The Rt Hon Stephen Timms MP, Shadow Minister for Employment, delivered the following speech to the IntoWork Convention on 9 July 2014.
I want this morning to set out in greater detail our plans for employment support in the event of our being elected next Spring.
After three damaging years of flat-lining, the economy is growing. New jobs are being created. We hope that will continue to be the case for some time. But its going to take a great deal of effort to deal successfully with the legacy impact in the UK of the global financial crisis, and the three years after 2010 with hardly any growth. The return of growth now creates the opportunity to address it, and its an opportunity we have to grasp.
We are concerned in particular by three major problems in the labour market:
I want to say a little about each of those, because addressing each of them is shaping our policy thinking. And serious skills shortages – and the growing mismatch between the shrinking number of unskilled jobs and the large number of unskilled people – are also underlining the need for change.
Unemployment among young people has thankfully come down in recent months, but at 850,000 – a youth unemployment rate almost three times the overall rate – its far too high. It spells trouble not just for those out of work now, and the Prince's Trust has highlighted links between unemployment and mental health problems for young people, but for the economy in the future.
Just compare unemployment by age in the UK and Germany. Overall unemployment is higher, of course, in the UK. But, for over 30s, there is hardly any difference between the two countries. The overall disparity is almost entirely accounted for by higher unemployment among the under 30s, and in particular by much higher unemployment among young people under 25. We can’t let that go on.
In his review on growth in the UK economy, Lord Andrew Adonis points out: “The UK has near record levels of youth unemployment and chronic skills shortages.” We have to do a far better job – recognising how the economy is changing – of preparing young people to contribute.
Long term unemployment
The number of people – of all ages – out of work for two years plus reached a twenty year high last year. It has thankfully come down a little since then, but not very much. And we know that those who have been out of work for a long time will be at the back of the queue for the new jobs being created.
Inclusion’s Tony Wilson and Paul Bivand have pointed out in a recent pamphlet for the TUC: “hiring rates for the longer-term unemployed remain far below those for shorter-term jobseekers, and hiring rates have fallen significantly for the very longest unemployed (more than two years).” Its much harder to get in to work if you've been out of work more than two years.
Its going to require serious effort to support those people to make a contribution again, to avoid creating a permanent drag-anchor on the productiveness of the UK economy.
People with health impairments
IPPR’s research for its “Condition of Britain” report has pointed out that we have a much lower rate of employment among people with health impairments than some other OECD countries. And 93% of people on Employment and Support Allowance have failed to secure a sustained job outcome after two years on the Work Programme. We have to do much better. We are looking with great interest at the proposals made in this area in the last few weeks both by IPPR and by Inclusion.
For people on JSA, we are committed to the urgent introduction of a Compulsory Job Guarantee. Young people who have been out of work for a year, and over 25s who have been out of work for two years will be guaranteed the offer of a job – and, where possible, a choice of jobs. And once the offers have been made, their Jobseekers Allowance will stop.
The jobs will be intended to last at least six months, to be for at least 25 hours per week, and paid at least at the National Minimum Wage. The model is based on the Future Jobs Fund, in place for young people until the last election, and has been in use since in successful initiatives like Jobs Growth Wales. Where necessary the Government will pay the full six month wage cost to ensure that a job is available.
For us, this is the key to raising substantially the overall performance of employment support and ensuring that we re-engage many of those – young and not so young – who are not able to make a contribution at the moment. We have set up a Compulsory Job Guarantee Advisory Board to work with us through the details of making the Guarantee successful. We would welcome ideas about the interface between the Work Programme and the Guarantee when it is first introduced.
I want to say more today about how we want to support people on Jobseekers Allowance before they reach the one year or two year point when the Job Guarantee kicks in.
The Youth Allowance
Ed Miliband has recently endorsed a proposal made by IPPR in “The Condition of Britain” for 18 to 21 year olds. IPPR argues: “Our goal should be for all young people to be earning or learning… Currently young people in this age group are sucked into a benefit system that is designed for adults who have lost their jobs rather than for young people starting out on their careers”.
The proposal is that young people in that age group becoming unemployed should not be placed on JSA, but instead on a new Youth Allowance, if they have not yet been in employment for a year, and they have not yet achieved a level 3 qualification.
