26 January 2007
Rt. Hon John Hutton MP
Secretary of State for Work and Pensions
The Future of Welfare: Tackling Poverty and Worklessness in Scotland
Given at the John Wheatley College, Glasgow. 26th January 2007
[Check against delivery]
Today I have brought my Ministerial Team to Scotland to discuss with the First Minister and members of the Scottish Executive how we can work together to widen opportunity, unlock aspiration and so combat entrenched forms of poverty and deprivation.
My ministers will see the progress that together we are making across the country. We will meet the men and women working in local communities who are passionate about transforming life chances for the people of Scotland.
Tackling poverty and disadvantage, creating opportunity and aspiration requires stronger ties, not weaker ones. So, in the decade ahead, we will need to build on the successful partnership that exists between us.
That we have made progress is without question. But what is beyond doubt is that the world we live in today is very different to the one we faced in 1997. The policies that helped deliver real progress in welfare - economic stability, active welfare, tax credits and reformed public services - will need to respond to new challenges if we want to achieve our shared ambition of full employment and the eradication of child poverty by 2020.
We can secure a positive, prosperous future for ourselves and our families if we turn outwards to the world rather than turn in on ourselves. And we should play to our strengths. One of these is the historic partnership between Scotland and the rest of the United Kingdom.
Scotland is as affected by the changes that are sweeping the world economy as any other part of the UK. The role of a modern, active welfare to work strategy is as crucial to Scotland as it is to the rest of the UK - in supporting the family, promoting social justice and ensuring people have the economic security they need in a rapidly changing world.
I’m grateful to the Wise Group and to John Wheatley College for hosting this morning’s seminar. It is fitting that we should be here today discussing our shared ambitions for the future of welfare and the eradication of poverty - at a college dedicated to the memory of one of the great social progressives of the early 20th Century. In 1923 he was suspended from the Commons for describing cuts in grants to child welfare centres as “murder”.
I hope John Wheatley would have been proud of the way this Government has responded to the issues of unemployment and poverty.
By 1997 nearly 6 million were dependent on benefits. One in three children was born into poverty.
In the mid-1980s, Scotland’s employment rate was more than 10 percentage points below that of the UK.
Scottish claimant unemployment peaked in January 1987 at a staggering 13 per cent - over 380 thousand people. 40 per cent of these people had been unemployed for more than a year - and over 30 thousand were continuously unemployed for five years or more.
By contrast, today Scottish claimant unemployment is at its lowest for 40 years. Scotland now has the highest employment rate of any nation in the UK and amongst the very best in the whole of Europe. Nearly three-quarters of all Scottish local authorities have employment rates above the UK average.
Since 1997 the Scottish employment rate has risen by 5 percentage points compared with a UK increase of just under 2 percentage points. That means around 200 thousand more people in work in Scotland than if the employment rate had increased in line with the rest of the UK. That is the jobs dividend that Scotland is now enjoying.
And unlike the UK as a whole, Scotland has met its first child poverty target. There are now 100,000 fewer children living in relative poverty in Scotland than in 1999 - a fall of 34 per cent - exceeding the target to reduce child poverty by a quarter by 2005.
None of this has happened by chance. Nor is it simply a direct consequence of economic growth.
The success of Welfare to Work in Scotland has been a direct result of a partnership between national programmes, the work of the devolved administration and local initiatives. Between carefully targeted public investment - and new flexibilities for local organisations to tailor welfare support to the particular needs of the area. And it’s been possible because of the partnership between the UK government and the Executive working together to transform opportunities for the people of Scotland.
Scotland has benefited from this partnership. It is a source of strength not weakness.
Record investment in the New Deal and Jobcentre Plus; and ground-breaking new projects like Pathways to Work and the new cities strategy to empower local areas to take forward their own solutions to worklessness, have provided a new foundation of active support.
As this new support has become available, the employment rate for disabled people has risen dramatically - up 13 percentage points on 1997. Over 4,500 people on incapacity benefit have been helped into work through Pathways to Work in Scotland. Over 400 already right here in the Glasgow Pathway.
The Scottish Executive has played a vital role in driving this progress in welfare reform. Through its anti-poverty strategy “Closing the Opportunity Gap” and its employability framework “Workforce Plus” the Executive is successfully tackling benefit dependency. Local partnership is at the heart of this agenda - and an estimated £500 million a year is invested, through different agencies and local authorities in Scotland, in services to help people into work.
