9 October 2008

Rt Hon James Purnell MP

Secretary of State for Work and Pensions

Jobcentre Plus National Conference

Novotel Hotel London West

Wednesday 9 October 2008

[Check against delivery]

Last Tuesday, I left a Cabinet meeting and went back to the floor.

At 10 in the morning I was speaking to my ministerial colleagues about the global economy, about the credit crunch, rising fuel and food prices. About how this was affecting our country, and others around the world. We talked about what we have done and what more we can do to help families and businesses across Britain.

By 11 o’clock that day, I was watching advisers do fortnightly reviews at Kentish Town jobcentre plus.

It struck me that Cabinet and the High street shared exactly the same concerns.  We were talking about exactly the same issues. 

That is why the Government responded in the way it did yesterday.

The immediate priority is financial stability and we have acted in the right way to tackle the challenges facing financial institutions:

• Increasing the money available through the Special Liquidity Scheme to £200 billion, and the Bank of England keeping it open for longer;
• Making up to £50 billion of capital available to UK banks in exchange for an equity stake or interest paying shares.

Because this isn’t just about banks and liquidity schemes.  The drama may be happening in Wall Street and Threadneedle Street.  This is about the lives of individual people and they are all asking when the ripples are going to reach their High Street.

We cannot say what the consequences of the current situation will be.  But between the cabinet discussions, and the worries of the mother in the office with her youngest in a pushchair, there is you and the fantastic people who work with you.

You are the link between the Whitehall machine and the person in the street. The advisers who you manage are the face on the other side of the desk and the voice on the phone for our customers. Guiding them through unsettling times, you are the ones dealing with their concerns.

One of the best things about my job is meeting Job Centre Plus advisers – they are the best in the business, and the cream of the civil service.  I love the mix of passion, compassion and toughness that they always bring.

So I want to thank you and your teams for the difference you make to the lives of so many people every day.

And I want to talk about how over the coming days, weeks and months we can help as many people as possible through these difficult times – helping them to get back to work and helping the country to manage the current global economic shocks. Preparing them, and us all, for the future.

Flexibility is a virtue in modern economies. It gives businesses the space to invest and create jobs, and allows individuals to get work and pursue their careers. And we can’t protect all jobs – even when the economy is growing, there will always be some sectors that don’t do so well. But that doesn’t mean leaving people to sink or swim.

So, during a slowdown, it becomes even more important that we help those losing jobs to find the next one. And that’s where you come in, with the guidance and support that we know makes a difference.  There’s a double win here – we help the life of that  individual and in doing so moderate the effect of these shocks on public spending, on investment, on consumption and hence on GDP. So, there is a link between what happens in Kentish Town and what we discuss at Cabinet.

After the longest period of growth in British economic history, this all feels like a new conversation. And the truth is that none of us know exactly what’s around the corner. But we can – and must – learn the lessons from previous slowdowns in this country, and from overseas.

Those lessons are:

First, increase support, don’t relax conditionality
Second, don’t fiddle the figures by parking people on inactive benefits
Third, maintain efforts to reduce inactivity

What these lessons mean in practice is what I want to talk to you about today – what’s currently happening in our labour market and the steps we are taking to help people through these uncertain times.

I know you’ve had a session today discussing precisely this issue – what more jobcentre plus can do over the coming period. Before I set out how I see things from the government’s perspective, I want to say that I am really keen to hear your thoughts and ideas. Because you know best what the individuals you work with need. Because it is you and your colleagues who are at the frontline, and you have a hugely important and valued job to do.

Labour Market Analysis

Any response to rising unemployment must start with a clear understanding of what is actually happening. Over recent months my Department has been conducting detailed analysis of current trends in the labour market and scenario planning for the future. Clearly the global financial and economic situation is evolving rapidly, but we are determined to be prepared..

It’s clear that unemployment has risen recently. The number of people claiming Jobseekers Allowance has been rising since the beginning of 2008, with the count going up by 32,000 last month. The monthly total of new claims for JSA was 50,000 higher in August than at the start of the year. But it’s worth noting that even in January, when claimant unemployment reached its lowest level for over 30 years, 200,000 new claims were made. In August, 215,000 people still  left JSA. This underlines the dynamism of the labour market which lies beneath the headline figures.

While we don’t predict future levels of unemployment, we are planning for the impact of higher levels of JSA claims in the coming months. Although this is what we would expect at a time of slower economic growth, these trends represent real people and their families who are now sharing the concerns of the people I spent time with last Tuesday morning.

These are clearly worrying times for all of us. However, it’s important to remember that we start from a high watermark.  The number of people in work reached its highest ever level – 29.6 million – this summer and there are still 600,000 job vacancies. The employment rate stands above 74 per cent and there are about a million fewer people on out of work benefits than in 1997. Levels of economic inactivity are also down – excluding students, about 15.5% of working age people are inactive today, a two percentage point fall from the mid 90s.

