Ann McKechin MP

Labour Member of Parliament for Glasgow North

Unemployment in Glasgow - 1 Febuary 2002

Mr. Speaker, I very much welcome this opportunity to speak today on a subject of such high importance to my home city and, of course, my own constituency. Only this week my Hon. Friend the Member for Glasgow Anniesland secured a debate on inner city policy, which also looked at this problem, and I believe that this is a measure of the depth of feeling and commitment, which members in Glasgow hold on this matter and their desire to find solutions to remove this scar from our community.

Glasgow, like many other urban areas dependent on heavy industry, suffered dreadfully during the economic recessions of the 20's and 30's - memories of applying to the parish for money, going without meals and the threat of eviction still live with our older generation from these times. The post war years until the mid 70's, whilst still tough for many at least enjoyed relatively full employment and social progress for the vast majority. Undoubtedly the economic transition away from traditional industries that characterised the next 20/25 years would have been difficult under any circumstances but it was the utter complacency of the Conservative Government in tackling the consequences and the failure to provide new opportunities which permanently marred the lives of so many in our communities and has led directly to many of the problems which we face today - the highest drug injecting concentration in Europe - Greater Glasgow Health Board estimates we have as many as 15,000 drug users in the city which is 4 times the national average; rising suicide rates amongst the young; continuing alcohol misuse and chronic health statistics which are amongst the very worse in Europe. According to latest statistics, 7 of Glasgow's constituencies are in the top 100 U.K. employment black spots.

Problems of this nature are not unique to my city but the sheer scale and concentration of deprivation mark Glasgow out as one, which I believe deserves special treatment.

I commend our government for the programmes introduced within the last 5 years, which have already made such a significant improvement in Glasgow's renewal. In the last year alone in my own constituency there was over a 17% drop in unemployed claimants and in the last 5 years the total unemployed count in Glasgow dropped by over 15,000. Many of the measures which have been introduced have been specifically targeted at the lowest income groups - the introduction of the minimum wage; the tax credit system for working families; increases in child benefit. These steps together with our success in providing a stable economy and increasing investment in public services have obviously borne fruit. But I am sure the Minister will agree that this is not a time for complacency. I trust he will share my aim to achieve full employment throughout the U.K. for all our citizens.

This is not an easy task but I would argue that we have a unique opportunity in Glasgow in the next few years to rid the city of long-term unemployment. The city is enjoying a substantial expansion in its commercial centre and the Scottish financial services sector anticipates further growth with upwards of 10,000 jobs in the next few years. The consequent new build in the city centre for new office space together with substantial capital investment in our schools, housing and hospitals has also led to many additional jobs in the construction sector - already there are skill shortages in the building trade. The proposed stock transfer of the City Council's rented housing to Glasgow Housing Association will be on the basis of substantial new capital investment in rebuilding and repairs which will create even further demand in construction. In addition, our commitment to quality public services in schools, childcare, community care and hospitals will inevitably lead to further job opportunities.

The challenge is to harness these opportunities for the benefit of Glasgow's own citizens and to allow us to tackle the social problems, which afflicts so many of them.

We still have substantial areas in our constituencies where the majority of the adult population is not in work - either on the unemployed register or on some other form of benefit. In some areas this group can be as high as 70% of the total population. I very much welcome the Government's proposals to merge the employment service with the benefits agency to offer an increasingly personalised service and to target the "hidden unemployed" in these areas. I am pleased to note the Government has recently announced a new startup initiative aimed at the hardest to help applicants and I am aware that Glasgow City Council is considering applying for funding for a similar initiative based on specific geographical areas but probably over a 3 year period. I believe we need to be imaginative and bold in how we approach these problems and hopefully, if successful, these models can be spread throughout the country.

Undoubtedly, more public funding will be required if we are assist these applicants back into the world of work - many suffer from "chaotic lifestyles" with drug or alcohol abuse; many have no direct family experience of a work routine; most suffer from low confidence, poor communication skills and educational standards - there is no easy fix but the alternative of continuing with a permanent underclass living outwith normal society is much more expensive for our communities.

We need to ensure that all appropriate agencies be they public, private or in the voluntary sector work together and effectively to focus on these issues - there are still too many gaps for people to disappear into - Glasgow's black economy needs to be tackled if legitimate work is to rewarded; too little quality training - particularly in the construction sector which for too long has relied on "the lump", artificial self employment and shoddy standards; and too little support for small and medium sized enterprises which provide the vast majority of employment opportunities for our workforce and should be integral to all our development plans.

People need to see work going on around them if we are to beat the spectre of depressed soulless schemes - even in my own constituency which suffers from the 8th highest unemployment total in Scotland, there is a shortage of small industrial units for private firms or traders or the space for community run industries. We need to focus on spreading job opportunities throughout every part of the city and not just in the centre. It doesn't suit every worker to travel to work - particularly those with dependents, young or old, who require the convenience of living near their place of work.

We also need to ensure that our public transport system supports our workers - there needs to be more services across the city rather than routes revolving around the city centre. I am aware that the local authority has little control over bus routes following on from de-regulation and I have every sympathy with their frustrations about this but surely we need as a government to look at every hindrance to the opportunity of work and take appropriate action where we can.

I would also like to take this opportunity to raise the problem with making work pay in Glasgow for our lowest earners. A study carried out by the Development and Regeneration Services department at Glasgow City Council in January 2000 demonstrated the steep withdrawal of housing and council tax benefit which occurs to households when moving from unemployment to work and how this acts as a significant barrier to residents in the city who historically have paid higher rent and council tax than elsewhere in the country. If I can give an example of this - a couple with two children under 16 with one of them taking on a job at £170 per week. Taking into account WFTC and child benefit the total weekly income is about £276. Comparing this with the benefits whilst out of work the family appears to be about £115 better off but when you take into account the revised rent and council tax figures the net benefit per week is less than £14 i.e. about £2 a day- this example is even worse if we took a couple with no children. In addition, these examples disregard any additional costs for travel or food incurred whilst working.

These figures will change once the new tax credit system is introduced next year but the so-called work poverty trap will still largely remain and will hit hardest those very people in our city who need the most help and support. In particular as the rules stand this low level of net benefit would be further reduced if there is any increase in rent or council tax as any increase would need to be met in full by the individual households. I am aware that the Government rejected the council's original proposals in 2000 to carry out a pilot which would allow WFTC to be disregarded as income for the purpose of assessing entitlement to housing and council tax benefit - I appreciate the Government's concerns about marginal deduction rates which may act as a disincentive to work and that this issue raises a no of technical problems but I would urge them to initiate dialogue with the council and other public bodies to identify mechanisms to remove this barrier to employment.

The council put forward a new proposal in July last year whereby the earnings disregard would be increased to £92.90 (which is in line with the WFTC income threshold) and the reduction of the tapers of 65% for housing benefit; 20% for council tax benefit to 55% and 10% respectively. This would result in households being on average £75 better off as opposed to around £12 in the current system. Whilst this appears to involve an initial loss to the exchequer - all our statistics point to the fact that people obtain better paid work if they are already in a job and it would also act as a real incentive to encourage people back into work which in turn provides a significant saving in the benefits paid out by the department.

In conclusion, I would urge the Government to give Glasgow the resources it needs to tackle this running sore and engage in a constructive dialogue with the Council and the Scottish Executive - the opportunities have never been better and the rewards to our society for overcoming long term unemployment are enormous. I would ask his department to be bold, and have the courage to take risks - the people of Glasgow have put their faith in this Government and they are entitled to social justice - they deserve nothing less.


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