SPEECH

Introduction

Thank you, Susan.

I’m pleased to be able to join this summit today, to discuss how we tackle youth unemployment – undoubtedly one of the most important challenges currently facing the UK and the rest of Europe.

Indeed, a dangerous combination of long-term youth unemployment, the rising cost of living, stagnant wages, unaffordable housing, restricted educational opportunities and chronic underemployment is resulting in the very real prospect that – for the first time since the Second World War at least – today’s younger generation will end up worse off than their parents.

A situation that would have been unthinkable until only recently.

Youth unemployment

Whilst the most recent figures suggest that the number of young unemployed people in the UK is falling overall, our main concern with respect to this country must be the continued trend of an increase in the number of long-term unemployed young people.

Indeed, the number of 16-24 year olds claiming Jobseekers Allowance for more than 6 months increased by 16% over the last year, whilst the number receiving JSA for 12 months or more has risen by a worrying 163% in the same period – and now stands at its highest rate since May 1997.

Unless swift and decisive action is taken to tackle this trend, I fear we are at risk of long-term youth unemployment becoming dangerously entrenched, with the serious implications this has for local communities, levels of poverty and inequality, and wider social and economic cohesion.

Believe me, growing up in the North East in the 1980s – and Stephen will back me up on this – I know all too well the impact of abandoning a generation to long-term unemployment.

I am therefore absolutely determined to do what I can, both as a Newcastle MP and as a member of Labour’s Shadow Treasury team, to ensure that this doesn’t happen again.

Government policy

That’s why it was so disappointing when the current Government decided to axe Labour’s £1billion Future Jobs Fund and Young Person’s Guarantee – a triple whammy for young people also facing the abolition of the Education Maintenance Allowance and a hike in university tuition fees.

Indeed, recent research by the TUC indicates that whilst long-term youth unemployment has risen by around 23% since the Coalition came to power in 2010, Government support to tackle this problem has fallen by 26%.

Labour’s Future Jobs Fund would have seen the creation of up to 200,000 new jobs – paid at least the minimum wage, with normal employee rights and lasting for at least six months, for long-term young unemployed people or young people in unemployment hotspots.  118,000 of these jobs had already been confirmed, with 80,000 more pledged when the decision to cut the programme was made.

And the Young Person’s Guarantee meant that 18-24 year olds out of work for more than nine months were assured a training place for 6 months; a work experience place on the Community Taskforce; or a job from the Future Jobs Fund.

In their place, we have the ‘Youth Contract’ – launched with great fanfare back in April by Nick Clegg – which involves firms receiving a wage subsidy of over £2,000 if they a take on a young person who has been unemployed for nine months or more. The Government claimed it would offer 160,000 wage incentives to employers.

Whilst official figures won’t be published until next year, a recent survey of employers by EEF – the manufacturers’ organisation – suggests that take up of this flagship scheme has been worryingly low.

Indeed, of the companies surveyed by EEF 32% had not even heard of the policy, and 44% had heard of it but had no current plans to take it up.

Labour policy

So what would Labour do differently?

Whilst this week’s revised growth figures confirmed the long-awaited end to the double dip recession – with 1% growth in the third quarter of 2012 – our economy still contracted by 0.1% over the last 12 months.

With our economy flatlining and overall long-term unemployment increasing, borrowing is actually up by £5billion – or 7.4% – so far this year, to pay for this economic failure. And in October, we saw corporation tax receipts fall by nearly 10%.

All of which led the IFS to warn this week of squeezes on public spending until 2018 if the recent deterioration in growth prospects and tax receipts turns out to be permanent.

It’s clear that one of the key issues facing the economy as a whole is a lack of confidence and therefore a lack of demand.  There is little point in us developing a long-term strategy to deal with youth unemployment, if a lack of domestic demand now is putting the economy, and therefore jobs, at continued risk.

