HC Deb 03 April 1990 vol 170 cc1086-94

'Sections 10 and 13 of the 1989 Act shall cease to have effect.'.—[Ms. Short.]

Brought up, and read the First time.

Ms. Short

I beg to move, That the clause be read a Second time.

The intention of the new clause is to abolish the actively seeking work test introduced in the Social Security Act 1989.

The way in which we have to proceed at great haste through the enormously important issues that we are debating tonight is a consequence of the undemocratic guillotine that the Government have imposed on the Bill. It brings the procedures of the House into disrepute and means that important issues cannot be properly debated and that hon. Members who wish to contribute cannot do so.

The provision that individuals must prove, on a weekly basis, that they are actively seeking work or face the possibility of having their benefit taken away is deeply objectionable. It is part of the Government's long-term strategy to encourage low pay in our economy.

Hon. Members should realise that, in the post-second world war benefit system, it has always been obligatory to take a job if one was available; no one has any argument with that. We agree that that is the right structure. However, what the Government did in the Social Security Act was intended to force people to accept jobs that are so low-paid that they might even be paid less than they previously received in benefit. We moved an amendment in Committee to ask that no one should be forced to accept a job which paid less than their benefit. The Government refused the amendment, so that is not the current provision.

In 1979, the Government set out to positively encourage low-paid employment in our economy. They have taken a series of measures to remove protection from low-paid workers and measures that prevented employers from competing for tenders—particularly in the public sector—by cutting wages. The Government have been enormously successful—regrettably—in that strategy. There has been a massive growth in low-paid work in Britain since 1979. It is a truly shocking and alarming statistic, but 49 per cent. of people at work in Britain are now paid less than the Council of Europe's decency threshold—a standard laid down by the Council of Europe to measure low pay in member states.

The overwhelming majority of low-paid workers in Britain are women. The Minister for Social Security, who has now left the Chamber, made it clear in debates on a previous Social Security Bill that the Government are not concerned about low pay for women. He said that that was not a worry, because many women were part of a two-income household. That is very interesting, and it says something about the Government's underlying attitude to women's work and to how women should be valued. Many women are not in two-income households. Some men and many women head single-parent families. They are trying to work and trying not to be dependent on benefits. They have to struggle to survive on low rates of pay.

The low-pay economy that the Government have so successfully developed during the past 10 years is obviously bad for the individuals concerned. It is bad to have to work, to be creative and to try to be productive while struggling week by week to make ends meet. It is bad for our benefits system, because it means that an ever-growing number of people are claiming family credit, which means that the system is subsidising some of the worst employers—employers who pay bad wages. Lack of training, poor health and safety standards, lack of investment, poor quality jobs and a poor contributions to the economy go hand in hand with low pay.

The positive encouragement of low pay means that the benefits system subsidises some of the worst, least economically efficient employers. The policy is also bad for the British economy, because an economy that seeks to go forward by encouraging low pay will not be successful. Employers who seek to compete by cutting wages and paying low wages do not train, do not invest, do not embrace new technology and are inefficient, and they cannot help the British economy to compete internationally.

The actively seeking work provisions require individuals to show each week that they have been looking for a job. A constituent came to my last advice bureau a week ago. He worked for 20 years for a large manufacturing concern in Birmingham—so one can tell that he was a reliable, hard-working employee. He was thrown out of work in the massive recession that the Government generated in 1980–81, and he has been desperately seeking work ever since. He has been on a whole series of Government training schemes. There are many such men in the west midlands. They are in their fifties, and having worked all their lives, were thrown out of work in the recession and have lived between schemes and bits of low-paid work ever since.

My constituent so desperately wanted work that he went on an employment training scheme, where he was not trained—he was ripped off. He had to work in dirty, bad conditions. He came to see me during the scheme and said that it was a rip-off but he would stay on in case there was a job at the end of it. He did not get a job, and someone else has been taken on, under the employment training scheme, to do the non-paid job that he so badly wanted. he came off ET and now he has been given a form. All such workers will he given a similar form. He has to fill out the form and prove each week that he is actively seeking work. He feels angry and humiliated, and there are a large number of people like him.

Some 700 unemployment claimants each week have been given written warnings about their job-seeking activities in the first seven weeks after the implementation of the Social Security Act 1989. Nearly 600 of those people subsequently had their benefit suspended when their claims were referred to adjudication officers. Then there is an enormous gap in time when the individual concerned has no money, and the adjudication officers do not uphold all the cases that have been referred to them. My constituent is desperate, and is often forced to take appalling employment at appalling rates of pay, and that is the Government's intention.

The Government's strategy is deeply wrong for the individuals affected by it. It is wrong positively to encourage low pay in the economy, which is what the Government are all about and what the Bill is all about. On top of that, it is an outrage to humiliate people by forcing them to show each week that they are seeking work. Many of them write letters but employers do not reply and so it is difficult to produce evidence.

