My letter to Nick Clegg

25 November 2011

Dear Nick

I am writing following today’s announcement from the Government on a ‘Youth Contract’, which includes employer subsidies as well as additional work experience placements and apprenticeship incentives.

With more than one million young people currently unemployed I am sure you will agree with me that this is a very serious issue, which requires effective action.  The Labour Party has been saying for 18 months now that the Government was wrong to scrap the Future Jobs Fund and put nothing in its place. We now have serious concerns that the replacement announced today will not go far enough to alleviate this serious problem.

I assume that further details of the scheme will be made available at next Tuesday’s Autumn Statement, but I would be grateful if you could provide answers to the following questions ahead of then.

Firstly, can you confirm how this £1 billion scheme will be funded?  There have been reports in the media that it will be paid for by freezing working tax credits.  This would be an unacceptable further blow to low paid workers who have already seen a significant squeeze on their living standards, not least through January’s mistaken VAT rise.  You said on the Today Programme this morning that “the only thing I can sort of rule out that this £1 billion isn’t paid for one particular tax change or one particular welfare change” and that “we will not balance the books of this country on the backs of the poorest”. Can you confirm whether working tax credits will be changed so that one group feels like they are being asked to pay for this scheme?

Secondly, the Government claims that the wage incentives will be available “as part of the Work Programme”.  However, there have been reports that the Department for Work and Pensions is “concerned” about how the scheme will interact with the Work Programme.  Can you provide further clarity on exactly how this scheme will work with the Work Programme and Work Programme providers?  Will the money go directly to employers as a wage subsidy or will it add to existing Work Programme funding to create new jobs?

Thirdly, can you confirm that the Office for Budget Responsibility has scrutinised and signed off the costings for this policy?  Will further details of this be published alongside the Autumn Statement next week?

Finally, I note from the announcement that you told the Cabinet in January of this year that youth unemployment was a problem.  Can you explain why then it has taken ten months for any action to be taken and why the support will not become available until April next year?  Since that presentation to the Cabinet the long-term youth claimant count has increased by 83 per cent.  The Future Jobs Fund was scrapped in the Government's first month in office.  Given that this scheme will not begin until April next year it would be a tragedy if young people are made to pay the price of two wasted years of government inaction.

Youth unemployment is a serious problem which requires urgent and effective action.  Long-term youth unemployment can leave devastating scars on an entire generation.  It is therefore important that the Government gets this right.

I look forward to your reply. Given the interest in this matter I will be releasing this letter to the media.

Yours sincerely
Rt Hon Liam Byrne MP
Shadow Secretary of State for Work and Pensions