................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 21.3.93
................................................................................ JONATHAN DIMBLEBY: Good afternoon and welcome to On The Record. There was a blip in the statistics last week and the unemployment figures therefore failed to cross the three million mark as had been expected. But no-one doubts that the dole queues will get longer and longer in the months ahead. Facing that grim prospect, the Chancellor used his budget to announce new measures to help the unemployed and "they aren't piddling", said the Employment Secretary, Gillian Shephard. In her first extended interview since joining the Cabinet, I'll be asking her to justify that claim. The polls show that rising unemployment now causes more public concern then any other issue. People have long stopped blaming the unemployed themselves as work shy or feckless or scroungers. It touches far too many for that. So what can the government do? What is being done? And is it enough? ****REPORT******** DIMBLEBY: Secretary of State, unemployment is now nudging three million. It would be a cruel delusion to suppose that it's not going to go on up, wouldn't it? GILLIAN SHEPHARD: Well, the Chancellor made quite clear in his Budget statement, and I never lose an opportunity to repeat the fact that an improvement in unemployment has to lag the recovery. Everybody knows that that is the case and, clearly, that is why I was so cautious when we saw a drop in unemployment last Thursday - welcome as that was. DIMBLEBY: You would not want people to go away believing that because there was a drop last Thursday the projections of the experts who say it's going to be three-plus, three-two-point-five, three-and-a-half - whatever their projections might be - that those projections are out of line? SHEPHARD: Well, I don't actually predict levels of unemployment, partly because of the experience that we had in the nineteen-eighties when nobody, but nobody, predicted that between 1987 and 1989 there would be a growth of two-million jobs in the economy. So we don't, we don't in a Government make predictions but, of course, the Chancellor's seven wise men made predictions and I noticed that there was a variation between the two ends of those predictions of eight hundred and fifty thousand, so there's quite a range of opinion, even amongst the experts. DIMBLEBY: But they were indeed, however, all over two million down the road. But we'll come to that a little bit later. Do you take the view - as some politicians do - that it's the direction that counts. That if unemployment reaches a plateau Secretaries of State for Employment can begin to relax because all that people really care about is the trend that may be beginning to come down? SHEPHARD: Well, the point is that for every unemployed person the trend is fairly irrelevant. What unemployed people want is, first of all, a real job and for that there has to be the right economic framework in place, with low inflation and low interest rates and competitiveness in our economy. But what they also need is help while they're unemployed, so for them, I think, in a sense, the trend is meaningless - it is important though because of the optimism that a downward trend can engender in the economy and generally. DIMBLEBY: Do you, do you also share the view that is expressed by many that to have unemployment persistently high at this kind of level for long is not only damaging in the way that you've just described for the individual, but is also damaging to the social fabric of the nation? SHEPHARD: Well, it's certainly damaging for individual people, because it's depressing and demoralising, and it's certainly wasteful in the economy if you've got skilled people who aren't putting their skills to use to help the economy - those things are for certain - and if you
see large communities blighted by unemployment, or fear of unemployment, then clearly that can't be a good thing. But what one should never forget is that two out of three people actually do leave the register - the claimant register - within six months of becoming unemployed. Now I know that's difficult to believe when it's you that's facing unemployment, or you that's facing redundancy, but that is a fact and it's still a fact despite the difficult times that we're in. DIMBLEBY: Given that, would you find yourself more or less in sympathy, however, with what John Smith, Leader of the Labour Party, has been saying almost as we speak - namely, that the present level of unemployment IS damaging to the social fabric? SHEPHARD: We certainly want to see unemployment come down. The Government takes the matter extremely seriously. DIMBLEBY: The cause for you of perpetual dismay, perpetual concern? SHEPHARD: Well, just let me finish. That is why we had the measures that we had, for example, in the Autumn Statement, when the Chancellor boosted manufacturing, boosted exports, brought in the very capital programmes that were mentioned by my colleague, Rhodes Boyson, and it's also why we've got a wider range of help for unemployed people now than we've ever had. DIMBLEBY: You see, I want to get, I want to get a sense of - because I think people at home would be really