Delivering Future Jobs Conference

Rt Hon Yvette Cooper MP
Secretary of State for Work and Pensions
CESI – Thursday 3 December 2009

Thank you to Dave Simmonds for organising today’s event, it is a great pleasure to be here.
And thank you too to all of you. I know that many of you are involved in action to help people get work, supporting people across the country who are still being hit by the shock waves from the global recession, and particularly helping young people get that first step on the jobs ladder.

Your work is invaluable and it is making a difference. Whether it’s through the Future Jobs Fund – delivering real jobs for the young and long term unemployed, through the Flexible New Deal, providing specialist help for the long term unemployed, or other programmes.

Never underestimate the importance of the work you are doing. Helping people get back on their feet after a redundancy. Helping people who have been stuck on the dole over a year get back their confidence, their self esteem as they find work. Helping young people stuck in a rut to get their first tentative foot on a career ladder.

And it isn’t just those individuals. The ripple effects reach across their families, their communities, the local economy, and ultimately the public finances too.

I also want to take this opportunity to thank Councillor Houghton and his review team for the excellent work they did with their report on the role of local partners in getting people back to work.

Their work was influential in getting the Future Jobs Fund off the ground – a real example of what we can achieve when central and local government work together to make a real difference.

And I’m pleased that the new National Worklessness Forum is also getting underway – with its advisory board meeting for the first time ever yesterday. I’m sure it will provide a real focus for local authorities and their partners to improve their capacity, coordinate additional support and continue to improve, innovate and adopt best practice.

When unemployment started rising last year, we said then that we would do everything we could to help people hit by the recession, and that we would not make the mistakes of previous recessions when government too often turned its back and left people to struggle alone. When we set out £5 billion extra investment to help, we said then that we were not prepared to turn our backs, and that Britain should never again see the deep scars of long term unemployment we saw in the 80s and 90s.

We pledged then £5 billion to help get people back to work. Expanding the help in Jobcentre Plus, providing extra help for people through the programmes many of you are involved in. Extra youth jobs, extra training places and apprenticeships. And keeping up the welfare reforms to avoid the big increases in inactivity we saw in previous recessions too.

That action has had an impact. Through the recession, unemployment has risen, and we expect it to increase again next year. But the increase has been much lower than people expected and lower than in previous recessions too. And I want to talk today about some of the reasons why that has happened.

But we also need to look forward. Because the challenges remain. And just as we were determined to learn the lessons of the eighties and nineties during the recession, we also need to learn those lessons in recovery too. Because the real damage of previous decades was not just about what happened during the recession itself, it was the lack of sufficient action to get people back to work once recovery came. In the eighties and nineties, unemployment continued to rise for years after the recession ended. We must not and will not let that happen again.

Now is not the time to pull back from our support for the unemployed. Quite the reverse. Now is the time to do more. Never again must we lose a generation from work. Never again must we see people abandoned in recession, or neglected because recovery is on its way. Just because there are signs the economy is starting to turn, doesn’t mean we can risk turning back the clock to the 80s or 90s approach, withdrawing government support or cutting back on employment help. Quite the reverse. Now is the time to set out more help to get people back to work in the recovery too.

Families across Britain are still being hit by the global recession. The claimant count stands at 1.64 million. The wider ILO measure stands at 2.46 million. And people still are looking for help. Major search engines report that "jobcentre" is on of the most frequent internet searches – in among Michael Jackson, Tiger Woods and I’m a Celebrity.

We are not through the tough times yet, even though the increase in unemployment has slowed very substantially since the beginning of the year, and in the last few months we have seen the first increase in the employment level. As we look forward we expect unemployment to keep increasing in the New Year even once the economy returns to growth. And that means hundreds of thousands of individuals and families across the country are still in need of help.

But it is clear that the action we have taken has made a difference. The claimant count is 400,000 lower now than people expected even at the time of the Budget. And something different is happening compared to the eighties and nineties. It is worth reflecting on why. Because we need to apply that knowledge in the recovery too.

The drop in employment has been much less than in previous recessions, even though the overall shock to the economy has been much greater. The worst global financial crisis for many generations has cut growth significantly this year, but it has actually had less effect on unemployment than the home grown, inflation driven recessions of the eighties and nineties.

The claimant count is currently around 5 percent compared to 10 percent in the 90s and more in the 80s. Indeed the claimant count still today remains lower than the lowest point it ever reached in the 1980s.

People are still finding new jobs. Recruitment has remained stronger than many people expected, and people out of work have been getting a lot of those jobs. Last year nearly 6 million people started new jobs – and over 3.5 million of them were out of work before. That means on average every month a quarter of a million people who were out of work find new jobs.

Half of those signing on for Jobseeker’s Allowance, still leave benefit within 3 months, 90 per cent still leave within 12 months – a significantly higher proportion than during past recessions.

Long term unemployment has remained low, with claimant long term unemployment currently below 180 thousand. At its worst in the 80s it was over 1.3 million.

Perhaps more important for the long term, the level of inactivity has not increased either. In the nineties the number of people on sickness and lone parent benefits went up by a million in the space of just five years. Many of those people – pushed into long term worklessness – never worked again.

Even for young people, who have been heavily hit this recession, if we strip out the numbers in full time education, you find that 9 percent of the youth population are currently unemployed, compared to 12 percent in the 1990s and 13 percent in the 1980s.