The Youth Allowance will be paid at the same level as Jobseekers Allowance, but it will be available to people in full time learning. As IPPR sets out: “It would aim to increase the number of 18-21 year olds remaining in education to gain the skills necessary to embark on a successful career”.
Taken alone, that would be a major new spending commitment. We have agreed to IPPR’s proposal that it should be funded by making the Youth Allowance means tested on the basis of parental income, along the lines of the system used for maintenance grants for higher education. On the IPPR's model, it could produce a small net saving to the Exchequer.
Replacing the Work Programme
Work Programme contracts are due to end in 2016, although there are rumours they will be extended to 2017. We will allow the Work Programme contracts to run to their conclusion. Terminating the previous programme early was a costly mistake made by the current Government, and it led to many months of lamentable performance as providers of the new programme struggled to find their feet. Its a mistake we will not be repeating.
A Labour Government would commission the successor to the Work Programme in a different way, reflecting other changes we will make – like the Guarantee and the introduction of the Youth Allowance – and to improve performance, and the experience of participants in the programme.
There has been valuable innovation on the Work Programme. We don’t want to lose the gains in efficiency which have been achieved.
But the National Audit Office has found that performance for JSA claimants – even after the terrible performance early on has been put right – is not exceeding previous employment programmes. And performance for ‘hard to help’ groups, like those on Employment and Support Allowance, has been very poor.
A wide range of evaluations have found ‘creaming and parking’. The NAO says that providers now spend less than half of what they promised to invest in groups furthest from the labour market. They also report DWP’s analysis of case files as showing that 46% of participants had not had contact with their work programme provider in the last two months. These are natural, commercial responses to the way the Work Programme was set up.
The Work Programme contract package areas have been too big. Some really good local organisations have been squeezed out, and capacity lost as a result. Local authorities have often played no role in the Work Programme – an omission which, in our view, we can’t afford. A survey of London local authorities found almost half felt they had ‘no influence’ over the Work Programme in their area.
So Labour would establish a national set of minimum s+tandards, including setting out the specialist support that should be in place for those with health impairments and others furthest from the labour market. We will consult on the best way to collect customer feedback and ensure compliance with these standards. One possibility would be to establish a regulatory body, but we would want to canvass industry views before deciding on the best way forward.
More disadvantaged claimants require more up-front investment. We will have to look at the balance between attachment fees and sustainment fees for those who are furthest from the labour market, while maintaining the strong emphasis on sustained performance which has been achieved in the Work Programme. We will retain payment by results.
We will commission the new programme at a more local level, on the boundaries of Local Economic Partnerships and Combined Authorities. Andrew Adonis has set out a compelling case for giving “city and county regions the powers they need to promote growth”. We agree, and the powers here are a case in point.
In the Work Programme, there are important additional benefits of a more localised approach. The current disjunction between employment support and skills support is a serious problem. Successive governments have been unable to line those two things up together.
But at a city region level, employers, providers, jobcentres and colleges can work together with local authorities to build a strategy to meet the needs of their local labour market. And the health service can be there too.
In those areas where combined authorities can demonstrate that they have the capacity to do it, we will devolve commissioning of the replacement for the Work Programme. We recognise, however, that, first time around, there will not be many regions able to take this on.
Funding to secure the contracts will be agreed on a conditional basis, along the lines of the Labour Market Agreements that operate in Canada. It will be based on previous performance within the area, with combined authorities able to keep savings from delivery above the baseline, but responsible for the costs if the delivery mechanisms they commission fall short of it. Delivery must meet the minimum standards that we will set out, and will be monitored on a national basis.
For those areas not yet ready to take on this level of risk, provision will be co-commissioned between the Department for Work and Pensions and local areas working together. Initially, that will be the majority. Local areas will feed in their local growth strategies to the DWP, and will sign off the commissioning strategy. Commissioning itself will be the responsibility of DWP.
We will then encourage combined authorities to develop the capacity to monitor the performance of the Work Programme contracts in their area, and to take a lead on commissioning next time around.
It is widely agree that the current system of classifying jobseekers in terms of the benefit they were in receipt of previously has not worked well. We think we have to come up with something much better.