interested in this - not because you are new to the job necessarily, but do you, Gillian Shephard, feel their unemployment in here as well as being able to trot out arguments very effectively about what you're doing. Do you feel it on their behalf? SHEPHARD: But, of course, nobody who comes into contact with unemployment people, as I do a lot of the time, could fail to feel that. But what I also know is that make-work schemes and throwing billions and billions of pounds at the problem, doesn't help and, what is more, I find that many unemployed people share exactly that view, which is why they talk about real jobs. DIMBLEBY: OK. Now if the concern is there, and if your predecessors had the concern - I want to look briefly at the context of the record before looking at what you are particularly doing now. Isn't it odd that over the last few years, when unemployment was sharply rising, the overall budget for your department was sharply falling. SHEPHARD: Well, I have to say that this year my budget sees a real terms increase. We're spending two point eight billion on training, which is two and a half times more than we were spending at the beginning of last decade, and employers themselves are maintaining their commitment to an investment in training - twenty-billion or so - despite, again, the very difficult times that we're in. We've actually got a real increase. DIMBLEBY: Yes, which we will come to. My question
to you, as you I'm sure interpreted was, wasn't it odd that when it was rising before this real increase - unemployment - the budget was actually falling. That's a strange demonstration of concern, isn't it? SHEPHARD: One of the reasons that the budget was slightly reduced was that the money was being spent in someone else's budget. As you know, my budget provides help for young people through youth training - young people of sixteen to eighteen - and we're seeing a very welcome increase in the numbers of young people staying on at school and college and, therefore, a reduction in the numbers of those young people who require training through youth training. So while there's been an increase in the spending on, say, further eduction and on schools, I have needed less in my budget. DIMBLEBY: But Secretary of State, you're not trying to tell me, I'm sure, that now a third - until this moment - a third less was being spent on unemployment, on the unemployed, than was being spent in real terms at the last peak when it was at three million, that that has all been accounted for by the fact that more people are staying on for higher education, are you? You would not try that on? SHEPHARD: Quite a good deal of it is accounted for by the fact that we have far more young people being paid for in full time education and further education. DIMBLEBY: And the rest, and the rest? SHEPHARD: What we're also spending is a very great deal more than any government has ever spent before on training and we are also demanding of TECs, who deliver that training, ever more effective and cost effective measures and a greater attention to the way that they spend that money and I think that since when unemployed people cease to be unemployed and become taxpayers that is something they would welcome. DIMBLEBY: Let's have a look against that background of declining spending and the ways that you described and what you have just described as your real increase at the programmes on which you are now going to spend that money, take the Community Action Programme. You hope to have sixty thousand if those jobs are taken up, but that's at the margins isn't it? SHEPHARD: Don't forget you have got to look at this in context of the one and a half million measures in employment and retraining that are just about to come on stream next month. These measures which were announced in the Budget are of course in addition to that one and a half million measures and in addition, the other things that the Chancellor did in the Budget to help small business and so on. DIMBLEBY: Why limit it at sixty thousand. SHEPHARD: Well just let me complete this, now the new measures, the hundred thousand new measures which were announced in the Budget are not only innovative and rather different from the one and half million measures we already have, but they are also an attempt to help unemployed people invest in themselves and also for there to be an investment in the economy in unemployed people and in society.... DIMBLEBY: ...this is new.... SHEPHARD: ..when the period of unemployment is over. Now if you look at Community Action it actually gives unemployed people the chance to volunteer, it's a voluntary programme, to work with a voluntary organisation, it might be NACRO, it might be the National Trust, for three days of a week, the other two days will be spent in active job search. Now, at the end of the period of unemployment when the person comes off the register having found a job, not only will he or she be able to look at the work that they did while they are in Community Action, but also they will be enriched, I mean they will actually have a better CV to offer to employers as a result, so it's an investment. DIMBLEBY: Now you're going to have to, with great respect, we've got a lot to get through, you are going