John Penrose

Conservative Party | Weston-super-Mare

Government Employment Strategy

Mr. Terry Rooney (Bradford, North) (Lab): I welcome this opportunity to debate our report on the Government’s employment strategy and the Government response to it. I start by thanking all those who submitted written evidence to the Committee, the witnesses who gave oral evidence, our specialist advisers, and my hon. Friends and colleagues on the Committee. In particular, I should like to thank the staff and users of Rosemount lifelong learning centre in Glasgow, which is in the Speaker’s constituency. We had a tremendous experience when we visited the centre. In addition, the Committee visited New Zealand in the course of its inquiry.

The scope of our inquiry was to look at the Government’s target of an 80 per cent. employment rate. We focused in particular on ethnic minorities, the over-50s and lone parents. Needless to say, I will not cover the entire report or the responses, not least because I want my hon. Friends and colleagues to get in.

Sadly, I start by saying that all members of the Committee were disappointed by the Government response. That is in stark contrast to the Government response to our report on the Child Support Agency, which they published yesterday and which is a splendid document. An awful lot of the issues that we flagged up were downplayed in the Government’s response, so it was particularly discouraging when they were subsequently flagged up in the Freud report and positively welcomed by Ministers. In fact, I think that David Freud is guilty of plagiarism, because there were no original ideas in his report that were not in ours, but there we are.

The city strategies initiative was launched by the Government last autumn. We know that if we can solve the problem of the employment rate in the UK’s major cities, we would easily meet the 80 per cent. target. Great store was set by the new localism and getting all the agencies together to act in concert on the massive pockets of deprivation. However, the submissions that have come in from cities have, frankly, been disappointing. The initiatives are not innovative and are not really focused on addressing the challenges. Although the city strategies seem a good way forward, further work needs to be done to educate those local partners on how they can make a difference in their communities.

A particular concern was the employment rate among ethnic minorities. We need to be careful about that, because the employment rate among people of Indian or Chinese descent and in many other ethnic minorities is way up there, level with that of the indigenous population. However, the rate in the Pakistani and Bangladeshi populations is quite low, and extremely low among women in those communities. There was therefore concern about ending the ethnic minority outreach grant, which was merged with the deprived areas fund. There is no real evidence either way as to whether the transfer has been successful. However, we were concerned that a specific pot of money to address those low employment rates had been submerged into a general fund. To return to the city strategies, the large ethnic minority populations are in our big cities. If the city strategies are weak, our response to the needs of ethnic minority communities will also be weak. That is a real concern for us.

We made great play in our report of the fact that one of the biggest contributors to a lower employment rate is the lack of skills and low skills. We welcomed the report by Lord Leitch, which was published during the course of our inquiry and which sent some challenging messages to the Government. The Government’s response was again a bit weak and slightly evasive, although perhaps because the Department for Work and Pensions is not totally in control of the situation. In particular, reference was made to the “Train to Gain” programme for those in employment. “Train to Gain” is fine, but it is for the under-25s. It does nothing for those who are over 50, which is a particular problem, nothing for most women or most lone parents, and very little for ethnic minorities. The message is mixed.

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): When we discussed the Leitch report, we did so from the point of view of those out of work. Does my hon. Friend share my concern that we did not receive satisfactory answers to our questions about how people who were out of work would engage with the skills agenda in Leitch and how that would impact on their benefit entitlement?

Mr. Rooney: There are two issues there. Leitch focused on upskilling people who are in work. To that extent, there is not much in that agenda for those who are out of work. However, there are also impediments in the benefits system to those who want to do out-of-work training.

As it happens, just last week we visited a Prince’s Trust project that runs a programme called TEAM, which is recognised nationally by the DWP as a work-related training programme. Notwithstanding that, nine different benefits centres in London were making the lives of participants on that programme a misery, and in some places they told participants that they had to leave the programme and go on the new deal. Part of TEAM’s 13-week programme is a one-week residential. However, if participants did not sign on during that week, their benefits were stopped, even though Jobcentre Plus knows that that one-week residential is part of the course.

That lack of interpretation of the rules among different offices is worrying. I do not suggest for a moment that we should finance people in education through the benefits system, and I do not think that the Committee does, either. However, where people undertake training or learning that will lead to a qualification for a job, that needs to be reflected in their benefit status. A lot of the rules are very unclear about how that is supposed to happen.

