Thank you very much. Before I come to your question, I should perhaps draw the Committee’s attention to the fact that this will be Sir Peter’s last appearance before you. I would like to begin today’s session by placing on record my thanks to Sir Peter for his many years’ service to the civil service as a whole but in particular to the Department for Work and Pensions as permanent secretary for about eight years. He has been an absolutely magnificent public servant. He has led the Department through many challenges, most specifically the covid period when the country really needed help from the systems that we run. Before coming to your question, I just wanted to say that.

Zooming out from the question, it will always be for the electorate, not Ministers, to mark the report card.

I have been there for nine months. The job of the Department has several headings. Of course, it is a critical part of the welfare state. It is there to support those who rely on its help, whether they are pensioners, children, the unemployed, the sick and disabled, and so on. The Department does that on the whole well. There is always room for improvement and there is always a dynamic policy debate about the challenges of the future. Since I was appointed Secretary of State about nine or 10 months ago, the particular challenge that I have probably focused on more than anything else is young people and their chances in life, and that is where we have put a lot of energy over the past year. That does not mean that the Department does only one thing; it does lots of things. We pay out state pensions every month, and we pay out benefits to people who can never work. It is important that the welfare state is always there for those who need it but is also adapting to the times and to new challenges, and that is what we are trying to do all the time.

I totally agree that if you can get people into work, it does not just save money; it changes life stories, and that is a really important thing to do. In numbers, the simplest picture of this was in Charlie Mayfield’s report “Keep Britain Working”, which used the figure of £1 million—if you can get a young person into work, it will benefit their earnings by about £1 million over their life and save the state a similar amount of money. On Connect to Work, we published figures I think a few days ago on the number of people who had gone through it and the number of people who have been helped in the first year. Connect to Work is devolved—

Yes, it has been devolved. When you devolve something, there are lots of really important strengths and advantages to that, but one of the things is that capacity will differ a little bit in local areas around the country, and in the first year it can take a while to stand up. I think the figure was that 14,000 or 16,000 people had been through it so far. Those numbers are growing fast, and that reflects some work on standing the programme up in its first year.

It will depend a bit on performance. It will speed up this year because we spent the first year standing it up. More people are now joining it more quickly, and I hope and expect that will continue. There is a really important concept here, which is that we want to bring to an end the era of being signed off and written off. People come to these junction boxes in the system, and they are put into either an intensive work search path or what has often been a signed off and written off path. Connect to Work and a lot of the employment support that we are putting in place is designed to not make that junction box such a life-defining fork in the road for people. That is what Connect to Work is trying to do.

Do you want to know more about the forward path of spending?

We will report regularly to you and to Parliament as a whole. It is public spending. It is a commitment to us. The devolved nature of it is really important, because local labour markets differ.

When we agree that, it is important to recognise that it will probably mean performance is not the same in every area, because of the different labour markets.

Exactly. This is very important. This is the discussion that I always have about devolution, and we might get into this a bit more. I say that it is a good principle, but in the end, the chain is: if I ask the Treasury for money for certain purposes and then we devolve it, when it comes to a session like this one or oral questions, Parliament will naturally ask me about performance and it cannot always ask the people to whom the money is devolved. That is an interesting and live discussion in all the devolution debates.

I know that you have a deep interest in this. This system across the whole piece is dealing with some of the most vulnerable people in the country. When it goes wrong, it can result in the worst possible outcomes. As you and the Committee members will know, there have been cases where people have taken their own lives and coroners’ reports have heavily criticised the Department for Work and Pensions following those deaths. We have to take that extremely seriously. I think the public are probably quite jaded with phrases like “lessons learned” that are used when disasters take place. I share the view that people are probably quite sceptical about this. You said you did not want a process answer, and I do not want to give you one, but I will just explain the things we have in place. It is important that when something terrible happens, you have the deepest possible dive into what your learnings from that are, why it happened and so on, and we do that, but that is not enough. You cannot just wait for bad things to happen. This is probably at its most sharp in the health assessment field. All the people doing that now have to have a safeguarding level 3 training. They all go through that. There is an issue with attrition, which you know about, and a fast turnover of these staff, so the level of people who have had that training is very high, but we have to keep up with attrition as people leave and come into that service. My understanding is that in the most recent figures, they have referred about 450 people—I think the actual figure is 455—for safeguarding reasons. The watchwords are “recognise”, “respond” and “refer”. It is not always the health assessor’s personal job to fix the situation, but they should be very alive to it and they should be referring that person to the appropriate authorities, whether they spot signs of abuse, particular signs of distress or whatever it is. It has to be a thing that is daily practice, but it also has to be a thing of deep learning when things go wrong, as they tragically have done a number of times in the past decade or so.