The actively seeking employment provision should never have been made. The clause seeks to withdraw it from the statute book.

Mr. Andrew Rowe (Mid-Kent)

I wholeheartedly agree with the hon. Member for Birmingham, Ladywood (Ms. Short) that it is extremely bad for an economy to be a low-wage economy. The hon. Lady is right to say that one characteristic of a company which sets out to pay the lowest possible wages is that it tries to avoid its training and investment responsibilities.

However, I part company sharply with the hon. Lady when she says that it is Government policy to set up a low-wage economy. That is absolute nonsense. The Government's objective is and always has been an economy in which unit labour costs are falling because productivity is rising. Productivity rises on the back of investment, and investment last year was at a record level. The threat to those unit labour costs and to investment comes from inflation. It is essential that inflation is squeezed out or we shall be in real difficulties.

Mr. Frank Field (Birkenhead)

The hon. Gentleman says that it is not the Government's aim to increase the number of low-paid workers. As their numbers have increased over the past 11 years, are we to conclude that that is another Government success or failure?

6.30 pm
Mr. Rowe

That is something of a Morton's fork, but I feel that I can, with one bound, be free. It is much easier to find better employment when one is already employed. That is a characteristic of the labour market. The large number of part-time and full-time jobs available to people with few qualifications provides them with an entry into the labour market which, in an increasingly technological society, they would otherwise find it exceedingly difficult to find.

Mr. Field

The hon. Gentleman's argument would hold good if the number of low-paid workers was falling, but as it is increasing every year, it seems that people are not able to use a low-paid job as a springboard into higher-paid employment but instead find themselves trapped in low-paid jobs.

Mr. Rowe

One needs greater analysis of the number of people in low-paid jobs who stay in those jobs and of the other opportunities that they have to better themselves by training. Hitherto, training has always been seen as uniquely the employer's responsibility. It gives me hope for the future to detect a growing interest among employees in training in their own time, for their own improvement. That will secure a more prosperous future for us all.

As to the availability for work test, I make the point that individuals working voluntarily for voluntary organisations are often relied upon to turn up on time to bathe an elderly person, take a child to school, or perform some other task. I believe that such people are still subject to the requirement to make themselves immediately available for work. There have been exchanges in the House about that in the past. I am a trustee of Community Service Volunteers, which is one of many organisations making use of volunteers for such work. Although the availability for work rule is accepted by volunteers working with organisations less structured than CSV, I should like an assurance that that requirement will be interpreted flexibly so that a client will not be left in the lurch by the need for his or her carer to turn up for work the very next day.

How is availability for work defined? It is appropriate, particularly in cases such as that of the gentleman cited by the hon. Member for Ladywood, that it should be relatively streamlined and straightforward, but unemployment benefit offices are merging with jobcentres, so will the point be reached where arriving to collect unemployment benefit becomes, ipso facto, sufficient to meet the requirement to be available for work?

We would do better to move eventually to a system of guaranteed minimum income, whereby benefit would not automatically be cut the moment one starts making a certain amount of money. At present, that is done on the side, but I should like that earning capacity to be made the subject of a declaration, when it would not have a stark knock-on effect on benefits.

Ms. Short

One knows the hon. Gentleman to be a very honourable Member of this House. Will he say whether he has been invited by his Whip to filibuster so that we cannot debate child benefits properly?

Mr. Rowe

I apologise if I have given the impression of filibustering. I thought that every one of my points was fresh. I believe that there has been a substantial fall in the number of households in which it is not worth members of the household going to work because they would receive less than they would from social benefits. Can my hon. Friend the Minister confirm that? If so, it is a strong measure of the success of the Government's policies.

Mr. Allen McKay (Barnsley, West and Penistone)

I make the point briefly that it is difficult in an area such as mine, with unemployment at 14.1 per cent., to obtain even a low-paid job in the hope of eventually securing better paid employment.

I ask the Minister to consider the problems in the mining industry, which have been the subject of attention from my right hon. Friend the Member for Manchester, Wythenshawe, (Mr. Morris), the Department of Employment, and others, in relation to workers who left the industry on the understanding that they had retired but who have now been caught up in the requirements of the restart scheme. Most cases have been admirably dealt with, but a small number of people receiving superannuated earnings do not fall within the same ambit of rulings. After 30 years in the mining industry, they find it rather distasteful, at their age, to be caught up in the restart scheme.

Mr. Robert G. Hughes (Harrow, West)

It is a shame that more people do not want to speak on new clause 16, which is revealing of the Labour party's attitude.

Mr. John Battle (Leeds, West)

Will the hon. Gentleman give way?

