Government Employment Strategy

I am grateful for that intervention. Perhaps the Minister will, instead, acknowledge the inadequacy of the Government’s initial response to the report. That would be a good way in which to address some of the points that the hon. Lady rightly made, which I shall now address. We must consider the report in the context of overall performance on employment. I am sure that the Minister will dwell upon the rises in the number of people in employment under the Labour Government, but despite that increase, the UK employment rate is no higher than it was at the peak of the last economic cycle. Indeed, according to figures that were released yesterday, it is slightly lower. That throws into stark relief the scale of the challenge. The composition of the employed population has changed slightly. There has been a fall in the male employment rate, which has been balanced by a significant rise in the female employment rate. That goes to some of the social exclusion issues that have been raised. A significant part of the population is workless and there are workless households. Some of those issues were addressed by the Committee in the context of multiple disadvantages. Raising those people’s employment aspirations and employment rates will be an important part of meeting the target. While the employment rate of groups such as the disabled and lone parents has risen steadily in the past 10 years, albeit from a low base, the employment rate of people with the lowest qualifications has fallen from 58 to 49.4 per cent. since 1992. Those figures highlight the points that have been made about the synergy between the Freud report and the Leitch review and the importance of the skills agenda in pushing the employment strategy through. According to yesterday’s figures, the employment rate in the UK is 74.4 per cent., so we are still some way from meeting the 80 per cent. target. Other points have been raised that are worth reflecting on. Both the Chairman and the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) talked about the importance of engaging with employers. That point has been made throughout our debates on welfare reform. I have said several times that the Government’s policy on employment seems to be largely supply-oriented, the view being that if they put in place policies to get people ready for work, employers out there will simply absorb those people into long-term, sustainable employment. For people in some of the groups that we are discussing, particularly the multiple-disadvantaged for whom disability is part of that, there is still a significant amount of work to do to change attitudes. We need to work with employers and to have a long-term relationship with them to ensure that they are willing, ready and able to employ people after work has been done to prepare those people to enter the labour market. The Government have not really applied themselves to doing that. The Secretary of State’s recent announcement about the partnership programme with large employers such as Tesco is a welcome step in the right direction, but it is practically the first thing that the Government have said about engaging with employers that has any substance. I welcome that step, but we need to see much more progress in that area. The report rightly dwells on labour market disadvantage and identifies several different elements of disadvantage in the labour market. That concept is much more useful than the approach that the Government sometimes take, particularly in relation to disability. During our debates on the Bill that became the Welfare Reform Act 2007, I suggested that we should identify labour market disadvantages rather than identify barriers using medical terminology. That is a better way of thinking about the position that many people in society are in—suffering from multiple labour market disadvantages—and recognises the social context rather than placing the barriers firmly with the individual, which has too often been the Government’s approach. The Committee’s report was published before Freud’s, but the news of his publication was already in the public domain. In a sense, the Committee’s comments on the Freud report are limited, but there are clear synergies between what David Freud said in his report and the points that the Committee has made. The Government have talked about piloting. The hon. Member for Blackpool, North and Fleetwood made the sensible point that we have a lot of pilots, but not many aeroplanes. Pilots come and go, but the idea of programmes taking off across the country sometimes falls by the wayside, in some cases despite considerable success having being identified in pilots. Her point is an important one: when pilots are successful, the learning, knowledge and ideas from them need to be applied. The need to have full consultation has been mentioned. We do not know anything about the events in May. The Minister indicated that this might be one of them, but our only clue about that is that it is May. Full consultation and discussion about the ideas in David Freud’s report need to take place, and we look forward to the Government’s response. The hon. Member for North-East Derbyshire asked why the Department for Work and Pensions and the Treasury do not get together, in an astonishing feat of joined-up government, to publish a single, combined response to the Freud report and the Leitch review. That is a good suggestion, but I suspect that her faith in joined-up government may be considerably greater than mine. If the two Departments could find a way to get together on that, it would signal that the skills agenda and the Freud review’s agenda of bringing labour market services to those who need them in a more targeted and personalised way over the long-term had been taken forward. There are concerns in relation to the Freud review, although they are not about the review itself. I welcome its content and believe that, in some areas, which I shall come on to, the Government could go further in the direction that he signalled, rather than hold back. The Minister is not one to hold back, and I hope that he will not do so in this area. We should examine the role of the voluntary and private sectors in delivering welfare to work services. The long-term funding model suggested in the Freud review takes account of the fact that the money that will be paid in benefits to people should they remain on benefits for a long period is, in a sense, a payment for failure. If that money can be used to help to stimulate greater, targeted activity in the private and voluntary sectors to help people back into work, that must be a good thing; it would be a good funding model. It would better reflect the idea that we should spend to save in this area and seek long-term investment that delivers long-term benefits. The Treasury has perhaps not historically been comfortable with such a funding model, but I hope that the Minister will push it forward. I wonder whether the Minister, when examining the Freud review, will be inclined to rethink some of the proposals that have been put forward in the cities strategy. A discussion of the strategy was an important part of the Committee’s report. In some areas, the Freud review contradicts, or is, at least, in a slightly different current of opinion to, the ideas contained in that strategy. The Freud review seems very much to be about bigger contracts and contracting out—concerns have been expressed about the way in which contracting is being centralised—whereas the cities strategy is about devolving to city level. I have another concern. Although the emphasis in the Freud review is rightly about engaging with and utilising the innovation, skills, experience and benefits of the voluntary and private sectors, in the implementation of the cities strategy, engagement with—this is certainly the view that I have heard from providers—private and voluntary sector contractors seems very much to be an afterthought by the cities strategy consortiums that have so far been set up. The boards and the consortiums in the city strategies are perhaps naturally