I have no reason to hide from information. If there is more information, I want to know it. When I speak to our work coaches, I think they really try to care for people, but there is no denying that this system has made mistakes. It has made decisions that have contributed to people’s distress. Those things have been reflected in coroner’s reports, as you say. If there is more information from coroners that we could use, we should of course use it. We should never be running away from information that may be there.

Are you referring to civil penalties and things like that?

They do have discretion. This was an issue in carer’s allowance that had been sitting in the Department unresolved and unlooked at for many years, and we are now trying to get a grip of it. There have been a few issues like that, but this is definitely one of them. There are several elements to it, the first of which is fixing this issue with overpayments where it was not the person’s fault but they have been fined, and we are working through that. We started that work a few months ago. As with what I said on Connect to Work, we are very happy to keep you and the Committee up to date with the progress on that. We will go through something like 200,000 cases, but I think the ballpark estimate of these overpayments is around 25,000, and we will try to sort those. There will then be the issue of how these earnings are calculated, as it goes wrong in the averaging, and how you calculate average earnings and all of that, but we are working through that. There is then the issue of how you fix the policy design going forward, which is really about real-time earnings and having the systems that can adequately cope with that. In the past, we have not had that in the way we have for universal credit. On civil penalties, those who are administering this have discretion. They can decide to do so or not, on the basis of the circumstances, so it is not automatic that they have to do that. They are caseworkers, and they have discretion on whether they impose such a thing.

Do you want to deal with those in writing?

There are a few things I would say on that. You referred to the longer-term record. One of the things that happened during that longer term was a four-year benefit freeze, but it applied only to some benefits and not to others. The result was that the gap between what people could get on standard benefits and on sickness benefits grew, and that has become a bigger feature of the system in recent years. Whether it was particularly intended at the time those freezes were introduced, I do not know, but it is a notable consequence of freezing some of those benefits. That is the past. To go to the present, you are correct. Partly informed by that, this year has seen the first real-terms increase in the standard allowance for many years. It is tough to live on the incomes that people get under these benefits, but we have that increase in place. We have a number of other things that can help people with the cost of living, such as the extension of free school meals to families on universal credit. School meals can be a very significant expense for low-income families; there is help with that. There is the extension—not all of these are in the DWP bucket, but perhaps I can speak to the Government as a whole—of the warm home discount to more families, which is worth about £150 off energy bills. I think that one in six families are able to benefit from that now. Of course, the lifting of the two-child limit for families with more than two children will have a very significant impact on child poverty. So, across the piece, we are trying to help people with the cost of living. The final thing I would mention is the package recently announced by the Chancellor. Again, it is aimed particularly at families over the summer. She reduced VAT on various things, such as children’s meals in restaurants, to help families—the school holidays can be a very expensive time for families with children. So we are very alive to the cost of living. I hope that recent international news about events in the middle east will ease the pressure that some thought would remain for the rest of this year on the cost of living. That may not happen quickly, so the consequences could still be with us for some time. People are aware of that, most obviously, every time they fill their car with petrol, but in other ways too.

I mentioned the big disparity between ill health incomes and standard unemployment incomes, if you want to put it like that. The gap between them is somewhat closed by the changes we are making this year. It is not always a feature of international systems that you have such a big gap. I do not want to make too many promises about upratings in the future, because we have a system to do this, and it depends on various factors. But last year we uprated benefits by inflation; this particular benefit is by more than inflation, for the reasons we are discussing. I will not pretend that this is easy to live on, and I do not think that politicians should do that. The other thing to mention is that for many people, the standard rate will be accompanied by help with other things—housing costs, children costs and so on. That is not true for everybody, such as for single people living in particular circumstances, but for a family, support for housing costs will usually be significantly more than that standard single rate.

There are a host of them. We may come to this later in the discussion, but the significant thing about the British system is that contribution and contributory benefits play a significantly smaller role Our system is much more needs based and means-tested than the systems in other countries. That is probably the most significant difference between them. That leads to a higher level of initial benefits in other countries, through the contributory system; sometimes, they have higher taxes too, because they are making those contributions. The big characteristic of our system is that contributory benefits make up about 4% of benefits, and benefits are almost entirely means-tested. Personally, I think that has not only economic but political consequences, in terms of how people see the system: who pays in, who gets something out, and all the rest of it. That is the big British characteristic, compared with lots of European countries.

