“Thank you very much for inviting me to speak here today. Last week Policy Exchange published new figures that revealed the UK is heading towards having six million people on out of work benefits. Journalists were astonished, the statistic made the front pages. But the shocking truth is that four out of five people included in that 6 million figure were already claiming benefits before the recession began. Dramatic as the recent rises in unemployment have been, Policy Exchange’s research shone a light on a problem that has been lurking in the shadows for the last twelve years.
Not everyone can work, and for those who can’t, the welfare state should not only be there to protect them from poverty, but support them to live an independent and fulfilling life.
But there are many people in that 6 million who can work, and who want to work. They have been let down by Labour for the past twelve years. Those are the people I would like to focus on today. The recession has brought a new focus on our welfare system and in many ways has exposed its inadequacies.
As we slowly make our way towards recovery and growth, we need to make sure not only that those who have lost their jobs in the last few years find their way back into work, but that we reform our entire welfare system so that those left behind by Labour for the last twelve years are not abandoned again.
The unemployment crisis
Usually every month I spend a morning in the television studios when the unemployment figures come out, and every month they tell an ever starker story of the impact of this recession on people’s lives.
In the past year over 2000 people a day have lost their job. We have seen the largest rises in unemployment on record, combined with a record drop in employment.
Every month in those TV studios I emphasise that the figures only tell half the story. Behind them are thousands of families whose lives have been turned upside down. Those individual stories aren’t told in the statistics that hit the headlines. Instead I hear them from constituents that come to my surgery every week. I hear them in the letters that fill up my mailbag and the emails arriving daily in my inbox.
Again and again I hear stories from people who have worked for all their lives but now find the benefits system impossible to navigate. Stories from those who want to do all they can to find a new job but find their way blocked by complicated and inflexible rules. Stories about the lack of time job centre staff have to support people inexperienced in the modern job market. Stories from people referred to inappropriate programmes, forced to spend all day in a ‘classroom’ with no proper facilities to help them search for work.
People are frustrated and outraged, and rightly so.
One email I have received portrayed Jobcentres struggling to manage with growing numbers of benefit claimants – describing them as “overrun and running short of stationary and short of staff to cope”. Another lady, desperate to find worked described her experience; she said in her email “The current system is completely failing and the vast majority of unemployed, who desperately want paid employment, are finding the jobcentre rules are actually hindering those claimants.” For too many the process has become a case getting you “to literally 'sign on ' and leave the building as quick as possible.”
Labour’s failure to reform welfare
But this is not a phenomenon that has grown up over night. The system that is now struggling to cope with the fallout from the recession is a direct consequence of Labour’s empty rhetoric on welfare reform.
For too long Labour got away with it. Making grand announcements, only to back away from those promises in the small print. Grabbing headlines but never delivering. It has taken the unemployment crisis that we now face to shine an all too revealing light on the failures of our welfare system.
It should be a national scandal that during years of economic growth, with millions of new jobs being created, nearly five million people remained on out of work benefits. That whilst millions of migrant workers found jobs, Labour ignored those people who were already trapped by welfare dependency. That if you are on Incapacity Benefits for two years or more you are more likely to die or retire than find a job. These are people that Labour could have helped. But they chose not to.
Public services and welfare reform
Of course, in 1997 Labour came to power promising great things. But ever since Frank Field was fired for actually daring to think the unthinkable welfare reform stayed firmly off the agenda. That is, until Tony Blair recruited David Freud to rewrite the rule book on welfare back in 2006. But once again Labour demanded radical ideas, only to back away when it came to taking any real action. Instead of welcoming David’s ideas on reform, Gordon Brown gave him an ear bashing.
Labour’s record on welfare reform has not had the same focus as, for example, its failure to deliver on its promises on health or education. There are plenty of pushy parents (and I mean that in a good way!) willing to shout about falling standards at their children’s school; local communities will launch highly effective campaigns to protest against NHS cuts in their area; worried relatives will not let their local hospital get away with poor standards of hygiene and cleanliness. But those who have been failed by Labour’s welfare system often remain voiceless.
These are people that have been hidden away by Labour for the past ten years. They have slowly built a wall between the working and the workless, hoping to keep their failures out of sight. Well let me spell them out. The reality is that under Labour there has been a steady growth in welfare ghettos - unemployment did not disappear during the ‘boom years’. It was merely disguised, renamed, and hidden away in ever growing pockets of poverty.
