Select Committee on Work and Pensions Minutes of Evidence

Examination of Witness (Questions 80-92)



Rob Marris

  80. I want to ask you a bit about what might be grouped under distance from the labour market, both in terms of geography and local jobs gaps, and also in terms of the skills of people who are unemployed and all their personal circumstances, whether from infrastructure, location, child care or transport or their sickness in terms of being on invalidity benefit. It is against that background. In your view, has labour market improvement varied across the country? You say in your memorandum, where you give these figures from January 2002: 0.5 per cent in Hart, Hampshire—this is the local authority claimant unemployment—to 10.8 per cent in Tower Hamlets. Clearly the labour market has changed in recent years in terms of numbers employed and so on, but in relative terms has that varied around the country or is it that everybody has gone up and the people who are behind are still behind?
  (Mr Webster) Yes, the people who were behind are still behind. Basically the relativities have not changed much. My figure 2 shows you there is a 0.9 correlation across local authorities between the distribution of unemployment in the 1991 census—I mean, 11 years ago—and the distribution of claimant unemployment across local authorities in January 2002. That is how little change there has been in unemployment relativities. It is quite remarkable. Most people do not know that because it is quite difficult to do. You have to recalculate the claimant unemployment rates in the way that I have done, because you have to get rid of this invalid denominator that the ONS are still using to calculate them.

  81. Looking at individuals and workless groups, if there has not been that relative geographic variation, has there been that variation of improvement between groups? It is very interesting what you say about the link between lone parents and joblessness as to which is the cause and which is the effect, taking that as a group, for example.
  (Mr Webster) There does not seem to have been a great difference between groups geographically. I have actually looked at the data—we now have data on sickness claimants back to May 1995—and I had expected to find that the movement into sickness would be rather greater in the areas of highest claimant unemployment. But in fact that is not the case. There does not seem to be any particular relationship going on there; it does seem to be quite random. In a sense, that is rather good news, but it does look as if the impact has been very similar.

Ms Buck

  82. On the group issue, my understanding is that the lone parent unemployment pattern is dramatically worse in London, partly because we have more lone parents but also because lone parents in London are half as likely, I believe, to have informal family support than lone parents in any other part of the country and therefore are more dependent on home childcare, which is more expensive. Those are the figures I have. There is a whacking variation in lone parent capacity to go into employment between London and the rest of the country.
  (Mr Webster) I am not sure that is the case. I have not actually looked at claimant unemployment for lone parents. Claimant unemployment among lone parents is actually not numerically all that important: not very many of them appear on the claimant unemployment count. The more important thing with lone parents is their employment rate. I mean, they tend to be either working or economically inactive. There are not very many in the unemployed category. And those figures for London might be a bit deceptive because you may be getting more people in the unemployed count actually because they have a higher employment rate. The point is, you cannot be claimant unemployed unless you have employment experience, because that is the qualification. Certainly the employment rates among lone parent across the country are quite highly correlated with the general claimant unemployment rates and there is a very big difference: areas of highest unemployment have employment rates among lone parents that are only around 35 to 40 per cent, whereas the best areas with the lowest claimant unemployment have employment rates that are double that, nearly 70 per cent—nearly up to the Government's target—and that is a measure of the scale of the problem.

Rob Marris

  83. Which geographic areas of workless groups remain the most problematic and why? And I suspect part of it is region, which you have referred to.
  (Mr Webster) Yes. We still have the legacy of the kind of economic change which we have had over the past 20 years which has seen more or less the disappearance of coal mining and very dramatic reduction in manufacturing: the loss of something like two-thirds to half of manufacturing jobs. So it is still the areas which have lost those jobs which have the highest unemployment. One of the problems about the kind of economic expansion that we have had since 1996 has been, broadly speaking, that the areas that have done worst have tended to be the ones that were doing worst before, because manufacturing has gone on declining and therefore that has impacted adversely on the areas that already had the greater problem. There are some complicating factors here. In this upturn, cities have done somewhat better, partly because they had already lost so much of their manufacturing. In a place like Glasgow, which is down to round about 11 per cent of jobs in the manufacturing sector, there is not a lot more to lose now, so if you have a high rate of loss then actually the number of jobs you are losing is still relatively small, whereas a new town, say like Telford, can be hit quite hard by a manufacturing recession now because it has got a high proportion of manufacturing jobs. So there are some complicating factors there but, broadly speaking, the areas that are problematic now, as my chart shows, are the areas that were problematic 10 years ago and problematic 20 years ago.

