were proving hard to fill. That is often a precursor of a recession: companies across the country are not prepared to make the commitment to the long-term employment for staff. Recent figures show that the claimant count has increased by 31,800, and the labour force survey showed an increase in unemployment of 164,000. The projections from the think-tanks are alarming. Yesterday, the chief economist of the Social Market Foundation gave evidence to the Select Committee on Work and Pensions and said that his estimate was that long-term unemployment, which is just under 150,000, would quadruple over the next couple of years to 600,000. Recently, the Ernst &Young ITEM club produced a survey on the overall scale of unemployment, both short and long-term, and suggested that the claimant count would double. Against that background, the Government must review their policies on employability practices. I wrote a pamphlet about trying to audit the new deal in 2004 entitled ““Auditing the New Deal: What Figures for the Future?””, in which I made the point—and I think that many people agreed—that providers of the new deal made quite a bit of money on the back of the general improvement in the labour market. The labour market expanded and, yes, people found jobs, but no one who looked at the issue seriously was of the view that many of those jobs were the result of someone having a new deal interview. When the Government hit their target of 250,000 young people going into employment, the National Audit Office produced a report saying that only about 8,000 of that total would not have found work anyway. Of course, 8,000 is something, but it is nothing like what was being claimed. The Minister should accept as part of his new responsibilities that the new deal was a policy that appeared to work well when the wind was behind it, the labour market was expanding and all was set fair. Now that we are in a situation in which it appears that the opposite is going to happen and that there will be a contraction in the labour market, the Government must look again at their capacity to deal with unemployment and how they will deal with the longer-term unemployed. It is often said that there are many vacancies in the economy. It is true that there are about 575,000 vacancies in our economy, but in 2004 there were almost 1 million. The last time we had a major recession was in 1990-91 and, in that recession, the number of vacancies halved and unemployment rose sharply. If, as seems to be the case, we are to have a major recession, all sorts of assumptions that the Government have been making about a flexible new deal must be changed. In my pamphlet, I suggested that we needed to focus the effort on the people who had genuine barriers to employment and tailor the packages to their needs. There should be an early triage to find out what the problems are—the person may be an alcoholic, may be unable to read and write, or may have one of the other classic barriers to employment—and to offer them without delay a tailored package probably provided by the private sector or the not-for-profit sector. I pointed to the evidence in America, which was very promising. Since then, as has been said, there have been reports about the Wisconsin experience, which has been remarkable. By means of tailored packages, the claimant count there has been reduced by 80 per cent. in three years. That is a tremendous achievement. Such focused approaches are the right way forward. Although it does not go as far as I would like—it does not have the triage and there are faults with it—the flexible new deal is a step in the right direction. However, all the prime contractors who are waiting for the Government's decision next February have been assuming that the labour market would be roughly what it had been. The Government are producing performance targets that the prime contractors are supposed to aim at. Those targets do not assume that we will have a quadrupling of long-term unemployment. If we do, the prime contractors will have a number of problems. First, do they have the capacity to cope with 600,000 rather than about 150,000 unemployed? That is a massively higher number. Secondly, the flexible new deal is outcome-based, so the payments are back-loaded. That means that the prime contractors are taking on substantial risk while the individuals receive advice, their tailored packages, and so on. It is one thing to take a risk on 100,000 people; it is quite another to take a risk on 600,000. The capital needed to be able to do that would be substantial. As the Minister is starting afresh in his role, will he have a serious look at whether the model will work in the world of employment that we are entering, or whether it is necessary for the Government to think again about how they underpin the flexible new deal to ensure that the capacity exists? It is all very well speaking about prime contractors, but others are involved. There are the subcontractors—good-hearted charities, voluntary bodies and not-for-profit providers who desperately want to help people with social and medical problems. There are the individuals themselves. Some of the most vulnerable people in our society are in that category of the long-term unemployed. For the sake of the small subcontractors—the good people who want to do good works—and the individuals and for the sake of the overall financial model, will the Minister examine that model carefully to ensure that it is robust? The flexible new deal is a much better model than the old new deal, which was about box-ticking and taking credit for the rise in the jobs market. It would be a pity if one looked back at the improvement in what is being done and considered it a failure because the background had changed at a crucial time.