public sector led, but, in many cases, they exclusively involve the public sector, bringing together Departments, local authorities, quangos and other public bodies. They do not bring on board the expertise, ideas and innovation that the voluntary and private sectors can bring to the table, and which the Minister has, in other contexts, rightly celebrated. I hoped that those sectors would be brought in at the beginning of the city strategies, rather than as an afterthought. I hope that the Minister will explain some of his thinking, because the feedback that I have received has suggested that that is not happening in some of the city strategies. Some of the more sceptical responses that I have heard have said that the city strategies are more about bringing services back in-house, perhaps within local authorities, than about utilising the sorts of services and ideas that the Freud report rightly highlights. The Chairman of the Committee rightly said that there is no point replacing Jobcentre Plus with, as he put it in an aside, large private sector monopolies. On the centralised contracting process and the lead contractor model, the Committee’s report identifies the risk that the lead contractor model could lose the very local innovation that has taken place. I should particularly highlight the work of the Shirlie project in Inverness, which the Minister is yet to visit, despite a commitment to do so. I am sure that in many of the constituencies of the hon. Members present, and in mine, that degree of local innovation could well be lost in the lead or prime contractor model. I hope that the Minister is conscious of that when developing the contracting process. The Committee rightly concentrated on the fact that many people who wish to get back into work face multiple barriers to work. The sort of help that is available under the current system depends on the benefit that one is on. The system means that many people do not get access to the help that most suits their needs. Many of the support services available under pathways to work are not available to people on jobseeker’s allowance, despite the fact that we may be talking about someone whose most significant barrier to employment is a low-level mental health problem. Getting help through the national health service is an integral part of the pathways model. Accessing such services as a matter of course is much harder for people on jobseeker’s allowance. That sort of thinking in silos needs to be broken down, and service needs to be much more personalised. The Committee has rightly highlighted the experience gained from its visit to New Zealand. I recently had the pleasure of a brief visit to New Zealand and Australia. In Australia, the jobseeker classification instrument, which sounds like a weapon of torture but is a means of assessing the range of different disadvantages that someone faces, provides, at the start of the process, a much clearer method of analysing the variety of different barriers that an individual might face in getting back into work. No matter which benefit someone is on and no matter what their main barrier to labour market participation, the process of having the jobseeker classification instrument applied to them—that sounds terrible and I am sure that I could have phrased that better—means that they get directed to precisely the sorts of services that are needed to address the specific barriers that are most important to them. In Australia, people are also then directed to the private and voluntary sectors through the job network that exists in Australia, not just for people who have been on benefit for more than a year, but for nearly all claimants after three months. That experience needs to be evaluated more closely to see whether the Freud review goes far enough in terms of the extent to which the experience and innovation of the private and voluntary sectors are used. The Committee’s report also made the point that in New Zealand, the assistance and support that are available to get back into work are based much more on the needs of the individual, rather than on the individual benefit that they are receiving. The concerns about that are reflected in the fact that the building on the new deal programme seems to have disappeared off the face of the earth. Perhaps the Minister will explain what has happened to it, because I am sure that he knows what has happened to it. The Committee made the point powerfully in its report that there should be much more focus on retention and ongoing support in employment—not just getting someone into a job, but ensuring that that job is sustained and that they move perhaps to a better job and then to a career. The ABC of labour market participation is a job, a better job, and then a career. Taking someone through that process should be a big part of the Government’s employment strategy. Work first may be right, but there must be an emphasis on sustained labour market participation and not on the sort of recycling that we have seen too often in the new deal programmes. The hon. Member for North-East Derbyshire is no longer in her place, but she made the point that some 70 per cent. of Jobcentre Plus customers are recycled again and again. Dealing with that problem through sustained engagement with the individual and the employer can be a way of building those long-term relationships. I saw that when I visited the working neighbourhoods pilot—yet another pilot, to take the point that was made by the hon. Member for Blackpool, North and Fleetwood—which has been very successful and has engaged with people in a particular ward in Glasgow, not just to get them into work, but to continue that engagement, sometimes over a sustained period to enable them to move forward. At the end of its report, the Committee addressed benefits simplification and in a few short paragraphs pointed out a particularly important area for ongoing consideration. I am delighted that the Committee says that it is planning to carry out another inquiry into benefits simplification, and I greatly look forward to its results. The Committee concluded that the effects of complex benefits can be significant in terms of barriers to the labour market. It pointed out one or two areas where barriers exist—for example, income disregards. The point has been made in the debate about better-off-in-work calculations, particularly relating to lone parents. I would add to that the relationship between benefits and tax credits, and the fact that they are dealt with by different Departments. Different bureaucracies mean that the interaction between benefits and tax credits, which are now a big part of understanding whether someone is better off in work, is not well understood. Jobcentre Plus is not always easy to access for someone trying to gain an understanding of their position. There is a wider issue where we could go further. The Committee went to New Zealand, so Committee Members will know that detailed consideration has been given there to moving towards a single benefit for people of working age. That important idea merits further discussion. Clearly, there are issues of detail that need to be worked through, but the idea is to remove many of the complexities and distinctions between benefit levels, depending on why someone is out of work, and instead, for example, in relation to disability, provide support much more through disability living allowance, which is payable whether or not someone is in work, as opposed to having different levels of benefit dependent only on whether someone is out of work. That would be a more coherent and straightforward way to approach the matter, and would remove much of the complexity that too often disadvantages those who are seeking to get back into work. The Minister has suggested in previous debates that that may be worth exploring, and perhaps he will give us a wee hint as to how the Government intend to move forward. Moving towards a radical simplification of benefits, while not without pitfalls, could make a big difference to employment and to delivering the Government’s employment strategy.