We discuss this all the time, and we have discussed it particularly in relation to events in the middle east over the last three or four months. As I said a moment ago, I hope those pressures will ease, but it is a very unpredictable world. We have had a number of predictions that this conflict would be over and that trade would begin to move; let us hope that that is true this time, but I cannot know for sure. We have a live and ongoing discussion about cost of living pressures and policy responses to them—you saw that in the package for summer announced by the Chancellor a few weeks ago. The inflation figures that came out this morning show that they have held steady; some predicted a rise in inflation. I do not want to make predictions about future months, but I repeat my hope—and it can only be a hope, because the situation is unpredictable—that the announcements made in recent days will lead to trade moving more freely, and to the beginning of an ease on energy price pressures, which feed through to the cost of almost everything else.

Correct.

Not all of them, no.

There were a lot of numbers there. First, on the £400 billion, more than half of that is for the state pension. I do not know whether it is your party’s policy to cut the state pension; perhaps you can clarify if it is. But more than half—about 55%—of the bill that is quoted is the state pension. The health and disability proportion of that total has been rising very fast. It is rising slower in this Parliament than in the last, but nevertheless it is rising. The PIP numbers to which you refer were published yesterday. I have set out many times my approach to welfare reform and legislation, and I am happy to do so again before the Committee today. I believe that the best way to reform the welfare system is to do more to help get people into work, and that has informed most of the policy that I have announced during my period as Secretary of State. We may have a chance to discuss this in some detail—the youth guarantee measures, the employment support measures that the Chair referred to in her opening questions, and so on. On future legislation, we have two very important reviews under way. We have the Milburn report, which is focused specifically on young people. Alan Milburn published his interim report a few weeks ago. We have the Timms review, which is specifically focused on PIP. I expect an interim report from the Timms review before the summer recess. Both reviews will give final reports before the end of the year. Depending on their conclusions, which I do not want to anticipate too much here, if legislative change is needed, it will come after that.

The policy direction I have set out is quite clear: it is neither to circle the waggons around the current system, because I think it spends too much on failure and not enough on opportunity, nor to treat it as a fantasy cashpoint for every policy going, but instead to reform it and put work and opportunity at its heart. That is what I am doing, and I think that is the best way to reform the welfare system. I am often asked about welfare reform as though it is a “High Noon” moment in Parliament. When we put in place the youth guarantee, that is welfare reform. When we put in place more work experience places for young people, that is welfare reform. When I offer employers a hiring incentive to take on young people, because I understand that hiring a young person can sometimes be a risk, that is welfare reform. Critically, to go to the question that the Chair opened with, about employment support, when you stop the culture of signed off and written off, and actually extend support to people to get them into work, that is welfare reform. Let me give you some numbers on this. Forgive the acronym, Chair, but the LCWRA group—is the universal credit health group—has previously been characterised by some, including the Resolution Foundation, as “no support, no conditions”. We invited a number of people to come in and get extra support for getting into work, and we had a target of 65,000. We have exceeded that now and have had a stronger response than we expected. We expect about 100,000 people to come forward by July, and that shows that, if you stop dealing with people as signed off and written off and actually offer them help and support to get into work, you can have a welfare reform that makes a difference.

The first thing I would say is that the amount of young people in employment has grown by 1.6% since the last election; it is up 59,000. Under the last Government, it went up by about 1,000. We have a long-term problem and a long-term challenge. Not in any year since the financial crisis, which is the best part of 20 years ago now—not in any single year under the last Government—did youth employment levels reach the levels they reached before the financial crisis. The challenge of NEETs—I do not particularly like that term; it is not a pretty term—and youth inactivity is not a new one. Youth inactivity went up by a quarter of a million between 2021 and 2024. On the specific policy choices to which you refer—the Committee will know this, but I am not sure how widely known it is outside—there is a tax break in place for young employees under the age of 21, and no employer national insurance is liable, unless someone is earning more than £50,000 a year, and not many people that age are earning that. I do not think that that is well enough known about, but it is there, with the addition now of a £3,000 hiring incentive, provided that the young person has been out of work and claiming universal credit for six months. For many jobs, that is roughly the equivalent of a year’s national insurance contributions. There is help on both the tax side and the incentive side for hiring young people. The other thing I would mention is changes in the apprenticeship system. In the system we inherited, the bulk of the apprenticeship budget was going on people who were in work and over 25. I am all for in-work training—it is a very good and important thing—but there is a different question about whether the public apprenticeship budget should be focused on that group or on the young. I believe that it should be focused on the young, and from this autumn onwards that is what we will be doing.

