17 October 2006

Speech by the Chief Secretary to the Treasury, Stephen Timms MP, at the 5th HMT/DWP Labour Market Conference

Check against delivery

I am delighted to be here this morning. Of my eight years as a Minister, five have been spent – extremely happily – in the two departments represented at this Conference. And I spent the year before that as Parliamentary Private Secretary to the Minister for Employment.

In Summer 1999 I moved from Minister of State for Pensions to Financial Secretary, and that was written up as a promotion. And then in Spring 2005 I moved from Financial Secretary to Minister of State for Pensions. And that was also written up as a promotion. Maybe people were just being tactful!

Whereas Richmond House looks exactly the same today as it did when I was first appointed there eight years ago, this building has been remarkably transformed since I first worked in it. I had become used to the glittering spaciousness of the Versailles-style ministerial middle room in Richmond House, and the splendid refinement of Stanley’s library. The Treasury in 1999 had the appearance of a dilapidated hospital nearing the end of its days, with long echoing corridors and peeling paintwork. It has of course been remarkably transformed in the meantime. So let me bid all of you a very warm welcome, and thank you for participating in the 5th annual Treasury Work and Pensions Labour Market Conference, which I am sure will be a great success.

The discussions which I was involved in between our two departments on the pensions white paper were not always marked by complete unanimity. But I think everyone involved can take a good deal of credit for the success of the white paper and the warmth of the reception it has received. It was a comprehensive, integrated package of reform. As John told Parliament, it has provided “the foundation for a new and lasting consensus on a long-term resolution of the pensions challenge we face.”

We need to get the Child Support Agency right too, to fight child poverty together, and make the right judgments on welfare reform. Great challenges, with a great deal at stake.

We share a vision, of eradicating the scourge of child poverty, of delivering support to parents and their children, of ensuring that work pays over welfare, and that we achieve full employment. And I want to express thanks to everyone for the contribution you are making.

Mobility

Your discussions today about mobility come at time when migration has been at the forefront of public debate. We have heard a lot about advisory committees and quotas, and about the EU accession of Romania and Bulgaria. And it is a healthy and important discussion.

But it must be informed. We need to understand and address genuine public concern about migration, working from a proper analytical understanding of its impacts on the labour market and more widely. But we need to guard against ignorance. We need to protect new members of our communities, as well as the old. I was startled after the accession by the speed at which cars with number plates from Lithuania and Latvia started to appear on the streets of my constituency, but it would be hard now to dispute the substantial economic gains which have been the result.

Migration reflects wider changes in our global community. People are more mobile, cross-border and cross-community. And we have to achieve our collective goals for raising employment and reducing child poverty in the context of intensifying cross-border economic competition and rapid technological change.

Labour Market

The labour market is the focus for much of this debate. The UK labour market is proving remarkably resilient to the global challenges. We have a clear strategy for ensuring employment opportunity for all:

Helping people move from welfare to work, through the New Deal;
Easing the transition into work;
Making work pay, through reform of the tax and benefit system and the national minimum wage;
And securing progression in work, through lifelong learning

Today employment is at record levels, with nearly 29 million people in work. Working-age employment rate is 74.6%, close to record highs, and unemployment is close to record lows. The recent claimant count reduction is a welcome result for the alterations to our jobseekers’ regime, and we will need to see whether it can be sustained. I enjoyed over the summer spending a day at the JobCentre in my constituency, where the staff took great pride in being the best performing jobcentre in the district. The transformation of jobcentres, from the dingy grimness, depicted so memorably in The Full Monty, to the purposeful brightness and smart Jobpoint terminals of today has been one of the most telling of the changes which this Government has brought about in public service.

Its one of the reasons we have more people entering the labour market, more jobs, record levels of low unemployment, and fewer people on benefits.

Welfare reform

The Welfare Reform Bill, beginning its Committee stage this week, is looking to go further. We are aiming for a modern welfare state that responds to individual needs; balances rights with responsibilities; and invests for the long-term.

One of the first things I worked on as a Minister in the Department of Social Security in 1998 was a small set of – I think eight – pilots called the New Deal for Disabled People. It is great to see how the ideas being tried out there have been developed into a programme of Incapacity Benefit reform, supporting the 2.7 million recipients of IB, many of whom want nothing more than to escape the label of inactivity and return to work.

Pathways to Work has been a great success, allowing us to announce our commitment to a national rollout by 2008. We are confident that Pathways will generate significant long-term benefits, and, as these are realised, we should look to invest further to ensure we maximise the gains from welfare reform.

We need a lively dialogue with sources of expertise and insight in the voluntary and community sectors, with the medical profession and with others represented here, to help us achieve the right balance between incentives to work for those who can work and support for those who cannot. I hope the discussions today will help.

Child poverty

Mobility impacts the labour market, welfare reform and poverty reduction. We need to understand these impacts if we are to be successful in halving the number of children living in child poverty by 2010, on the way to eradicating child poverty altogether by 2020. We have so far removed 700,000 children from relative poverty and 1.5m from absolute poverty. Through commitment and long-term reform, we could get rid of child poverty altogether.

Two thirds of families who move into work also move out of poverty. We need to do more through the ethnic minority strategy, and through extending working lives, to increase the numbers in work.

The Lone Parent strategy is another example, with our shared ambition to achieve a 70% employment rate for lone parents by 2010. Meeting that target would lift an extra 200,000 children out of poverty.

But – partly reflecting the success of welfare to work – nearly half of poor children today live in a household where someone works. So continued mobility, where people progress through the labour market and develop their skills, will become more important for meeting our 2010 and 2020 goals. The recommendations of the Leitch Review, looking at the skills needs of the UK labour market, are going to be very important.

Concluding remarks

So thank you again for giving us your time and for being willing to share your perspectives today. Let me also thank Diane Coyle for being willing to act as your Chair, and the Treasury team here, led by Alison, for their hard work. I look forward to our continuing the discussion with you all, and I wish you a very fruitful and a very enjoyable day.

Thanks