  84. I notice you say that in your opinion the New Deal for Young People, for example, has played a relatively small role in the labour market improvement and it has been more driven by economic growth. I was asking you when I started about the relative improvements around the country and I cited back to you figures of 0.5 per cent for Hampshire, and 10.8 per cent for Tower Hamlets. Turning it around the other way, if we were to have an economic slowdown, would that have any differential effect on groups of geographic areas? Or would everybody come down in the relative positions they are currently in and have been in for 10 years?
  (Mr Webster) I suppose it depends what sort of slowdown we are talking about. The slowdown that we have had to date—I mean, compared to a year ago, the quite sudden slowdown that we have had—has tended to be in things like tourism and things that were affected by September 11. Manufacturing has not got a great deal worse; it has started to bottom out. The re-balancing of the economy, if it happens, that Mervyn King is talking about in the quotation from him, would actually tend to favour manufacturing. He is saying that the economy has to be re-balanced through growth of exports.

  85. Away from consumption.
  (Mr Webster) Away from consumption. That would in fact tend to favour areas which have manufacturing, so it probably would, broadly speaking, be quite beneficial from the geographical point of view, so that the areas that have been doing badly would tend to do rather better.


  86. What you are saying, essentially—and it is not original because we have seen this for some time—is that big communities like Glasgow, Liverpool and the like should get the ability to create jobs. That is what it boils down to, is it not?
  (Mr Webster) Yes.

  87. Let me put it to you that in your critique in your paper on the Layard supply-side theory which has driven policy in the recent past, you are a pretty lone voice, are you not? You have been arguing that message for some time—and I think it is an interesting argument—but why do you think that there are not more people now responding to the kind of suggestions you are making about your own special interest in using derelict sites to generate work? Why are more people not saying this is the right way to go? Why is your attack on the Layard approach to policy not more successful? Because you have been out there a long while.
  (Mr Webster) In terms of people accepting that there is an important local demand-side dimension to the problem, I think probably a growing number of people are accepting that—not because of the rather arcane arguments about long-term unemployment in the 1980s but because it is becoming increasingly obvious.

  88. It is catching on, do you think?
  (Mr Webster) I think it is catching on, but I think the derelict land and infrastructure issue presents a particular problem because I think you have to have a particular kind of professional background or involvement or orientation to be particularly interested in derelict land and transport infrastructure. I think, generally speaking, non-spatial economists have become much more numerous.

  89. Non-spatial economists?
  (Mr Webster) Yes, economists who think of things in a non-geographical way, who have been trained to think about economic problems in a non-geographical way. There are far more of those sort of people around than there used to be. "Geographer" type people have become less important. "Town planner" type people have certainly become less important, lower status and so on. The kind of professions that are particularly important when you talk about property development—people like surveyors particularly, surveyors and property developers—are probably lower status than they used to be, rather specialist and not very strongly represented in government. There were some hearings at the Urban Affairs Sub-Committee of the Transport, Local Government and Regions Select Committee. Some witnesses were heard in March, at a couple of sessions there, and some of the property professionals who came along were complaining about the lack of property development experts in central government. They were saying that the reason why policies are not very realistic about dealing with derelict land type issues is because people in central government do not really understand them because they are not "property" type people. They said that loud and clear, and I would agree with them.

  90. If we could switch on a system that would provide commercial expertise and the know-how to do this, do you think we would notice a difference in Liverpool, Glasgow and Manchester?
  (Mr Webster) Yes. Certainly Glasgow. In Glasgow you are talking about getting on for one-tenth of the land area of the city which is either vacant or derelict. If you look at the sites, they are the places where people used to work. I mean, more or less by definition, these derelict industrial sites used to have thousands of people working on them. Of course it has become much more difficult to put thousands of jobs on to these sites because space requirements have changed, but you could put a lot of employment back on these sites, and they are in the right places.

  91. Have you done any cost-benefit analysis? Supposing we said to the Minister, "This is something that we seriously need to look at," and he said, "We have a lot of money invested in New Deal"—and, whatever you say about the Government, you cannot say they have not invested time, money and energy in trying to deal with this problem—if he were to come along and say, "Why don't you add this to the list," what kind of figure would you need to do this in a way that would make a noticeable difference. Have you any notion at all?
  (Mr Webster) Well, there is a figure available for Glasgow. All of the derelict sites would cost £150 million to do.

  92. You are really only talking about—although I am surprised you have left London out of this—Liverpool, Manchester. Parts of London must surely come into this reckoning if you are going to do it seriously.
  (Mr Webster) Yes, I think they do. There is a problem about employment mismatch. It is very difficult to get the same kind of employment back onto these sites. It is probably harder in London. I think there is a difference between London and the provincial cities because London property values tend to be very, very high. There is lots of pressure to get high value activities on; it is quite difficult to get manufacturing. It is a lot easier if there is manufacturing about—and, as I said, because of the balancing of the economy there may be some manufacturing growth about. It is much easier to get a manufacturing operation onto an outer city site in Glasgow than to get it onto a London site—although there are projects like that in London. In fact London Regeneration people are very keen on having as much manufacturing as they can get, if you look at what they say, because they feel they need a balance in the London economy.

  Chairman: Thank you very much. Your memorandum is very useful and it has been very helpful to cross-examine you about that. Thank you for your appearance and for the memorandum.

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