No. I think there has been some misinterpretation of this. I think Mr Darling and I discussed this when I first came before the Committee, a few weeks after being appointed. In the terms of reference, we were sending a signal to the reviewers not to come forward with a big, increasing cost package. There is nothing to stop them coming forward with measures that reduce costs, but we did not want them to come forward with a review that simply says, “Let’s pay much more into the system.” We want to look at the operation of the system. In particular, I think there is a critical question for the system. You referred to the PIP figures that were published yesterday. They do not show only the numbers claiming PIP; they also show the conditions. The conditions have changed over recent years. In particular, there has been an increase in conditions like anxiety and depression, neurodiverse conditions and so on. Is this benefit fit for purpose in the way that it is designed, in dealing with that variety of conditions? That is a very interesting question for the reviewers. When I went to speak to them a few months ago in one of their sessions, that is the question I put to them to consider. I probably said this last time, but Stephen Timms is an excellent person to co-chair this. He is a predecessor of our current Chair on this Committee, so he really has deep knowledge of this system. I believe that he is highly respected by everybody with an interest in this area.

I don’t know about costed options before the review concludes, but I expect an interim report before the summer recess from Stephen and his panel, which they are writing—not me.

That I will always put work and opportunity at the heart of what I do. What I have tried to do since being appointed is to say that we need to change the question the system asks from simply assessing people for benefit entitlement to asking, “How can we help to change your life?” I think that is a more dynamic, fuller and more positive question. We are called the Department for Work and Pensions. We now have skills added to our remit, which makes the “W” bigger, if you like. The commitment you can hold me to is that I will always try to put work and opportunity at the heart of what we do, whether we are dealing with young people, the long-term sick and disabled, people who have been long-term unemployed—any of those groups.

First, I thank the commission for its really important work. There are lots of elements to this, but to go back in history again, the big fundamental reform dating from the latter days of the last Labour Government and the early years of the coalition was implemented as part of the Turner recommendations. We had auto-enrolment, which I think has been a really big policy success for the UK. We are very good in this country at talking about what we do not do well, but that was a big and important policy reform that we did well. It has given people a measure of security in future pension income that they would not have had if that had not come into place—hats off to everyone involved in it. The task now, however many years on we are, is to look at where the gaps are in that reform, who was left out of it and what we should do about that. As you would expect, the commission has identified that, even with those good reforms from 15 or 20 years ago, a proportion of the British working public are not saving enough for retirement, which has implications for their future quality of life. The commission is looking at that in detail and will make recommendations.

I have not given any instructions to not look here or there; the commission is free to do its work. Of course, another big reform was the new state pension, which started for those retiring after 2016. It was intended to deal with some of the gaps in the previous system; it was set at a higher level. That is the system rolling forward, although there is still the issue—a particularly sharp issue—of adequacy of pension incomes and pension poverty for older pensioners, some of them older women who retired before that date. We may come on to discuss that.

Most people will not rely purely on the state pension. About 20% do, but most people have either a state second pension—SERPS—or some other occupational pension on top of that. I am not a financial adviser, but it makes sense, if people can, to invest in a pension. The tax system incentivises people doing that, as we know, for pension contributions to not rely purely on the state pension as they get older. It is a balance between the two; across Governments of different colours, that is what has been encouraged. It works well for many people, but there are people who are not saving enough, and there are gaps in the system, and the Pensions Commission is looking at that.

There is a lot in that. It has gone up as a proportion of GDP by about 1% over the last six or seven years—

One per cent of GDP is quite significant. Part of it that has probably grown more than others is health and disability benefits. Ms Baxter asked me a few moments ago about the standard unemployment rates. That has not been going up as a percentage of GDP; it has probably been going down. What has been going up is health and disability benefits—Mr Bedford’s question quoted some of the numbers involved in that. Cost is a consideration. Cost is not a dirty word; we have to look at the cost of the system. I am aware of the cost of the system. I am aware of these steep increases in health and disability benefits, which are often quoted. There is another part of this, which I am keen that we reflect in our discussions, which is life stories and what I refer to as the stickiness of long-term sick and disability benefits: once people are on them, it is very difficult to come off. There will be a certain proportion of people who can never work—who are so disabled that their condition will never change and who can never work—and the welfare state should always be there to look after people in those circumstances. But I believe there is a group—probably a bigger group—who, with the right help and support, could do some work. The truth is that that help and support has not been in place in recent years. I can say gently that it was not in place under the time of the last Government. We are trying to put more of it in place now, and I think that is really important—that we do not just consider a snapshot of what the system spends, but also consider the life story over time of what that spending results in. What I am keen to do—I have said this a few times this morning—is to see us invest more in opportunity, training and chances to work, and less in the consequences of those things not being in place. That is what is informing my policy agenda in the Department.

