Select Committee on Work and Pensions Minutes of Evidence

Examination of Witness (Questions 57-59)




  57. Good morning and welcome. David Webster is Chief Housing Officer at Glasgow City Council, but I think it is clear, David, that you are here in your own personal capacity. You have had a long, abiding interest and have written many academic papers in conjunction with colleagues from Glasgow University, but, for the record, David, you are here in your individual capacity?


  (Mr Webster) Personal capacity, yes.

  Chairman: We are very grateful. We have got your memorandum and it is very thought provoking. Thank you for that. I wonder if we may turn to Anne Begg to start the evidence session by looking at some of your experience and the work you have done in Glasgow University and some of the employment programmes and growth issues which flow from that.

Miss Begg

  58. What are the main obstacles to success of the Government's individual requirement programmes and how do these compare in importance with economic growth?
  (Mr Webster) As I mention in the memorandum, I think the main problem is the great disparity in the state of different local labour markets. In a labour market like Glasgow there is a huge jobs gap and the kind of position which the council would point to is that you have got under 20,000 people who are claimant unemployed but the true number of workless people of working age is more like 100,000, so you have only really got one in five on the claimant count and there is a huge shortage of employment. So I think these local jobs gaps are the major problem. There is another problem, which did not really come out of the previous two evidence sessions, about the long-term sick. I think that is an extremely serious issue. As I mentioned in the memorandum, the number of working age people who are on sickness benefits has gone on increasing since 1997, even in a period of prolonged economic expansion. There is lots of evidence now that this is due fundamentally to the fact that unemployment has been made a very unattractive status: the income is lower than if you are getting sickness benefits and, of course, there are now all the requirements brought in by active labour market policies, so you are not going to get left alone if you are unemployed. Sickness unfortunately has become quite a desirable status to have if you do not think that your prospects of getting well-paid work in the longer term are good, and there is a lot of evidence that it is relatively comfortable. There is evidence from the new Scottish household survey, for instance, which our chief executive's department got out at my suggestion a couple of weeks ago. There is a question in there which asks: "Are you financially coping? Are you coping well? Are you just getting by? Are you struggling? Are you in a state of financial crisis?" and there is a very marked difference in the answers to that question from the people who are on long-term sickness benefits and the people who are on unemployment benefit. The people who are on unemployment benefit are far more financially stressed. It is often alleged that government employment advisers will try to get unemployed people onto sickness because that is regarded as a positive outcome of some kind: it gets them off their case load, they can then concentrate on people who are easier to help and so on. Even if you leave all that aside, we have created a system which has got incentives in it for people to move onto long-term sickness. It is interesting that the kind of theories which Richard Layard and others advanced in the mid-eighties were about claimant unemployment. I think they were wrong, as I mentioned in the paper, to say that being claimant unemployed has a major impact on your employability, but I think there is an issue about being on long-term sickness benefits. It may not impact on your employability as such, but it is the difficulty, psychological and otherwise, of moving from a status where you have declared to yourself and to the world that you are not capable of work, into a job. That is a very serious problem. Unfortunately, we now have this very large stock of people who are in this condition. In Glasgow it is between 15 and 20 per cent. I would say that, apart from jobs gaps, that is the largest single problem.

  59. You have identified the problem. What should the Government do in order to help those people back into the labour market or should the policy be different with regard to the actual benefit levels?
  (Mr Webster) I think you need to tackle the jobs gaps obviously. Another somewhat more radical suggestion is to suggest that you should make being unemployed more attractive compared to being sick. It is not just me that has suggested that. Steve Nickell, who is a very distinguished economist on the Bank of England Monetary Committee, in his paper recently (which I cite in my evidence) about the problem for the long-term sick, points out that other countries have quite a successful combination of policies where unemployment benefits are relatively high. You do not have this distinction between unemployment and sickness but you still have the pressure on unemployed people to get work. The thinking in the 1980s certainly was very strongly that you really could not afford to have a good level of benefits for unemployed people because it would have such an adverse impact on the choice between work and unemployment, but Steve Nickell was really casting doubt on that and, certainly, if you were to equalise the level of unemployment and sickness benefits you would get rid of this financial incentive to move into a sick status. I think that would be thoroughly beneficial because then that would make your unemployed people visible and you could then start to do something about the problem.

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