---

Work and Skills

Not at all. It is good that we are thinking along the same lines. With reference to the winner's curse, if it is simply a matter of quoting the lowest price, there is the risk that the contractor who gets the job may not be robust enough or have enough capital to provide the service in difficult times. If the figure of 600,000 long-term unemployed is realistic and those people cannot be placed in employment because long-term unemployment is rising and the general background is poor, the financial risk could be significant. My hon. Friend made the point more succinctly. Some of those with barriers to employment need a great deal of help. They are people with substance abuse problems, people with a history of back trouble, which can be expensive to cure, and people who have mental health problems and a range of other difficulties. It is necessary to make sure that the rewards for getting those people into work are high enough to ensure that that happens. The evidence from Australia is that the people nearest the labour market were finding work—being pushed across the line—rather than those who were the hardest to help, where the benefit to society would be greatest and the premium should be adequate. There is a case for having a tariff for getting into work the hardest to help, and that tariff should take account of the four or five main conditions that people with barriers to employment have. Finally, I shall say a word about skills, if I may do so without trespassing on the good will of the House. My first point is about literacy and numeracy, a topic on which I spoke recently during the Committee stage of the Education and Skills Bill. It is true that it is much more difficult to get a job if one cannot read, write and add up properly. It is at least 12 per cent. more difficult for people in that tier to get a job and their earnings are lower. Functional illiteracy is often associated with a household that is deprived, with poor health and with a household where the head of the household is an unskilled worker who is also often unable to read and write. The problem is thus generational, leading to a cycle of deprivation.