There are two main things. Of course, we have the basic state pension, which rose by 4.8% last year, if my memory serves me right. That was worth about £575 a year to people on the new state pension—less on the older state pension. That is a sizeable increase. For those who do not benefit from that—we were speaking about that earlier—there is pension credit. We are always encouraging people to claim the pension credit to which they are entitled. The Committee will know, however, that there have been long-term issues with people underclaiming pension credit and not claiming the help to which they are entitled. We have had lots of information campaigns and we have put in lots of effort, and the numbers have gone up, but that is what pension credit is there for: those who do not have access to enough income due to the state pension that they receive. There are other bits of help, like winter fuel payments and so on, but they are the two main things.

Let me take every opportunity, including this one, to encourage anyone watching to apply if they might be entitled to pension credit. They have nothing to lose by applying. I encourage every pensioner who thinks that they might be able to access this help to take it up. It is theirs as a right. There has been a long-term issue with some people not doing that. Some pensioners I know are proud and they do not want to ask for help, but I would say to people, “It’s there for you.” If their income and all the other conditions match, people should apply. Peter, you probably have more history than me of various take-up campaigns. Is there anything that you want to add?

This is a really important point—I am glad you have asked about it—not just for DWP but across Government. Data sharing can really help. We began our discussion with Connect to Work and devolved systems, and data sharing is a really important part of that. There are trust issues, and people want their data to be protected. However, my view is that we can and should do more on this, and it will be helpful. I will give an example in another context. We have a new data-sharing agreement where we are going to be able to use data from LinkedIn about real-time movements in the labour market—us using its data, not the other way around. That is so we can track what jobs people are actually applying for and how careers are changing. That will help to inform the skills system, where we have Skills England, which accredits, reviews and changes the apprenticeship courses available. It will be of particular help to it to know what is actually happening in the labour market around people’s career movements. Constant curiosity about what is happening and how to better use data are really important tools of public policy.

2027 for what?

If that is what we said, we will check on progress for that. However, I think this is an ongoing thing. I do not think data sharing happens in one move. This is a cultural thing across Government and across all sorts of Departments. It is one that is much underused, and the lack of data sharing has probably been harmful to public policy. We need to do a lot more of it.

There are periodic reviews of this built into the process. The state pension age has been rising in the last couple of decades. I do not want to pre-empt anything, but that review is built into the process. That is the timescale, and I have no changes to announce on that this morning.

There is a lot there. I am an optimist about growing older; I hope people see a productive working life when well up in years. One part of the story is that the increase in the state pension age has been accompanied by increasing rates of employment in people close to state retirement age, but you are right that another part of the story is that being 67 or 68 years old can feel very different in different parts of the country. I represent a working-class, Black Country constituency where there is a tradition of physical work, and I know that it can feel quite different to be 67 or 68 years old in my constituency compared with leafier parts of the country. We have to bear that in mind and consider all these aspects when thinking about the state pension age in the future so that we have a system that is fair to everyone, is financially sustainable and does the best job it can to give people security in retirement.

I will have to consider that, as I do not want to give you the wrong answer, but all the information is very valuable.

We should consider all these factors. I am conscious of and stand by what I just said to Mr Egan about how the same age can feel different and be experienced differently by people in different parts of the country. I am not trying to duck the question when I say this, but these are difficult decisions. You have to take into account affordability for the country, because even though it is a contributory system, it really works as a pay-as-you-go system. It has to be affordable and give people security in retirement, but it has to take into account the factors that you raise as well. We owe that to the public. It is a very delicate decision, which is why we do these careful reviews to take all these things into account.

Is that for me?

Yes, we are quite close.

When it is published, you will see that what we are trying to do through the action plan is learn from what happened before and think in particular about how we communicate with people. How you communicate with people and where they get their information now is of course vastly different to the way it was in the past. You see that in the way people consume media—physical newspapers versus electronic media and so on. There are big changes going on. We and the whole of Government have to respond to that in the way we communicate with the public. That is the heart of it.

There are trust issues; that is really important. I think gov.uk, which is one very important platform for us, is trusted and should be trusted, but you are right: there are trust issues in how people get their information. This is a challenge for Government right across the board, not just in our Department. We have to be alive to it, and the communications departments which exist in every Department have to change with the times.

I am one of the few old timers who has served as a Minister in both Governments.

Thank you. I often get treated as a walking history book; I do not know if it is a compliment or not. I think that comparison is a little bit unfair. This Government will do more to tackle child poverty in a single Parliament than, I think, any of its predecessors. The measures we have taken—not just the two-child limit, but free school meals for families on universal credit, the energy help that I referred to earlier, the crisis and resilience fund, the cost of living measures that have been announced by the Chancellor—all show a commitment to this.