It’s surely fairly basic maths that the more people there are – of all ages – not economically active, and not contributing to the Exchequer but receiving unemployment benefits does not help to bring the deficit down. This in turn will restrict whatever Labour can do when we return to Government in 2015.

That’s why Ed Balls put forward our 5-point-plan for jobs and growth last year, to swiftly get the economy moving again – including a tax on bankers’ bonuses to be partly used to introduce a £600million real jobs guarantee for up to 100,000 long-term unemployed young people. 

It would cover 25 hours of work a week at the minimum wage – £4,000 per job – and in return the employer would cover the training requirements with young people expected to take the jobs available.

And in October – in recognition that we cannot simply wait until 2015 to tackle youth unemployment – Labour’s Shadow Work and Pensions Secretary Liam Byrne launched a ‘Youth Jobs Taskforce’, to bring together business, academics, trade unions, youth representatives – including Susan! – and local government leaders in the UK’s top 10 unemployment hotspots to monitor the impact of Government policy, and to co-ordinate a national drive to help tackle the crisis.

The taskforce is also working to create a powerful network among Labour councils so they can learn from each other in finding ways to get young people into work – ensuring innovative ideas to tackle youth unemployment are spread widely fast, whilst also helping MPs and local authorities to set up jobs summits in their areas, bringing young people together with potential employers.

On a longer-term basis, Ed Miliband outlined in his speech to conference his vision of an education system that works for all young people:

• Raising the status of vocational education with a new gold standard qualification, the Technical Baccalaureate;  and

• Changing our culture so that it becomes the norm – in the public, private and third sector – to offer quality apprenticeships that result in long-term, sustainable jobs.

This will be vital, not just for ensuring young people are able to improve their employability – but will be equally important in helping to deliver the type of growth we want to see in our economy going forward, as we hear time and again from business that they cannot recruit workers with the skills they need to grow and develop.

I am particularly delighted by Labour’s plans to ensure that all organisations winning Government contracts will be required to provide apprenticeship places – particularly as I introduced a Bill on this very issue into the Commons shortly after being elected in 2010. 

Labour’s policy review is now looking in some detail at how we make these ideas work for young people and the economy alike.  And if you haven’t already done so, I would urge you to contribute to this consultation process via www.yourbritain.org.uk

Learning from best practice / conclusion

Of course, the policy review is also looking at some of the countless examples of best practice elsewhere – whether abroad, or indeed youth unemployment schemes that are working in this country.

For example, Austria’s youth unemployment rate – one of the very lowest in the world at around 9.9% – is in large part credited to its highly-regarded apprenticeship system and ‘Youth Training Guarantee’, which guarantees an apprenticeship place to any young person under 18.  Their ‘Future for Youth Action Programme’ also ensures that 19-24 year olds are guaranteed the offer of employment, targeted training or a subsidised job within six months.

In my own part of the country, I know that the region’s 12 local authorities are working closely together, via the Association of North East Councils, and other public, private and third sector organisations to identify key gaps in service provision and to consider how they can learn from each other, what works and what doesn’t. This has included a high profile jobs summit, held in July, alongside the Association of Chief Executives of Voluntary Organisations, ACEVO.

This North East initiative has built on the excellent work already done by ACEVO, alongside David Miliband, with their Commission on Youth Unemployment – particularly around preparing young people for work and about the all-important transition from the education system to the workplace.

Of course, none of these ideas will deliver without the engagement of the very people we are supposed to be helping and so I would welcome hearing any examples of best practice in this area that you believe we should be taking up – or indeed any examples of bad practice that should be avoided.

However, I would end on the note that – whilst any and all initiatives to tackle the scourge of youth unemployment are worthy of careful consideration – we must not take our eyes off the bigger picture, as initiatives on their own are not enough.

As the Commons Work & Pensions Select Committee concluded recently following its inquiry into the Government’s Youth Contract and youth unemployment, we will only see genuine and sustainable falls in youth unemployment when our economies return to genuine and sustainable, long-term growth.

Thank you.