In addition, the Scottish Executive’s support for the Child Poverty Action Group in Scotland has helped to give additional training in tax credits to welfare rights advisers to enable them to provide accurate, high quality advice to eligible claimants - to maximise the take up of benefits and tax credits.
As a result, not only has the number of children living in workless households fallen by 2.6 per cent, the number of children living in ‘work full’ households - where everyone of working age is in employment - has increased by 3.7 per cent. This compares with an increase in Britain as a whole of 0.3 per cent - and has helped Scottish families to increase their household income and reduce the risk of in-work poverty.
Progress in the last decade has been considerable and is something of which we should all be proud. But not every issue has been dealt with. There are still areas in Scotland with low employment and high benefit rates - especially in and around some of the major cities.
Glasgow, Inverclyde, West Dumbartonshire and Dundee - all have benefit rates for the three main out of work benefits of around one in five. And Glasgow City itself has the lowest employment rate in Scotland.
In addressing these problems, I believe three challenges stand out.
Firstly, the numbers on incapacity benefits remain high - especially in the cities. A fifth of the 100 Westminster constituencies with the highest numbers on incapacity benefits are Scottish seats. Five of the top 20 are in Glasgow.
Secondly, we know that despite progress throughout Scotland, there are areas where far higher proportions of the population remain out of work and in poverty. For example, a recent report for the Joseph Rowntree Foundation found that some wards within Scotland had more than twice the UK average of children in families dependent on ‘out of work’ benefits.
And thirdly, we know that in Scotland more than three-quarters of all those on Jobseeker's Allowance are people who have claimed before. Some of those returning to JSA do so only briefly - they are simply moving between jobs - but across the UK, what we know is that around half of repeat claimants are spending more time on benefit than in work.
In the UK around 11 per cent of new JSA claims are made by people who have spent at least three-quarters of the last two years claiming benefits. For Scotland this rises to 13 per cent - which equates to around 36,000 JSA claims per year.
We know there's a strong link between worklessness, benefit dependency and poverty. But these areas are also often those where the most jobs and vacancies are found. And this is true across a range of occupations - from high skilled professional roles to elementary vacancies. Here in Glasgow, for example, where the employment rate is well below the national average, the number of entry-level vacancies per person is more than double the national average.
Meeting these challenges requires us to think afresh and be prepared to test new approaches to tackling poverty and lack of social mobility.
That is why I recently asked David Freud to undertake a wide-ranging review of our welfare to work strategy across the UK.
I want us to renew the contract of rights and responsibilities in our welfare system; create more opportunities for local communities to influence the shape of tailored support; be more ambitious in our objectives for welfare - if we are serious about enabling greater social mobility then we need to be as concerned about helping people progress through the labour market and not just stopping on the first rung of the ladder. Finally, if we are to be more ambitious about both in the quality and quantity of what we do over the next decade, we will need to think imaginatively about how we garner the resources necessary to get the job done.
We are launching Pathways to Work in the Highlands today. In October, private and voluntary sector providers will start delivering the Pathways service to customers in Forth Valley, Fife, Tayside and Edinburgh, Lothian and Borders. Together with our City Strategy and our reforms of Incapacity Benefit in the Welfare Reform Bill currently progressing through Parliament - I believe these changes will begin the task of getting one million people of Incapacity Benefit across the UK within a decade.
We know what a difference local initiatives and local solutions can make. The Welfare to Work forum here in Glasgow - a private sector led initiative working in partnership with Jobcentre Plus, the Scottish Executive, the City Council and other public sector bodies - has already reached its ambitious target to reduce the numbers claiming out-of-work benefits by 15,000 - with over 6,500 of those having been on incapacity benefit. It is seeking to push the bar even higher in future. The Forum is now part of the Glasgow Consortium to deliver a Pathfinder area for the new Cities Strategy.
Forging this new more localised way of delivering employment support services will mean shaping a different set of relationships between the front line and the centre. One that balances high quality support, sensitive and responsive to the needs of millions of individuals - and yet still operates within a fair system of nationally defined rules structure, regulating quality and performance and providing value for money for taxpayers.
By working together, not apart, we can rise to the challenges of the next ten years - and in doing so realise our ambitions of an end to child poverty, and achieve greater opportunity for all by progressing further towards full employment. Decent progressive values delivered in an effective partnership for the people of Scotland.
We have shown over the last ten years the real success of this partnership approach. We can continue this success into the future. The Scottish people have the power to make this happen. I have no doubt they will choose to do so.