The other positive point is that people are leaving unemployment faster than they used to – a direct result of the more active, supportive regime developed for jobseekers.  60% of people making a new claim spend less than 3 months on JSA, 80% leave within 6 months, around the highest levels achieved for 25 years. So, while the numbers starting to claim JSA has risen and may rise further, the challenge for us all is to help as many people find their next job, as quickly as possible.

JCP Ability

So active intervention is key. And at no time is this more important that in economic slowdowns.

We know from our history and international comparisons that this is precisely the time to maintain that active regime.  In the 1980s, all conditionality was removed from the system, and this contributed to unemployment rising to 3m at the same time as the number of people on incapacity benefits rose   In contrast, Sweden in the 1990s did the opposite and contained the effect of slower growth on unemployment.

That’s perhaps not surprising if we restate what conditionality means: it means providing more active support to find work, and requiring people to take up that help.

Back in the early 1990’s, unemployed people often had to go to two or three different offices to get the help they needed. They just had to attend the Benefits Agency every two weeks simply to confirm they were unemployed. What lack of ambition.

Today, a Jobseekers’ Agreement is compulsory. When someone claims, their personal advisor will work with them to set a series of achievable goals aimed at getting them quickly back into work. And support will be available to help them do so.

As people claim for longer, we expect more of them and provide more support in return. This is backed up with a clear framework of obligations and sanctions for those who do not take up the guidance and support on offer.  This regime has been instrumental in reducing unemployment over recent years. I am confident in its ability to meet the challenge. But as we face a tougher economic climate, I’m ready to take whatever steps are needed to maintain its effectiveness and adapt to the changing situation.

As you know, over the last few months we’ve been doing contingency planning for the possibility of rising unemployment. We have modelled various scenarios, and the advance work has shown that our regime can cope well with the current levels of customers. There are also a number of steps that we can take if numbers pick up still further.

The central priority throughout will be to maintain a regime of active intervention. And keep people on the regime that will work for them.

In the 1980s and 1990s, when unemployment was rising, not only was active intervention taken away, but people were hidden on other benefits, notably Incapacity Benefit, to keep the headline figures down. This was a human and an economic catastrophe. People were abandoned to their fate and written off – while also storing up the problems of inactivity that we are still trying to repair.

So I make a clear pledge to you today.  We will not repeat those mistakes. We will not fiddle the figures or try to keep the count down by displacing people on to inactive benefits. 

In fact, we will do exactly the opposite. Other things being equal, we estimate our reforms to lone parent benefits will increase the JSA count by around 80,000 by 2010/11.  Our reforms to ESA and the Work Capability Assessment will also mean that several thousand people each year who would previously have gone onto incapacity benefits will be required to claim JSA instead. 

This might not be the politically convenient thing to do at a time when unemployment is rising, but it is absolutely the right thing to do.  A more active intervention means more support for parents and fewer children in poverty. So, we will continue to help inactive groups back to work, even if that means a higher JSA count. 

JCP Activity

So, we start from a strong employment base. I believe in Jobcentre Plus’ capacity to rise to the challenge. And we won’t use short term fixes that store up long term problems.

But I also want to make clear that we will not stand aside and view unemployment as an inevitable consequence of an economic cycle. Instead we will stand by the people who need our help. And I know you will too. So, while we cannot protect each and every job, we will do whatever we can to help people prepare for and find the next job.

There are also some concrete steps we can take. Last month, we reformed the JSA regime to help people stay in their homes. Under the previous rules people losing their jobs only got help with mortgage costs up to £100,000 and even that only after 39 weeks of being unemployed.  We’ve brought that forward to 13 weeks and increased the capital amount to the value of the average house, £175,000 – extending the safety net for mortgage holders who lose their job.

We also want to make maximum use of our Rapid Response Service, which has proved to be so effective at supporting areas hit by significant redundancies. By going on-site and tailoring bespoke solutions, this proactive approach can get people the information and advice they need to quickly find alternative employment or retrain for a new career.

We are currently exploring how we can use this model of support to help those affected around the country by the dislocations in the financial sector.

We are also looking at how we can make the most of our current programmes, such as Local Employment Partnerships, in supporting both employers and employees through the current challenges. This will be an ongoing process and I want your discussions today to inform our next steps.  

Conclusion

This week I took up my seat on the newly formed National Economic Council. Over the coming days and weeks the government will continuing to work through the implications of often faceless global economic forces. But I will not forget the things I learn from coming back to the floor.

Perhaps the most reassuring thing that I took away is that Jobcentre plus has never been in such good shape to deal with the issues facing it today, and whatever may be thrown at you in the future.

Thanks to Leigh. Thanks to Leslie, thanks to everyone who works for this fantastic institution. The managers in this room and the advisers across the country, I know that you will carry on doing a vital job and carry on doing it well.

Thank you very much indeed.