to have to elegantly summarise what you're saying a touch more briefly if you'd be kind enough so that we can get through a lot of material. Let me put the question to you, why limit it to sixty thousand if there are more than sixty thousand who want to take it up, would you expand it? SHEPHARD: Because there are already other opportunities.... DIMBLEBY: ...which aren't so good, which aren't so good by your own account. SHEPHARD: There are other opporunities which are available.... DIMBLEBY: ...hang on a second, you said, you said, this is a new approach and it's a much better approach than what they...all your predecessors have been doing, you then say but I can only offer it to sixty thousand, there are what three hundred thousand on Community Action Programmes five, six years ago. SHEPHARD: With respect I said it was a different approach, I didn't say it was a better approach and some approaches suit some individuals, other approaches suit others and that is precisely why I am against all embracing workfare schemes, which attempt to deal with all three million unemployed people as if they were the same, I hope that was elegant enough. DIMBLEBY: It was very elegant indeed but I want to press you a bit more on the next one which is the learning for work scheme, doubtless a good scheme and I can't imagine people saying what a terrible idea it is that people should be able to learn the skills that they might need to get them back into work on the training schemes that we outlined in that film, why, again I ask you though, why a limit on this of thirty thousand? SHEPHARD: Well we want actually to see how this is going to work. It will be targeted on people who by the time most of the courses start will have been unemployed for a year, and it avoids any muddling about with the existing 21 hour rule it's specifically for people who have been unemployed for a year and we want to test it out, we want to see how it works and again, it will represent an investment, an investment in the person who will then be able to use those enhanced skills in the economy, so an investment in the economy too. DIMBLEBY: But it doesn't do much for the morale of someone who is longterm unemployed and happens to be number thirty one thousand on the list? SHEPHARD: Don't forget that unemployed people can
already study while unemployed as long as they keep to the 21 hour rule, these are set.... DIMBLEBY: ....you are supposing, this..I'm sorry, you must be suggesting that this option is a better option than the other option otherwise you wouldn't have proposed it? SHEPHARD: I am suggesting that it is again a different option... DIMBLEBY: ...not better... SHEPHARD: A different option which will enable us to look at how it works, to build on its success.... DIMBLEBY: ..alright then because I don't want to quibble with the point, let's say that there are numbers of people who say not only is this different but in our judgement it's better and we like it. Are you ready to expand it or are you held back by the Treasury? SHEPHARD: If we find that these measures work better for unemployed people and indeed, as investments in the economy, then certainly what I would look at is reviewing what we're already doing and perhaps switching from some of those ways of helping unemployed people into these new ways. DIMBLEBY: Well you should have been trumpeting it
then instead of having me push it out of you, what you're saying is if these things work, I want to see more of them, you should be proud of that not half ashamed of it. SHEPHARD: I am hardly ashamed of them, but what I also don't know yet - because they haven't started - is how they're going to work and, above all things, when you are looking at help for unemployed people, what you want is measures that work, because they've had enough knocks already. Now one of the strengths about the one and a half million measures that we already have - which you're I think trying equally elegantly, to make me rubbish - is that we really know they work. Half the people going to job clubs come out with a job. We know that the job interview guarantee scheme really works. We know that our measures work. Now what we want to see is if the new measures are as valuable as I actually think they're going to be. DIMBLEBY: You've got a pilot scheme - your work-start pilot scheme - what makes it a pilot? SHEPHARD: It's a pilot because we haven't actually tried this approach in England and Wales before. There is a rather similar sort of scheme which has been operating in Scotland since 1982. But what makes it a pilot is that there are going to be four schemes and two are going to be run by the Employment Service and two by TECs. Two are going to concentrate on people who've been unemployed for more than two years, and two on people who've been unemployed for more than four years, so there's rather a lot of test situations there. DIMBLEBY: How long are you testing for? SHEPHARD: For a year. We shall certainly have one in London; I suspect we shall have one in the North-East because of levels of unemployment there; and the other two will go to areas where they're expecting to have quite a profound change in their local economies. I have to say I've been absolutely besieged with