Mr. Hughes

Presumably the hon. Gentleman's intervention relates to the vast amount that I have already said.

Mr. Battle

The hon. Gentleman gives the impression that there can be a fair and open debate on new clause 16, but we are governed by the clock. I should have liked to address the House on new clauses 15 and 16, but I have been unable to do so because of the guillotine.

Mr. Speaker

The hon. Member for Harrow, West (Mr. Hughes) has the right to make his speech. He has only just begun.

Mr. Hughes

If the hon. Member for Leeds, West (Mr. Battle) will restrain himself from making pointless interventions, he may have an opportunity to contribute. The more he intervenes, the longer I shall take. I have several points to make, and I intend to make them.

The Opposition's new clause would send entirely the wrong signal to people looking for work. A minority—who can say how many?—will be beguiled by the words of Opposition Front Bench spokesmen into believing that there is no need for them to seek work. The hon. Member for Birmingham, Ladywood (Ms. Short) suggested that people seeking work would only obtain jobs producing an income below the level of their existing benefits. That might occasionally be true, but it is not for responsible politicians to tell people, "If you are dissatisfied with your pay or working conditions, or find it too difficult to obtain employment, you can rely on state benefits—we do not want you to put yourself out."

I am reminded by the hon. Lady of some of the experiences that one hears from people in the employment service. I wonder sometimes what sort of country I am living in when, for example, it is suggested that it is unreasonable for people in Tottenham, an unemployment black spot in London, to get on a bus and go to Hornsey to look for work. That is not an unreasonable distance, but the suggestion was described by an officer in Tottenham as fascist. It is an extraordinary contention that people should not be asked to travel a short distance to look for work.

It is a measure of the irresponsibility of the Opposition that at a time when we are experiencing record growth—the number of people in work had increased to more than 26 million by September last year, an increase of 3.1 per cent. over the previous year—and demographic factors are contributing to the demand for labour, they should choose to send out such a negative and depressing message to the unemployed. The Opposition are saying, "Go home and wait for a job to materialise—we will call you if anything turns up."

When I speak to employers in my constituency and in north London, I find that their difficulty is not sorting out applicants but finding anyone at all to fill the jobs. Whether they want skilled or unskilled workers, secretaries, cleaners, accountants or clerks, they cannot get staff. Although unemployment is low in my constituency, it is still significant. I find it difficult to accept that people who come to me for help cannot get jobs. Those people would be encouraged by the Opposition's proposal not to seek work.

It is extraordinary that the Opposition should want to return to the position before October 1989, when the mere fact of a visit to a jobcentre was deemed sufficient to prove that a person was actively seeking work. We are entitled to ask for more than that. People should not only make themselves available at times when jobs are available, but should look at newspapers, attend interviews and, if necessary, attend training courses on how to fill job applications, how to conduct themselves at interview, and so on.

The hon. Member for Ladywood spoke of jobs which paid less than benefit. Surely anyone who has ever been in employment or who has worked in a lower-paid job, as some of us on both sides of the House have at different times—

Mr. Paul Flynn (Newport, West)

You will soon be back selling double glazing.

Mr. Hughes

It is interesting to note that the Labour party expects to win my constituency. I wish it the best of luck. I hope that it will concentrate its resources on my constituency, because it will do it no good.

Everyone knows that the path to better wages in any job is by building up a record of employment. When people have a record of employment, sometimes they can move to better-paid jobs in the same organisation or to other organisations which are keen to obtain their skills. That is the essence of a skill shortage. Having done a job, however menial, and acquired skill, people can sell that skill to other employers.

I wish to put two important questions to my hon. Friend the Minister. Is it right that the Opposition's proposal would add £100 million to unemployment benefit?

Ms. Short

No, it is wrong.

Mr. Hughes

My hon. Friend will confirm the figure; I would rather take my hon. Friend's word than the usually inaccurate estimates of the Opposition. If that figure is correct, it is surely not a responsible use of public money. The Opposition are always bleating about what public money should be spent on, but they have very little idea of what they would devote to certain areas.

6.45 pm

At the beginning of my speech I mentioned the signals being sent out. It would surely be irresponsible for people to follow the advice of the Opposition and for 50,000 to be added to the unemployed total. The Opposition are trying to build up unemployment as an issue when plainly it is not. They are attempting to add 50,000 to the unemployed total merely to make the case that they have been trying to make for so long.

The Opposition proposal is highly irresponsible. They want to return to the position where people do not actively have to seek work. I do not believe that that would find favour outside the House. I do not think that: my constituents would regard it as a responsible way for the Government to act. They would not wish my hon. Friend to have any truck with that nonsense.

