Examination of Witness (Questions 80-92)|
WEDNESDAY 1 MAY 2002
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, Hampshirethis
is the local authority claimant unemploymentto 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 censusI
mean, 11 years agoand 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
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 datawe now have data on sickness claimants back
to May 1995and 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.
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 centnearly
up to the Government's targetand that is a measure of the
scale of the problem.
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
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 dateI
mean, compared to a year ago, the quite sudden slowdown that we
have hadhas 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
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, essentiallyand
it is not original because we have seen this for some timeis
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 timeand
I think it is an interesting argumentbut 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 thatnot
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
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 developmentpeople like surveyors
particularly, surveyors and property developersare 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
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
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 problemif
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
92. You are really only talking aboutalthough
I am surprised you have left London out of thisLiverpool,
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 aboutand, 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
sitealthough 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.