It is a very good question, and the answer is yes. This is not “one and done”; there is an ongoing cross-Government effort. In fact, the interministerial group on this meets later today, jointly chaired by my colleagues the Minister for Employment and the Minister for Children and Families. They are working on this together, and their job is to drive this across Government, so that we do not have a situation that happens perhaps too often in government where something is announced, and people think, “That’s it,” and move on to the next thing. On your interpretation of the numbers, there is a parallel here maybe with NHS waiting lists. NHS waiting lists are falling now for the first time in many years, but the comparison is not just with what we inherited; it is with what the trend was, if we had not done anything. I think that is a really important thing when we judge the numbers, the success of this and the political effort going into this. We did not inherit a static state either on child poverty or on NHS waiting lists. We inherited an upward curve. We now, in both areas, have a downward curve. That is really important in interpreting the numbers.

I am going to be slightly partisan here, Chair; I hope that is forgivable. I try not to do it too much in front of a cross-party body such as this, but as long as my party is in power, I think this will be a priority.

Thank you, Chair. It is right that people push for more. I totally understand it. I spoke to the Child Poverty Alliance in a speech last week or the week before. It said pretty much what you have just said, or a similar version of it. It was very pleased with what has happened, but it wanted to push for more. It is good that organisations campaign to do that. One of our sister parties had a slogan that was something like, “Proud but not satisfied.” People should push for more, but you probably expect me to acknowledge what has been done in this area. The other thing, which was touched on a few times this morning, is life stories. It is really important that this is seen in the context of life stories, and not just an income snapshot. I stress that all the time, because we know that children who are less likely to be poor will do better at school and have better chances in life and so on. That is a critical part of this story.

I want to consider all of this after the reviews that I referred to, in particular the Milburn review with regard to young people, later in the year, so I do not want to be ruling things in or out today.

First, I am really grateful to Alan Milburn for the work he has done. You had him before you quite recently for an evidence session; I hope you found that valuable. I thought his report was incredibly powerful. On that 25:1 ratio, I want to change that equation, and that is why I put forward a £2.5 billion investment in the youth guarantee to expand opportunity for young people. The system does need change in that direction. As I said in response to one of the earlier questions, instead of spending on the consequences of people being inactive, let’s invest in them becoming active. To go back to life stories, there are striking figures on this. If a young person goes on to the benefit you asked me about a moment ago at age 20, they are more likely to celebrate their 30th birthday and still be on that benefit than to have had a steady job for any year in between. We often think of ill health or long-term sickness benefits as something that would apply to old people in particular. In terms of the stock of people on them, that is probably true, but there has been an increasing trend in young people. In the young persons’ universal credit caseload—people under age 25—the proportion of those young people on long-term sickness benefits has doubled in the last six years or so. There is a big thing happening there that should really give us all pause for thought; more than that, it should be a call to action to invest more in opportunities for those young people. That is why I have talked so much in the last nine months about trying to get young people into work, trying to get more employment support to them, trying to change the apprenticeship system, trying to get more work experience for them and everything that I am trying to do. I am not saying that will be enough—I think we will have to do more when Alan Milburn reports in the autumn—but it is a really good start and an important change in the direction of the system.

I am not announcing benefit changes today. We have just implemented a benefit change from April, which the Committee will know about, on UC health. We have cut in half the difference between the UC health rate for new claimants and the standard rate—it goes back to the questions Ms Baxter raised to me. There are two parts to that; there is what you get on UC health and there is also what you get on the standard rate, and it is important to consider both of them. So we have made a very significant change—probably one that has not had much attention because of the furore over everything else that happened last year. We have done that, but I do not have any further changes to announce today.

A bit like the answer to the question on child poverty the Chair asked me a wee minute ago, we do not have a formal target, but I really want to get these numbers down. Let me tell you what is achievable. I spent last Thursday in the Netherlands, which has a NEET rate one third of ours. I recommend the Committee having a look at what people are doing in the Netherlands, if you wish, at some point.

What was really striking about the visits and the discussions I had with my opposite number, the Minister there—everything we visited—was that they do not have one intervention or one fork in the road, which our system is characterised by. They have multiple interventions to help young people all the way through, right up until the age of 27. It is work experience, training, going to college—it is intervention after intervention, at age 16, 18 and right through the system; there is very active support for young people. They do have a rising rate of youth unemployment, but it is at a lower level than ours. It is just a more active system. You cannot lift and shift entirely from one country to another—there are always different traditions and so on—and I do not pretend you can, but I think there are lessons we can learn from what they are doing and from other countries that have lower rates of youth inactivity than we do.