We understand the scepticism in the UK – particularly in parts of Jobcentre Plus – about the reliability of up front job seeker classification of the kind practised in Australia. I visited Australia last year to see it in operation. It is clearly not infallible. But it works much better than classifying people on whether they were previously on Jobseekers Allowance or Incapacity Benefit – a distinction which, in itself, tells you very little about how much help they are going to need to get back to work.
We therefore agree with the Work and Pensions Select Committee recommendation, set out in their report in January that the department should “develop a ‘segmentation’ tool, to be conducted by Jobcentre advisers face-to-face with claimants, to allocate claimants to separate work streams according to their distance from the labour market and relative need for intensive employment support”, and that this tool should be ready in time for the new Work Programme contracts. In our view, the industry should be involved in advising on it, including drawing on the fantastic data providers now have, so that – as far as possible – the output from the tool will be of value to all providers.
We also agree with the Select Committee that Jobcentre Plus should be evaluated on the basis – not of benefit off-flow – but of “off benefit and into work” performance, on exactly the same basis as Work Programme providers.
The improved labour market is an opportunity we need to grasp. Our aim must be – as the title of the pamphlet by Tony Wilson and Paul Bivand for the TUC puts it – “Equitable full employment – delivering a jobs recovery for all”. The recovery isn’t delivering for far too many people at the moment. Without a change of policy, there will be a large, long term price to be paid.
Our aim is to develop policies that can deliver for everyone – policies we can quickly put into effect if we are elected to Government next year. And we look forward to working with everybody here, and with others, as we finalise the details of those policies over the next few months.
The Rt Hon Esther McVey MP, Minister for Employment, delivered the following speech to the IntoWork Convention on 8 July 2014.
Good morning. Thank you very much for inviting me to speak today – I am delighted to be here.
The recent performance of the labour market is a testament to the Government’s success in creating the economic environment and businesses creating the jobs needed to pull the UK out of recession.
But it also very much reflects the vital contribution that all of you have made in getting people back to work over the last year.
The strength of the labour market
There are a record 30.5 million people in work – up 780,000 from a year earlier and up nearly 1.7 million since 2010.
And the number of women in work is up by 699,000 since 2010, with the female employment rate at a record 67.9%.
And we have seen the largest annual rise in full time employment on record – up 678,000 in a year – and the number of private sector workers is up by more than 2 million since 2010.
We have also seen the largest annual fall in the claimant count since 1998 – down 406,000 in a year. And the largest annual fall in long term unemployment since 1998 – down 108,000 in a year.
Even friends in the media have had to recognise that the labour market performance has been strong. Yet for some reason, there are number of myths about today’s labour market that stubbornly persist.
Busting labour market myths
I sometimes hear that the recovery is a ‘fake’ one, built on insecure, temporary jobs and ebay traders. But in fact, the proportion of people taking second jobs has not increased since the recession and the rise in employment is being driven by full-time permanent employees.
It’s often claimed that it’s a London-based recovery driven by Bankers’ bonuses. That’s simply not true. Over the last year, the employment rate has risen in every part of the UK – and it’s risen fastest in the North East and the East Midlands.
Do most part time workers really want to work full time? No, that’s not true either. Most part time workers want to work part time. So called involuntary part time work did rise in the recession but is now starting to fall back, and is actually very low compared to many European countries.
And are there more young people unemployed than ever before? No there are not. Rising participation in education means the unemployed total includes more students than in the past. If students are excluded the current figure – 565,000 – is much lower than the peaks of about 830,000 in 1993 and over one million in 1984.
Scratching below the surface
So having given you some of the headlines and dispensed with some myths, I’d like to scratch below the surface, and talk about some of the underlying trends we’re seeing in today’s labour market.
In 2013 the number of people in work increased by half a million. That was the result of 3.5 million people who left a job and 4 million who took a new one up. A further 2 million people switched directly from one job to another.
The net effect of these changes - rising employment and falling unemployment levels – is encouraging – but something more fundamental is happening too.
At this point, after past recession over the last 30 years, inactivity was rising as governments allowed those who were unemployed to slip away from the labour market, either by moving onto sickness benefits or dropping out altogether.
But under this Government inactivity has turned around and has fallen by 590,000. The rate of inactivity is at it’s lowest for 20 years. For many groups – women especially – it’s already the lowest on record.