In some of the big cities hit most heavily by the previous recession, the difference is even more pronounced. The proportion of people claiming Jobseekers Allowance in Manchester is currently 5.7 percent, compared to 13.9 percent in the 90s recession. In Liverpool, it’s 7.5 percent compared to 14 percent in the 90s. In Hackney 6.8 percent compared to 17.7 percent last time round.

It is worth reflecting on why things have been different this time round
The overall support for the economy has clearly had an impact. The retail sector, helped by the cut in VAT, has continued to recruit strongly throughout the recession. Public sector capital has helped support jobs in construction and maintenance that would otherwise have gone. And the loss of jobs in the finance sector has not met many people’s early predictions, with finance jobs in Yorkshire still increasing and jobs saved in the North East at Northern Rock.

The institutionalisation of a low inflation environment alongside greater transparency seem to have made a difference too. According to the CBI, many businesses have reduced wages and hours rather than jobs. Indeed though the media often focus on the cases of industrial strife, the untold story of the recession is the number of workplaces where unions and employers, workers and managers have agreed to pay freezes or even reductions in order to save jobs.

But critical too has been the active labour market regime we have pursued and expanded to get people into work too.
That £5 billion extra investment has funded extra Jobcentre staff to deliver help to more people, and to make sure people are meeting their responsibilities to keep seeking work too.

In the nineties it was a different problem. People were in practice eased off unemployment benefit and onto long term sickness benefits instead.

This time, rather than easing off on the responsibilities for people to seek work, we are continuing to increase them – including implementing a stronger test for sickness benefits, bringing lone parents with older children off Income Support and onto Jobseeker’s Allowance instead and introducing stronger obligations for young people to take up the help that’s on offer.

The employment programmes are helping too. Over 230,000 people got jobs through the Local Employment Partnerships in the first 6 months of this year. The recruitment subsidies, the New Deals, volunteering options and self-employment support are all having an impact.

But the fact that investment is helping is not a reason to sit back. It is a reason to do more. Because we know the extra help makes a difference. And because we know there are still tough times ahead.

And there are fiscal benefits from getting this right too.
Already, by keeping unemployment 400,000 lower than expected this year, we have saved over £1.5 billion compared to the Budget plans. The revised forecasts for unemployment set out by independent forecasters mean a saving of over £10 billion over the next 5 years on benefits for the unemployed compared to those budget plans. That’s £10 billion that can be used to ease other pressures in the recession, help bring the deficit down as the economy recovers, and also to safeguard our public services too.

It demonstrates in practice the argument the government made last year that we need to grow our way out of recession, not cut our way out. It shows that one of the most powerful ways to cut the deficit is actually to use active government to support the economy and get people back to work.

Indeed, if we can go further and faster in bringing unemployment down than after previous recessions, that means potentially far more billions of savings to meet priorities elsewhere.

That then is our challenge now. To keep helping people back to work as fast as possible.
So next week we will set out our "Back to Work White Paper".
Plans to get thousands more young people, more quickly into jobs and training.
Plans to help older workers, and those most at risk of becoming long term unemployed.
Plans to simplify the system to make it easier to get people into work faster, as Jim Knight set out yesterday – to deliver more flexible, personalised service, both with the Flexible New Deal, and for Jobcentres themselves.

And plans to help people progress in work, not just to get that first job.
And we will particularly focus on young people
Although all age groups face these challenges, the scarring effects of recession are particularly felt by the young – research shows impact of a period out of work for young people has lasting consequences, even decades later.

So we need to do more to help young people into work – help them get the first step on the career ladder.
Our objective now must be to pull together, public sector, private sector, voluntary sector; national government, local government, specialist employment organisations, big and small employers, everyone to do their bit to stop youth unemployment rising and to bring it back down. We must guarantee that no young person gets stuck on the dole, or as long term unemployed.

Because in the 80s and 90s it wasn’t just what happened in the recession that left the scars, it was the long delays afterwards in getting young people back to work.

In 90s, youth unemployment went up for a year and a half after the recession ended – before it started dropping. In the 80s, youth unemployment rose during the recession and then kept going for another 4 years after the recession was over before reaching its peak. That's the real scandal

So we need to do more. We need your help, and also the help of employers in every corner of the nation.
Your organisations have already been critical in getting the future jobs fund moving – We have already identified 95,000 jobs – nearly two thirds of our original target and the first jobs started in October

But some areas still aren’t off the stocks.
We need to build on the success to date, but challenge ourselves to go further. I’m asking you now to redouble those efforts. We need to get on with it. The New Year could be hard. February is the traditional month when seasonal employment drops and recruitment is low. Can you speed up the help to get more posts in place before then? Can you bring more of those jobs forward? Can you accelerate those posts if we help you?

Because if we can, that will transform the lives of those young people, help rejuvenate our economy, and help save billions for the public finances in future years as well.

Government can’t do this alone. But together we can achieve a huge amount. Earlier this year we launched the Backing Young Britain campaign calling on employers to pull together to help young people through the recession.

At last count, over 330 businesses have pledged thousands of new opportunities, and the number of graduate internships available has already reached 16,000 well over our target of 10,000 by the end of November.

If just half of the 1.2 million employers in the UK took on one intern, more than 600,000 young people would be given a chance in a tough jobs market.

Our objective should be to do everything we possibly can to turn things round much further and faster this time round – in line with the differences we have already seen. Together I think we can do it.

Of course, a wide range of factors will affect the level of youth unemployment, many beyond our control. However, action is making a difference, as we have seen in the past months.

We need to build on the work we’ve done to get people the help they need in the recovery too.
Thank you.