That is true, and some of those opportunities are for work experience; there are 300,000 more work experience opportunities. These are really important. By the way, work experience is taken very seriously in the Netherlands. One of the startling facts in the Milburn report was that a majority of those 1 million young people who are NEET have never worked. Now, there is a tendency to say, “In my day, this and that.” I don’t really mean that, but I remember the jobs I had as a teenager—delivering newspapers, stacking shelves with newspapers, cutting people’s grass or whatever I was doing. The sense of pride and purpose in being able to earn your own money is really important for young people, and too many young people are not getting that. Then if you add AI hiring—it is a soul-destroying experience for young people to go through where they apply for maybe 200 jobs, it is all AI and they do not even get a response. There is a lot of things going on here, which we as a Government have a duty to try to respond to, with that question, “How do we help young people?”, in mind. I think the narrative around young people is far too negative—all the stuff being written about young people as snowflakes and shirkers and not wanting to do anything. The young people that I meet want to work; they want to have a chance. It is up to us to give them a platform to do that. On the things you have mentioned, I think the issue of work experience is so important because it helps get them out of that bind of, “We can’t give you a job because you have no experience.” Well, how are they supposed to get experience? So we have to help them.

It is a brilliant question. If I could perhaps use quite a Whitehall phrase, it is a challenge, and it has been a challenge for a long time. I always say that human beings do not live their lives according to our departmental boundaries; they really do not care much about what is the responsibility of DWP, the Department for Education, the local authority or the Department of Health, or any of that. We have to treat people as people. What I would say to encourage you is that the Secretary of State for Education and the Secretary of State for Health really take this seriously. They are as committed as I am to an agenda of opportunity for young people. Let me give you one example where I think things are being done in a more imaginative way. I visited a youth hub in Tower Hamlets the other day. It is about getting employment help and support out of the job centre and into the community, and we hope for many more of them are around the country, sometimes in partnership with the local football club or rugby club or whatever. It brings together not just job finding help, but mental health, housing and debt advice help, because people are people. They are not just dealing with one thing. It is not a linear, “We are going to take you, and it is all just about work.” Sometimes there are some things that need to be sorted out before people get there, and the youth hub can be a really positive way to do that. To go back to my Netherlands trip last Thursday, what was really interesting was that I went to a youth hub in the south of The Hague and it was almost exactly the same as what we were doing in Tower Hamlets: the same services, and the same feel when you went in. If you talk to the DWP staff who work in them—sometimes it is a couple of days a week—they are really positive about it. It is a different atmosphere for the young person going in. We have to be imaginative about that cross-departmental challenge. It is a great question. It has bedevilled Governments of all colours for many years, but this is so important that we cannot allow departmental boundaries to get in the way of opportunity.

We mustn’t fall under the illusion that a Committee is the answer.

With great respect to this body. That is the classic way of dealing with this, and I do not want to knock it—or maybe I just did. There may be a role for saying, “We’ll have a Cabinet Committee on it.” It may be a good thing, and interministerial groups can do really good work, but what is more important is a shared political commitment that it is a priority. I mentioned the Secretaries of State for Health and Education, and I am enormously grateful to the Prime Minister and the Chancellor for their support for this agenda. I had to go to the Chancellor and ask her for money for the youth guarantee, when I know there are many other calls on the public purse, and she was willing to support that and the Treasury was willing to support that. The centre of Government, in terms of No. 10 and the Treasury, are supportive of this agenda. I have heard the Prime Minister talk about it. I believe that this is an agenda for all seasons. It should be a real national cause for us, and I want to beat the drum for it, not just in terms of what the Government should do but out there, talking to businesses. Another appointment we made recently was Marc Bolland as the Department’s lead NED. He is someone with great business experience, as the former chief executive of Marks and Spencer and Morrisons, and he has fantastic business contacts. He is the founder of Movement to Work, which has helped 200,000 young people get into work since it was set up at the time of the riots in 2011. So we have a lot of people really committed to this right across the board.

We have to work with the devolution settlement. Somebody asked me earlier about the previous Labour Government, and I said that I am one of the old timers who has served in both. Of course, it was the previous Labour Government that established the Scottish Parliament and the Welsh Senedd. It is important to say seriously that we respect the settlement. You are correct that there are significant parts of the issues that I have been talking about today—specifically the education, skills and apprenticeships system—that are devolved. I hope that Governments of all colours want to do more about youth opportunity and young people’s rate of inactivity. It is in no one’s interest not to take this seriously, so I would hope to have a good and constructive dialogue with the Scottish Government about this. There are certain elements of this that are held by the UK Government, including much of the youth guarantee and the employer subsidies. We have a jobcentre network that is GB-wide. Northern Ireland is a slightly different situation: the social security system is devolved, although in practice Northern Ireland follows what the UK Government do on these things very closely, so that is slightly different. The truth is that devolution is here to stay, and we have to work with the system that our previous Government legislated for. I hope that, to some extent, people can check their politics at the door, as the Americans say, and share in an agenda of young people, work and opportunity.

