Government Employment Strategy

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. The simple fact is that the labour market is different from how it was 10 years ago. The type of person in the inactive benefit system is different from the type of 10 years ago, and we need a new approach. I understand that the Government are imminently to make an announcement about flexibility in the new deal. I am looking at the Minister, but his expression is a little blank. If such an announcement is about to be made, why are the Government not a bit more positive in their response to the Select Committee’s excellent report? I move on to the issue of lone parents, about whom we made a number of recommendations and who are probably the biggest success story of the Government’s welfare to work programme. The employment rate among lone parents has gone from about 43 per cent. to 56 per cent. However, in London it has hardly shifted; it has increased by only about 0.5 per cent. The rest of the country is doing pretty well in getting lone parents into work, but that is not happening in London. That is due to two things: the cost of child care and the cost of housing. I have been checking with people in the child care system in London and it seems that the average cost of full-time child care is between £250 and £300 a week. Even at £250, and even with the full child care tax credit, a person is still left paying £100 a week if they have one child or £260 a week if they have two. That comes from their net income; a lone parent needs a hell of a job to be able to pay those premiums and have enough money left. There is a real issue about the level of child care tax credit in London. Incidentally, the level of take-up is another important issue, on which we made one of the recommendations that got no response whatever. As I said, the second main issue is housing costs in London. We found that for many different types of claimant, the point of change issue decides whether somebody moves into work. What is the situation at the point of change? The average local authority rent in London is £120 a week; it is about £250 a week in the private sector. A lone parent may have a very modest income on benefits, but at least it is secure; they know that it will turn up every week. If they rent, their council tax will be paid and the roof over their head will be protected. However, we ask such lone parents to move into an uncertain world in which, although their weekly income as such—with the minimum wage and the working tax credit—will increase significantly, their housing benefit claim will end and they will have to make a fresh claim as someone who is not on income support but working. In London in particular, housing benefit administration is appalling; the length of time that it takes to process a new claim can be anything up to six months. A single parent moving into work would have to pay their own rent for up to six months while their housing benefit organisation sorted things out, on top of having to pay the child care costs—it is no wonder that they say, ““No thank you. I shall stay on my modest income; at least I know that it is there every week.”” There is a real issue there. The Committee raised another issue. At the moment, a person can get housing benefit and council tax benefit paid for the first four weeks following a move into work. We raised the question whether personal advisers could have further flexibility in rolling out other benefits. The answer was a flat no, and the Government have no intention of considering that. In this day and age the vast majority of jobs are paid monthly, so, for example, a single parent of two children is asked to give up her benefit and spend four weeks with no income. The children of someone on income support get free school meals, but if the parent receives anything else they will not and the parent will have to find £15 to £20 a week to pay for those two children. Previously, such children might have been protected from school travel costs or child care costs. We need a more radical answer to the expense picture, in London in particular, so that people can cross the Rubicon created by the security that benefits offer, even though the income is low, into the world of work. Once they are established in work, it might well all work out, but while they are waiting for all the other organisations, some of which are administratively useless, to do their bit, who would take that chance? Who would put their children at risk? Who would risk being evicted? It is not good enough. We saw in New Zealand that the personal advisers have absolute flexibility. I found it a bit dangerous, in fact, because it seemed that they could spend any amount of money as long as someone accepted a job. We cannot go that far, but we need more flexibility for personal advisers, so they can help people to bridge the gap and get over the massive barrier to work. If I were a lone parent, I would think five, six or seven times before I crossed that barrier. More help needs to be given. Freud’s analysis is that if we do not make such interventions, we will continue to pay benefit for many years hence. For a lone parent, that will typically be about eight years. If they have two children, we are looking at £5,000 to £6,000 a year in benefit, which means £40,000 to £50,000 will have to be paid out unless those interventions are made. If it costs £5,000 to get someone into work, surely that is worth while.