The Parliamentary Under-Secretary of State for Social Security (Mrs. Gillian Shephard)

The provision about actively seeking work was debated at length in the Committee that considered the Social Security Bill in 1989. The hon. Member for Derby, South (Mrs. Beckett) agreed that the Minister for Social Security was "right to say that most people believe that the unemployed should seek work actively". The effect of the new clause would be to return to the position before October 1989 which absolved claimants from any clear responsibility to look for work.

It is true that the requirement to be available for work would remain in the Social Security Act 1975 and a claimant would have to take some active steps to draw attention to his availability. But we would be back to the position where one simple step, such as attending a jobcentre, would be enough. There would be no requirement to make any further effort by looking in the newspapers, following up openings and seeking information from employers. The Government believe that that cannot be right for the taxpayer, employers and, indeed, for unemployed people themselves.

The hon. Member for Birmingham, Ladywood (Ms. Short) made much of the point of the provision. She tried to accuse the Government of forcing people on to low pay. That is not its point; I must underline that.

Mr. Battle

Since we debated last year's legislation, unemployment has risen in my constituency, and wages are going down from the figures that I quoted for the jobcentre in Bramley last year. That very jobcentre closed yesterday.

Mrs. Shephard

The hon. Gentleman always makes strong points about his constituency interest.

I hope to cover some of the points the hon. Gentleman made. The Government wish to motivate and encourage people to take positive steps back into the world of work. Of course, we recognise that we must help people as well. That goes some way to meeting the concerns felt by the hon. Gentleman. That is why we have introduced the biggest ever training programme—employment training—to equip the unemployed, in partnership with employers in the new training and enterprise councils, for the jobs that are available now and are crying out to be done. I agree with my hon. Friend the Member for Harrow, West (Mr. Hughes) that at a time of record growth in employment, with the number of people in work increasing to 26.4 million in September last year—demographic factors are contributing to the demand For labour—it is extraordinary that the Opposition should choose to send out such a negative and depressing message.

During the passage of the Bill last year, the Opposition could at least plead that they wished to preserve their attitude until they had seen the regulations and been convinced that the new provisions would, as we assured the Committee, be applied flexibly and fairly. We now have the regulations: it is clear that they allow adjudication officers to take into account all the circumstances of a case in deciding whether a claimant has taken reasonable steps to find work.

The evidence available to us is that people are being treated flexibly and fairly. From 9 October 1989 to 26 January 1990, 11,400 claimants were issued with warning letters for failing to seek work actively, and there is a rising trend in the number of claimants warned about inadequate job search. Most claimants have reacted positively; the employment service reports that an increased rate of entry into job clubs has been maintained, and it has had a number of reports attributing improvements in the number of people entering other training or employment programmes to the new provisions. About 15 per cent. of the claimants warned need to be referred to adjudication officers for consideration of disallowance, but early feedback suggests that there has been little criticism of the operation of the new arrangements. In short, the early signs are that the changes seem to have delivered the changes that we sought within the fair and flexible framework that the legislation provides.

Obviously, we recognise that the skills and abilities and the physical or mental limitations of an unemployed person play an important part in his ability to find work. We want adjudication officers to take local labour market conditions and a person's work experience fully into account in deciding whether a claimant has taken reasonable steps to find work. That was stressed during the Bill's Committee stage last year. The workings of the regulations bear out the Government's emphasis on that point.

We understand that the unemployed want to spend their time usefully by studying or by undertaking voluntary work. That was the point made by my hon. Friend the Member for Mid-Kent (Mr. Rowe). If he examines the regulations, he will see the arrangements to allow voluntary work to be taken into account by adjudication officers. The current legislation takes account of all those factors, and also enables the unemployed to engage in other socially desirable activities—for example, as lifeboat men or firemen—or, in the case of the blind, to attend a course of training in the use of guide dogs. Clearly, the Government have not forgotten people with special problems. My right hon. and learned Friend the Secretary of State for Employment is currently reviewing his Department's services for people with disabilities.

The Government continue to believe that participating in socially useful activities for the benefit of oneself or others and actively seeking work are not mutually exclusive. It is right that the law should allow us to warn the small but significant minority of people who have previously given up looking for work that, unless they take reasonable steps to find it, they will no longer qualify for benefit. Obviously, we will continue to monitor the implementation of all the October 1989 changes. To put the matter into context, only 0.1 per cent. of all unemployed people have been referred to adjudication officers under the provisions since October 1989.

The Government are encouraged that many people warned about inadequate job search have accepted the challenge, and that fuller use is being made of the services provided by the employment service to get more people back into work. The underlying strength of the economy has led to the creation of hundreds of thousands of new jobs; we want the unemployed to be encouraged and helped by the Government and by employers to take the initiative, and to seek out the job opportunities that are opening up.

The changes that we made last October have been accepted by the vast majority of people, including the unemployed, as simply common sense. I have no hesitation in asking the House to reject the new clause.

Question put and negatived.

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