And there are stark figures to back this up: the latest census data shows 2 million people in this country have never had a job. Almost 3 million people have not worked under this Labour Government. As I said earlier, it is important to remember that not everyone can work, those with severe disabilities or those who do an invaluable job as full time carers or parents of young children. But at the same time we should not shy away from demanding more of those who can work, and often desperately want to.
Within these figures are over 100,000 people who classify themselves as unemployed and able to work but have never had a job. There are a further 140,000 people who are unemployed but have not worked since 1996.
But many of those covered in these statistics will not appear in the unemployment figures at all. No doubt the figures will cover some of the 800,000 people who have been on Incapacity Benefits for over ten years. They will include Lone Parents which the state has told not to bother trying to work until their youngest child was sixteen. They will include some of the record numbers of NEETs – young people not in employment education or training - who often don’t appear in the benefit figures at all.
If you take together the costs of paying Jobseeker’s Allowance, Incapacity Benefit, and Income Support, combined with Housing Benefits and Council Tax benefits paid to those who are out of work, the benefit bill for Labour’s twelve years of welfare dependency totals over £300 billion.
But the social consequences of this failure have been even greater. There are communities in Britain where more than half of working age adults are out of work and dependent on benefits. Figures released yesterday revealed that nearly one in six children is growing up in a workless household. Worklessness has become a generational problem - passed from father to son, mother to daughter. Report after report has laid out the problems children growing up in workless households face: they are more likely to fail at school, become involved in criminal behaviour, develop addictions to drink and drugs and ultimately end up workless themselves. A vicious cycle has emerged.
Poverty of aspiration
Labour ministers often look puzzled when reports show that Britain has one of the lowest levels of social mobility in the developed world. They just don’t get it. They see poverty, inequality, fairness, as all about income. For the past twelve years they have relied on tax credits to solve this. But tax credits do not solve poverty, they mask it.
Poverty is not just about income, it’s about aspiration. It’s not just about giving people a couple of extra pounds a week, welcome though that is. Poverty is about people lacking the tools they need to get on in life. And solving it is about tackling educational failure, antisocial behaviour, debt problems and addiction, and of course it’s about work. Tax credits do not help people get better jobs; in fact they can create poverty traps that actually disincentivise people from working more hours or finding a better paid job. For some families, for every extra pound earned, they get to keep only ten pence. Around 60,000 families are in this position, a rise of 30,000 since 2008, largely as a result of Gordon Brown’s scrapping of the ten pence tax.
High levels of worklessness have not only created pockets of serious poverty, but have crushed the aspirations of whole communities, changing the social norms from hard work and discipline, to antisocial behaviour and idleness. As the divide between not only rich and poor, but between the working and the workless grew, it became easier for Labour to forget those who had been left behind.
All this from a Government that claimed to have ended youth unemployment. All this from a Prime Minister who only last year was talking about record levels of employment, when at the same time we had more children growing up in workless households than anywhere else in Europe. Gordon Brown has boasted about creating 3 million new jobs, neglecting to say that up to 80 per cent of those are accounted for by migrant workers.
These figures are a shameful legacy for any Prime Minister of any government to leave behind. And Labour’s refusal to acknowledge the full scale of the problem shows that they simply have neither the ideas nor the moral strength to take it on.
It is too late to start shifting the numbers around, trying to imply progress by fiddling about with columns in a spreadsheet. The tragedy is that we’re talking about real people here, people who feel they have no future, who can’t imagine getting a job, who don’t know anyone else with a job. Recession or no recession, it makes no difference to their lives. They have been trapped on benefits for as long as they can remember and they can’t see any chance of getting out.
A lost generation
Today thousands of GCSE students are receiving their exam results. Many will continue in education, or training, but some will chose to enter the world of work. They will join thousands of sixth form students and graduates, also receiving exam results this summer, also attempting to enter the world of work for the first time, and for all these young people the challenge will be great. Just this week BT have announced that they are suspending their graduate recruitment programme. The CBI has said 38% of firms are freezing their graduate recruitment and a further 10% are cutting the number of graduates they take on. Every month in the unemployment figures the number of vacancies available in the economy drops to a new record low. Last week the Princes Trust warned that one in five teenagers receiving their GCSE results today could be receiving unemployment benefit by the time they are 21. The number of 18-25 years olds claiming Jobseekers Allowance is heading towards one million which would make young people in that age group the hardest hit cohort since the 1929 crash.
We must do everything we can to prevent this from happening. Youth unemployment scars people’s life chances. Research shows that a period of unemployment when you are young can affect your income for years to come. Even more shocking were recent reports that suggested, in one area, one in seven ‘neets’ died within 10 years of falling out of the system.