So the UK labour force is growing. And there’s an almost dizzying scale of movement in the labour market. There’s also been changes in the types of jobs that people are moving into, and the types of skills demanded by employers.
Whilst there are 4 million fewer jobs in manufacturing than 35 years ago, there are 10 million more jobs in services.
In professions like law, accountancy, advertising and engineering. In IT, communications, finance and hospitality. And in caring professions, education, arts, entertainment and recreation.
Maybe it’s because we were the first industrial nation, but some people tend to look down on jobs in services. They say it’s not the same as making things.
But the shift from a job market dominated by manufacturing to one where most jobs are in services is a common trend seen in many developed countries. And some of our services – like finance, law and education – are world leaders and major export earners.
Role of Government
We all know that change can be difficult and painful, particularly where people’s jobs are affected.
But in the long-term, we won’t succeed by trying to hold back the tide of change. We’ll succeed through being a country that’s open to and even embraces change – because by doing so we’ll be better placed to take advantage of opportunities in new and growing industries.
Businesses and individuals need to do all they can to be informed and forward looking, to have the drive and the work ethic they’ll need to succeed, and be ready to adapt to and take advantage of the many changes they are likely to see during their working lives.
Government’s key role is to provide a framework that supports growth, the creation of jobs, and individuals to embrace these opportunities. That’s why we’re putting so much emphasis on creating a vibrant and competitive economy, cutting out unnecessary regulations and making it as easy as possible for people to start their own business.
Government – at a national and local level - also has an important role to play in ensuring people leave education well prepared for the labour market, and have access to the guidance they need to choose the right career path for them. And it should support people as they deal with the consequences of change, whether that be through financial support in the form of benefits, helping them find their next job, supporting them to re-train or helping them launch their career in a new direction. Clearly it’s in these spaces that DWP and the Welfare to Work industry have a particularly important role to play.
This Government’s welfare reform agenda is about ensuring that all parts of the system are geared to get Britain working. It’s about giving people previously left to languish on out of work benefits the necessary employment support and financial incentives to take on work.
Take the household Benefit Cap for example. It ensures households don't receive more in benefits than the average household earns. It’s successful implementation is testament to what JCP and Local Authorities can achieve together through effective partnership working. Not only is the Benefits Cap expected to save £110m this year, but it is also strengthening the financial incentives to move into work. I’m pleased to say that 6,000 out of the 42,000 household who were capped by March this year have done just that, moved into meaningful work.
Jobcentre Plus and providers work tirelessly to provide the employment support that individuals need. In 2012-13 3.6 million people were to move off Jobseeker’s Allowance, with over 75% leaving within six months of their claim. JCP advertised 4 million jobs for 330,000 employers and work coaches carried out 24.5 million interviews. That’s quite an achievement and something I am very proud of.
I’d like to reflect on one particular part of the Jobcentre Plus offer - schemes such as Work Experience, Sector Based Work Academies, Community Work Placements and Mandatory Work Activity – which are all designed to give people valuable work based skills and experience.
These initiatives have been subject to a great deal of scrutiny in recent months, some critical. However, I’ve listened carefully to what young people and business say, and I’m confident that these schemes are giving people, particularly young people, exactly what they need.
We know that many young people’s greatest worry about finding a rewarding carrier is a lack of experience. Countless times young people have told me that they can’t get a job without work experience, but they can’t get work experience without a job.
The Jobcentre Plus programmes help square that circle. And the results of the work experience evaluation published in February this year speak for themselves:
And we’ve seen similar results in our evaluation of Mandatory Work Activity:
So long as employers and claimants continue to tell me that these schemes work for them, I will continue to strongly support them. And I will continue to encourage employers and voluntary and community sector organisations to back them too.
We’ve also demonstrated that where rules aren’t working, we’ll change them. Traineeships were introduced in August 2013 to provide young JSA and UC claimants with an opportunity to engage in pre-employment training and work experience, and gain level 2 English and Maths skills. We were told that the 16 hour rule made it difficult for some claimants to participate fully in the training and skills elements of traineeships. So we scrapped it: claimants on traineeships can now do up to 30 hours training a week. We will continue to listen and respond to constructive criticisim to ensure we deliver the best support possible.