requests for TECs and by MPs and others to have these schemes in their areas. DIMBLEBY: I bet now that if you find that the pilots work, will you then make it nationwide so that you don't have to be unemployed in place "A" - you can be unemployed in place "B", "C", "D" or "E" as well? SHEPHARD: Well, there are a lot of lessons to be learned from these schemes. One of the lessons is that we have to be absolutely certain that we aren't stopping employers genuinely taking on unemployed people, simply because under these schemes they can get a subsidy, and so all of that has got to be very carefully handled. We want to avoid job substitution and people taking on others simply because they're..simply because they're subsidised, and also - perhaps I could just add this - the effect on the unemployed people is the thing that we want to measure most carefully. Now, if you've been unemployed for four years, and some of the people in the pilots are going to be in that category, you will have taken quite a bashing on your confidence, your ability levels, you may feel have been diminished, and we want to measure the effect that these schemes have on unemployed people as well. There's a lot of studying to go on. DIMBLEBY: So the long-term unemployed should NOT, because of the difficulties that there might be in this - not least that people will shed labour, or not take on other unemployed - should NOT expect that this kind of scheme is going to go very far beyond the pilot, in terms of numbers. You've got a thousand people, you've got a million long-term unemployed - what kind of proportion would you like to, or could you believe, it might reach of those other nine hundred thousand long-term unemployed. SHEPHARD: Well, now, at this stage, I can't say, and I wouldn't want to say, before I have taken the lessons from these pilots, which I actually think are going to be very interesting and very worthwhile. DIMBLEBY: The...you see the point about this is you - in the particular case of this sixty pound subsidy that you will be paying - the Exchequer actually does quite well out of that because the person that goes back to work also pays tax and you're not paying benefit. It costs the taxpayer at the moment what, something near twenty-four billion pounds if you take both the loss in tax revenue and the benefit payment. You would think on the face of it that a bit more of this would actually save the taxpayer a lot of money as well as getting people back into jobs. SHEPHARD: Well, the key point is really "on the face of it", because you do really have to be very careful with these kinds of schemes that you aren't distorting the labour market, that you aren't persuading people to take on employees they otherwise wouldn't take on, and so on. That is the rub, and that's what we've got to look at very carefully. DIMBLEBY: Now, do these ideas that have come up, do they come from your Department, or do they come from that Wakeham Committee that the Prime Minister set up with such fanfare? SHEPHARD: The Wakeham Committee was extremely useful because it enabled all of us to look across the board at what Departments are doing to help unemployed people, and to help unemployment, and it is very interesting you know that the other Departments between them are spending something like four billion in all kinds of employment-creating schemes - the DOE, the DTI and so on - in addition to my own not inconsiderable budget of four point one billion, so there's a lot going on, and we wanted to be certain that all ideas had come forward. DIMBLEBY: Which, which, which of these were yours and which were these of his that went into the budget? SHEPHARD: Let's say that we all worked together and this is what came out at the end. DIMBLEBY: Has it done its task now, the Wakeham Committee, or is it still in action? SHEPHARD: No, the Wakeham Committee has ceased to be because once we'd identified the options and the priorities that we all thought were the most worthwhile, and that the Prime Minister could approve, then, of course, it's over to me. DIMBLEBY: So you're in charge again? SHEPHARD: Over to me - I was always in charge, but not of the Wakeham Committee, since John Wakeham chaired it. DIMBLEBY: Have you got any more ideas up your sleeve which you are going to bring forward, or have we now got it and let's see how these work and see where we go from here? SHEPHASRD: Well, let me just mention one other scheme which actually your excellent film omitted. You said there were four measures announced by the Chancellor and you left one out, which was TEC Challenge, a twenty-five million project whereby we're asking TEC to come forward with bids for excellent ideas for job creation, for economic re-generation, for helping unemployed people in their own areas, and I believe that the TECs will be very enthusiastic about bidding for this money and ideas will certainly come out of that. I have many more ideas. DIMBLEBY: You see, if you look at the position that you face, with all these schemes that you've elaborated just now, you help, you help over and above the other things that are being done, with three million people unemployed, you help something like a hundred thousand people. Let me suggest to you that for most