The engagement of employers is also a serious issue. The National Employment Panel does a fantastic job, and I think that Cay Stratton is brilliant. However, I suspect that as an organisation its position now is, “Well, you would say that, wouldn’t you?” I wonder whether we need to breathe new life into the process, because there is now a lot of evidence that employers are getting a bit bored by the issue. At the end of the day, however, the employers are, after all, the ones with the jobs—not the Department, Jobcentre Plus or the Select Committee. We need to re-energise the engagement with employers, in respect of both what level of skills they want people joining their companies to have and what ongoing support is needed once they get into work.

John Penrose (Weston-super-Mare) (Con): The hon. Gentleman is putting the Committee’s case eloquently. Does he agree that one of our other concerns about Leitch was that some of the traditional groups helped by the skills agenda—particularly those in middle or older age returning to work either because they have been caring or fulfilling family responsibilities or because they have been made redundant for a period—are not necessarily well catered for?

They tend to have skills that are already above level 2—Leitch made the point that level 3 skills are equally important. Because such people are not in employment and do not have an employer to fall back on, the Government seem to saying, in paragraph 39 of their reply, that they will not help either, and that the cost will fall on the individuals themselves. That means that middle-aged people who are currently jobless and in need of a little reskilling are, effectively, being left in the lurch.

Mr. Rooney: I do not know whether I would go as far as to say that such people have been left in the lurch, but as a group they are not catered for. There is a lot of talk in Leitch and the Government’s response about co-payment, as is so often the case across Government at the moment. Co-payment is fine in employment, but for a person not in employment, it becomes a non-starter. Another deficiency is that Leitch does not recognise that the starting point for people who have been out of the labour market for 10 or 15 years, as lots of lone parents have, should be the soft skills—building their confidence so that they can move back into work. Then we can move on to the academic or vocational qualifications. There is no real recognition of that in Leitch. It has always been difficult to quantify in contracting, but moving somebody a lot nearer to the labour market is every bit as valuable as getting somebody a couple of O-levels or A-levels, because it improves that person’s employability and willingness and ability to work.

In our report on the pathways to work pilots, we made the recommendation, which we repeat in the report, that the Department should retain some of the savings gained from the reductions in benefit payments that result from people moving into work. This time, the Government response makes only a passing reference to that, yet the response to the same suggestion in Freud was extremely positive. The Freud report said that that is the way ahead and where contracting should go, and that the savings made from reductions in benefit payments should be recycled into getting more people into work and added rewards for contractors and providers.

The Committee made a related recommendation. Currently, if somebody is in work for 13 weeks, their job meets the Government definition of sustainable employment. We said that the measure should be at least 26 weeks, and Freud says that it should be up to three years. In their response, the Government retreat into saying that it should be 13 weeks, because the evidence is that by the time somebody has been in work for 13 weeks, most of the barriers have been removed. I am sorry, but that is just not true. If single parents who start work could stay in it for 26 weeks, we would meet the 70 per cent. employment target for lone parents tomorrow.

Natascha Engel (North-East Derbyshire) (Lab): It was even more interesting to see the Government response to that point. They said that the issue was not even about defining what sustainability in work was. All they said was that all the evidence was that the longer somebody stayed in work, the less chance there would be of their dropping out of the labour market again, and that that was the aim of the Government strategy. The Government never even sought to define “sustainability”, so it was not even clear whether they thought 13 weeks’ employment meant sustainable employment.

Mr. Rooney: My hon. Friend is absolutely right, as is evidenced by the contradiction between the Government response to this report and what happens in employment zones, where there are enhanced payments as long as the person stays in work. If that is right for employment zones, it should be right across the system. Bearing in mind that under the labour laws in this country, a person can be dismissed at any time in the first 12 months of employment without any reason having to be given, defining sustainability with reference to 13 weeks has to be a simple non-starter.

I move on to flexibility. At the moment, the training programmes depend on the benefit that the people are on. In this report and others, the Select Committee has argued that although the new deal has to a great extent been an outstanding success, it is now a 10-year-old product and it is time that it was refreshed and renewed. The Department has run two pilots: building on new deal—BoND—and “Ambition”. Both show that moving to a training programme based on the individual’s needs rather than the benefit that they are on is the way ahead. BoND has been abandoned because it was assessed as too expensive, but “Ambition” is being further piloted and moved forward. There is also the new deal plus for lone parents, which is a much more enhanced product. Our recommendations that we should move towards such initiatives have been downplayed in the Government response, yet Freud says that once somebody has been unemployed for 12 months, they need an individual tailored programme. The Department, the Government and Ministers welcomed Freud as the way forward, yet do not welcome the same things when we say them in our report. As I expect hon. Members have gathered, I am getting a bit paranoid about that.