The prospect of a lost generation is looking all too real. But this is not just a consequence of the recession. In 2007, before the recession started, we had the highest level of youth unemployment in Europe. The dangerous combination of educational failure, community breakdown and generational worklessness has resulted in a crisis amongst our young people. Unless we make sure that we do all we can to help these young people, into work or training, we risk creating a new underclass
Our commitment to reform
The recession has broken down the wall between the working and the workless. It has revealed the problems in our welfare state to a whole new set of people who have never interacted with the benefits system before. And hopefully it will make the voice of those calling for welfare reform louder, and the audience more receptive.
The focus of our response to unemployment during this recession should not just be on those who have lost their job as a result of the downturn. We have an opportunity, when vacancies begin to return, when employment begins to rise, to help a whole generation abandoned by Labour.
The recession is not a time to slow down reform. We need to be working hard to improve support for the unemployed, not putting on the breaks. But the context has changed from when David Freud wrote his paper on reforming welfare. It has changed since we published our Conservative Green Paper on welfare reform. It has changed since Labour, bringing up the rear, published their plans for the Flexible New Deal.
Every month the situation changes when the new unemployment figures are published, and the truth is no one has a crystal ball which can accurately predict just how bad it’s going to get. But it’s essential that we hope for the best but prepare for the worst. And that does not mean putting all our plans on hold until the recession is over. Nor does it mean ploughing on regardless as if nothing has changed. That is what Labour has done with the flexible New Deal, and my worry is that it simply won’t be able to meet the challenges that this recession poses. So before the next election, we will publish more detailed plans on how we plan to move ahead with our welfare reforms, in these different economic circumstances.
Our commitment to welfare reform has not faltered. It has grown stronger. And the principles behind our welfare reforms remain the same: anyone capable of working should be trying to find work. We will keep our side of the bargain by improving the support people get to find a job and return to work. But at the same time if jobseekers find suitable work they will be expected to take it. That’s much harder at the moment, we know that. But it is also unfair on all those desperate to get a job, for people to continue to claim benefits if they have turned down an offer of work.
But reform is not easy. Earlier in my speech I talked about Labour coming to power in 1997 promising radical action on welfare reform. Now, in the run up to the general election, the Conservatives are going to do just the same. People will rightly ask aren’t these just more empty words? Won’t this end up as just another broken election promise?
It will by my job to make sure that we do deliver on reform and I believe there are some key reasons that will help us to succeed.
First, we are not afraid to be honest about the state of worklessness in Britain today. We need to stop hiding people in different parts of the benefit system and get on with the job of doing something about it. Our efforts will not be narrowly focused on those claiming Jobseeker’s Allowance, but acknowledge that there are many other people on different benefits, that are capable of working with the right support. The biggest of those benefits is Incapacity Benefit. We are committed to reassessing all existing claimants of IB. And for those that could return to work, we will provide the support they need to get them there.
Second we will not be bullied by those, often from the left, who oppose change.
When we launched our Welfare Green Paper over a year ago Labour claimed that our proposals were ‘dog-whistling to the right's prejudices’, that we wanted to cut benefits so that we could ‘promise tax cuts at the expense of the poor and the vulnerable.’ They said that we wanted to make mothers with children as young as 12 weeks old return to work or training. In fact they found it surprising that welfare reform should be an issue at all.
Labour have become a parody of themselves. They argue they are the only party that can represent progressive politics, but oppose the very changes that would deliver on those promises. They argue for good quality education for all, but oppose our proposals to create new, high quality schools. They are meant to be the party of the worker, but support the status quo in a welfare system that traps people out of work. Attacking change is not progressive. There is nothing compassionate, there is no social justice, in paying people to live a life on benefits.
And third we understand that Government cannot solve this problem alone. Labour have tried that approach, and we have all seen the consequences of its failure. Only one in three people on the New Deal find a job. Achieving reform will not just be about changing a law, or launching a new policy initiative. We need a cultural shift around worklessness. Government must be more honest about the facts and figures so that we can see just what challenges we face. People need more support to help them back into work. And society should expect more – that it is simply not acceptable to depend on benefits if you are able to go out and earn a living. We are committed to working with individuals, communities, the public, private and the voluntary sector to break the culture of dependency that has grown up in Britain today.
This recession leaves us facing difficult choices. We need to prioritise what we as a government and what we as a country can achieve. My priority will be to get Britain working again.”