people the fact that a hundred thousand are going to receive extra help, with unemployment rising as it is, is still to act at the margins, and you offer them nothing more than "we'll see how all these things work and we may or may not expand them". SHEPHARD: Well, as I said when we began the programme, these have got to be seen in the context of a number of other things. First, of course, the fact that we have one and a half million ways of helping unemployed people back into work, second, that we do now have in place the right economic framework for the recovery and third, not only the measures in the Autumn Statement but also in the Budget, which the Chancellor brought forward specifically to help business, that is to say employers. DIMBLEBY: But we're talking about a situation now where with the best will in the world, with the prospects of growth at the most optimistic, you are going to have to face, not only upto the next election but up until the end of the century by the seven wise men and all other predictions, unemployment at two million plus, you don't descent from that
judgement do you? SHEPHARD: I don't make any predictions about unemployment and again, as I said earlier, that is precisely because nobody predicted the rundown in unemployment that there was at the end of the 1980s. DIMBLEBY: Well then let me just put that point back to you, you will acknowledge, because the evidence is there in black and white, that unemployment since the last peak through until last year, the last peak being '86, '87 when it topped three million, has remained on average at two point six million and that was during a period which included four plus per cent growth as a result of the, in part, as a result of the Lawson credit boom. So it would be profoundly misleading to suppose that it isn't going to be something like that again can it? SHEPHARD: Well don't forget that we have more people actually in our working population, and don't forget that we actually.... DIMBLEBY: ...well that's no comfort to those who are out of work... SHEPHARD: ...don't forget that we actually have one point three million more jobs still in our economy than we had in 1984. We have a larger working population, nevertheless, I don't predict levels of
unemployment for precisely the reasons that I gave you, but it has to be said that unemployment is a problem that is besetting all major industrialised countries. DIMBLEBY: OK, but the reason why I am looking at this is because the problem of the longterm unmployed, you will accept the
figure of average two point six million over that period of unemployment despite that large growth, wouldn't you, that's not an argument between anyone. SHEPHARD: It isn't an argument save that one mustn't ignore the job creation that went on in the late Eighties and the fact that Britain's job creation in the late Eighties was faster than in any of the other major industrialised economies. DIMBLEBY: Yes you have to set that against the position..1979 and '80 before that, we can always play late Eighties games,
during that moment as you rightly have agreed, two point six million average has been the level of unemployment and whatever the job creation that occurred during that period, you would agree with me, I presume, that growth rates of the kind that came around at the end of the Eighties as a result of the credit boom, would be undesirable. SHEPHARD: We certainly don't want to go back into boom and bust, we want a steady sustainable growth because that is the only way we can ensure a lasting improvement in employment. DIMBLEBY: Now if you don't want to go back into what you describe as boom and bust, and you have levels of unemployment over three million, then you have to be acting as Secretary of State if you are, as I am sure you are, responsibly concerned about this on the assumption that you've got to help the longterm unemployed for what is a very longterm? SHEPHARD: I don't accept your predictions and again I say precisely because people got it so wrong in the late Eighties, we want steady sustainable growth, we want real jobs, we want business to feel confident that it can take people one, but we also need... DIMBLEBY: ...I don't wish to... SHEPHARD: ...just let me finish... DIMBLEBY: ...sorry... SHEPHARD: ...we also need good investing ways of helping people who are unemployed and that is why we have this huge package of measures to help people back into work and why we have these new measures which may show us better ways of helping people while they are unemployed. DIMBLEBY: One more thought on this however, it would be daft of voters to presume that they can get more jobs this time than last time if you have lower growth, as you say we need to have than last time, that would be stark staring bonkers to use a phrase of one of the previous luminaries of your Party. SHEPHARD: What is clear is that there are changes in the labour market, that is very obvious and I think that one of my jobs as Secretary of State for employment is also to help prepare for more part-time, more flexible working, more job sharing and looking at the labour market that is going to take us upto the turn of the century. DIMBLEBY: Secretary of State for employment, thank you. ...oooOooo...