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Benefit Reform

With permission, I shall make a statement on the Employment White Paper and the consultation document on housing benefit that we are publishing today. Families across Britain have been affected by the worst global recession in living memory. We made clear last year our commitment to help people through the recession—through wider support for the economy, but through strong active labour market policies too. We set out £5 billion additional investment this year and next to help people back to work. We expanded the help in Jobcentre Plus, and set out funding for 300,000 youth job and training places and more apprenticeships. We also pressed on with welfare reforms to avoid the big increases in inactivity that we saw in past recessions. The claimant count for November stands at 1.64 million, and we expect it to rise further in the new year. The International Labour Organisation's measure of unemployment stands at 2.46 million. However, the action that we have taken has made a difference. It has kept unemployment lower than people expected, and lower than in previous recessions too. The claimant count is about 400,000 lower than predicted at the time of the Budget. Employment has not fallen as far as in previous downturns, despite the fact that the overall shock to the economy from the global recession has been greater, and the claimant count currently stands at about 5 per cent., compared with peaks of about 10 per cent. in the 1980s and 1990s. We need to do more, however. Previous recessions left deep scars, as those hit by long-term unemployment found it hard to get work even once the economy started growing again. In the 1990s, youth unemployment in particular kept rising for more than a year after the recession finished, and in the 1980s it rose for more than four years after the recession ended. At times, 350,000 young people were on the dole for more than a year. To prevent the recession from leaving permanent scars that could damage young people for many years, we believe that more, not less, help is needed as we move into recovery. We are setting out extra help for young people who have been most heavily affected by the recession. We already provide extra support for young people from day one of their claim, but we will now deliver a youth guarantee of work or training for every young person who has been on the dole for six months. To deliver that support, we will fund an extra 100,000 youth job and training opportunities, on top of the 300,000 extra youth opportunities we are already funding this year and next. Young people will be required to take up the help on offer as a condition of receiving benefit. That help will include expanding the future jobs fund, which is already supporting thousands of people in jobs that are good for them and their communities—sports coaches, housing officers and jobs in child care and energy efficiency. More jobs are planned, including hundreds of new jobs working with the police in the Met, jobs in the NHS, and jobs developing the national cycle network across the country. For 16 to 17-year-olds, we are making available further funding to subsidise 5,000 additional apprenticeship places, so that more young people can get invaluable work experience under their belt. We expect youth unemployment to keep increasing in the new year, but our aim is to work with employers across the country who also need to do their bit to get the youth claimant count falling. We aim to get it falling in the second half of next year. Older workers also need extra help, so we are announcing today plans to provide tailored support for the over-50s, including help to tackle age discrimination. We will also provide more help for those experiencing repeated short spells of unemployment and expand help from private sector recruitment agencies for professional workers. We also know that lots of people want to start their own business, so we will provide more help and advice to do so from day one of becoming unemployed, with a self-employment credit available from three months of unemployment. Ninety per cent. of those on jobseeker's allowance still leave it within 12 months, but for those who become long-term unemployed we are rolling out the innovative flexible new deal through which specialist providers deliver personal help, paid by their results. We will trial new ways to incentivise providers to help the hardest to reach, to ensure that contracts can be delivered in a way that is good value for the taxpayer as well. We are also determined to keep up the pace on welfare reform to pursue our long-term goal of full employment. This recession has not seen the big increase in inactivity that we saw in the '80s and '90s, when the number of people on long-term sickness benefits trebled. Today, the number of people on inactive benefits is about 375,000 lower than in 1997. Many people still need help with skills, finding child care or getting health support to ensure that they can work. Programmes such as the new deal for lone parents and pathways are already providing wide-ranging help to get people back to work. However, we want to go further, not just to help people into jobs but to support them into sustainable employment where they can progress up the skills ladder and balance work and family life. We will do more to fund travel and child care costs for jobseekers in part-time training and through jobcentres and outreach workers in schools to promote flexible and part-time opportunities for parents and carers. We are reforming and extending the work choice and access to work schemes, and introducing mental health co-ordinators to help thousands of people with mental health conditions back into employment. We are also setting out further measures to improve skills opportunities, including skills accounts and a single joint budget, to help the unemployed between my Department and the Department for Business, Innovation and Skills. With greater support come greater responsibilities, so from next year we are extending the new work capability assessment for those currently on incapacity benefit. We are also extending jobseeking requirements to lone parents with children aged over seven, but we want to go further, so we will also bring forward requirements for partners of benefit claimants to seek employment. We are bringing forward a comprehensive package to help people back to work, but we also need to ensure that people are better off in work. The introduction of the national minimum wage and tax credits means that most people see significant gains from moving into work, but we believe that it is right that work should be properly rewarded, so it is now time to introduce a guarantee that people are better off in work. In the longer term, we believe that that could be done through further significant benefit reform, such as a single working age benefit, but in the meantime we will introduce a new better off in work credit, which will guarantee that everyone who moves into work after being on benefit for six months or more will be at least £40 a week better off. We are also increasing the help for carers and parents who can work only for fewer than 16 hours because of their family responsibilities. The housing benefit consultation also includes proposals to let people keep their full housing benefit payments for three months after moving into work and for setting fixed awards for up to six months to remove some of the uncertainty that comes with going back to work. We are also consulting on removing some of the highest rents that are distorting the system in a way that is unfair. Lower than expected unemployment is already saving around £10 billion over the next five years on benefit spending alone, compared with Budget plans. It has also saved money within the £5 billion budget for helping people back to work, as fewer people than expected have reached six or 12 months' unemployment where the more intensive help is on offer. Those savings now allow us to spend £400 million over the next 18 months—£300 million of it on the young unemployed—to support today's announcements. That investment is helping families across Britain at a difficult time. It is also supporting young people at the very start of their working lives, keeping up welfare reform at a time when it is more important than ever, and helping the public finances. This Government believe that we need to help people at a tough time. We will not turn our backs on people who lose their jobs. We will keep supporting them, not just in the recession, but in the recovery. The White Paper and the housing benefit consultation set out a comprehensive package to help people back to work and ensure that they are better off in work. It sets out the next stage of benefit and welfare reform in pursuit of our goal to get 1 million more people in employment over the next five years. I commend this statement to the House.