Ms Baxter, I should have added that I went to Hampden Park a few months ago and announced 80 new youth hubs, a proportion of which are in Scotland, so we are setting up youth hubs in Scotland too.

We always have a positive and constructive dialogue with the Scottish Government.

That is a great question, and it needs careful work. I am more optimistic than some about this. I spoke to the Mayoral Council that met in York a couple of weeks ago, and we talked about this. I think the new devolution structure that has developed in the country in the past 15 or 20 years, with these powerful elected mayors, has a lot to offer to this agenda. We have already done some things: youth trailblazers, economic inactivity trailblazers and Connect to Work, which the Chair asked me about. I think we can do more, but it has to be with the right understanding of what money is for and the outcomes we are trying to drive. Outcomes are the most important thing. If we are honest, there are loads of organisations. I bet every one of the elected MPs around this table could name lots of organisations in their area trying to help people into work. They are all trying their best, but what we really need to look at is outcomes: how many people did you actually get into work? The dialogue we need to have with this new and emerging devolved set-up is, “If we allocate money for young people, for the long-term unemployed, for sick and disabled people or for whichever group, it should be spent on that group. It should be outcome-focused. There should be an accountability framework But within that, you know your labour market, you know your own local health service set-up, you know your own local structures, so there should be flexibility within that.”

That goes right through the system. The questions we ask people when they are qualifying for benefits—certainly sickness and disability benefits—are all about what you cannot do.

I know. What I think we have to do in terms of tackling what you call the deficit model is change the exam question the system asks, from “What are you entitled to?” to “How do we help you change your life?” Once you have decided on the right exam question, then policy follows.

With Treasury funding, a part of the dialogue with local authorities is, “If we do well, do we benefit financially?” The obvious question is, “What if you don’t do well? Who picks up the tab?” That is not always an easy discussion in terms of what you describe as the deficit model. Part of the dialogue has to be, “How do you realistically do risk sharing and benefit sharing within the funding mechanisms we have?” It is an important and legitimate part of the discussion.

I can assure you that the Secretary of State for Business would share my view about youth opportunity and work. We are good and close colleagues. Perhaps we could set a target. I do not have religion one way or the other about it. You described a holy grail; I do not think a target is always the holy grail. It may help, but I hope that I have been clear—I am taking the Chair’s instruction to be brief here—what the priority is and what we are trying to do.

Trailblazers are local projects for mayors in this country with a lot of flexibility to try to help young people into work. Being candid, given that they have a lot of flexibility, I would expect different results in different areas, with some having more success than others. That is probably in the nature of it. That is why we did that. The learnings from the Netherlands visit are probably just about the real benefit of having a focus on this and an understanding between Government, education and the business community in particular that this is a big priority and in the national interest. I hope we can develop a shared sense of cause about this in the way I believe they have in the Netherlands.

Great point. That is absolutely true. I believe that expanding university participation has been a big advance in society. When I went to university 40 years ago, working-class people at universities were as rare as hen’s teeth. That is not a good situation; there were a lot of people cut off from opportunity, and I am glad that the previous Labour Government played a big role in changing that, because I think it has opened up huge opportunity for working-class people. That is point one. Point two is that it is not the only route: FE colleges, training and apprenticeships should be held in just as high esteem as having a degree. That has not always been true in this country, and we need to change that. I think it is changing, and I saw the pride the apprentices that I met at Cammell Laird Shipyard, TfL or Gatwick airport felt in the wonderful work that they are doing. I think young people are changing the way they think about these routes. It is a really important feature of the Dutch system, and we need to make it a feature of ours, too.

It is really important. Of course, there is an overlap because an increasing proportion of young people are, as we said earlier, registering for long-term sickness benefits. I want us to take this seriously. We have not got into the Access to Work system this morning, which we might. We are employing 500 people to clear the backlog in that, which has bedevilled the scheme in recent years. I told the Department that that was not good enough and we had to clear the backlog, and we have a plan to do that, which is important. Broader than Access to Work—going to Ms Ali’s question about deficit models and so on—I think we should be aiming for maximum participation. Sometimes that is work, but sometimes it is society, too. If there is a philosophy that unites all the employment support under the “Pathways to Work” banner, Connect to Work and WorkWell, it is that you should have maximum participation, and that is what we will try to help you do. It is important for us, and we have to keep going on it.