Impact of our programmes
I’d now like to focus on the performance of three of our major employment programmes for the hardest to help: Work Programme, Work Choice and Troubled Families.
The Work Programme has helped around 300,000 claimants into sustained work. It hasn’t been an easy ride, in fact at times it has been more than a little bumpy. But we have continued down the road together and now we are seeing the positive impact of the changes we are making.
The NAO report published last week highlights early performance for Jobseeker’s Allowance claimants whilst lower than expectations, was in line with Flexible New Deal. However, performance continues to improve and it is expected to be better than previous programmes and to broadly meet our high expectations at the outset.
For Employment and Support Allowance claimants, we acknowledge our initial performance expectations were set too high, however performance is improving. 16,000 ESA claimants have got a Job Outcome on the Work Programme to date with 11,000 of these in year 3 of the programme. We expect performance will exceed our revised expectations and again will be better than previous programmes for this group. 12 per cent was the Job Outcome performance for Pathways to Work. 14 per cent of all Work Programme ESA referrals will achieve a Job Outcome from April 2013 onwards – that’s is a relative improvement of 17% - an additional 7,000 people in lasting employment.
Not only that, we also know there are a further 10 per cent more Job Outcomes that were not scored in the performance figures I have just highlighted – so performance is even better.
I am pleased that performance shows signs of continuing to improve. But, we know there is much more we can do, particularly for ESA claimants. The Department has put in place a more systematic performance management regime. I expect it to drive up performance by: increasing transparency between providers; focusing attention on those contracts which are not doing as well as their competitors, and enabling us to understand the reasons for performance variations.
In terms of the longer-term, we will be looking to build on the Work Programme’s strong foundations. The development of the next phase of the Work Programme will be more about evolution than revolution. I’m glad that some in the industry have already called for such an approach. And I have asked DWP officials to talk with you as we develop the next phase.
Moving now to Work Choice, which is help disabled people who face the most complex barriers to employment into work, with 24,000 indivudals supported since the start of the programme.
You’ll know that I am passionate about getting more disabled people into mainstream jobs. So, as with the Work Programme, I have asked officials to look closely at how we can work together with Work Choice providers to continue to drive improvement to performance.
My performance management teams will begin discussions with providers shortly to take this forward. In line with the changes I’ve already mentioned regarding improvement to Work Programme performance, we will explore whether we can help to manage the current wide Work Choice performance variations by strengthening our performance management and intervention regime, including a more rigorous focus on managing starts and cohort performance.
The Troubled Families programme is another example of this Government’s determination and commitment to dealing with the most difficult issues head-on. In December 2011 the Prime Minister made a personal commitment on behalf of this Government to turn around the lives of 120,000 of the most troubled families in England by the end of the current Parliament.
The programme, delivered through Local Authorities, centres on an approach of one family, one plan – recognising the need for services - be it, health, social workers, truancy officers, police - to be aligned and coordinated in a way that actually moves the family forward.
More than 97,000 of the 120,000 families are being worked with and almost 40,000 are turning their lives around.
My Department focuses on supporting sustained change in these families by helping the adults find work. Last March in partnership with DCLG, we published an agreement which promotes the importance of work for families and as a result we seconded 152 specialist JCP employment advisers into 94 Local Authorities.
These advisers are providing hands on practical employment advice and support to family members. As a result of this intensive support we have helped family members from 3,400 families to find sustained and lasting work.
This programme works, and as a result we have already announced an expansion to the programme in the Spending Review. From 2015 we will extend the programme to support a further 400,000 families at risk, with 40,000 more families scheduled to receive support in this current financial year.
Future challenges – next phases of welfare reform
I firmly believe that this Government and the Welfare to Work community has improved the support available to get people back to work.
Our world class labour market regime has proved a great base for creating record employment levels.
But there is more to do if we are to see a return to full employment – with an employment rate higher than any of the G7 economies.
The biggest reform – Universal Credit – is fully underway in a growing number of areas, including right across the North West, beginning on 23 June. UC is available in Hyde, Stalybridge, Stretford, Altrincham. Southport, Crosby, Bootle, Bolton and Farnworth. And as of yesterday, Birkenhead, Bromborough, Hoylake, and Upton too
Last week UC opened its doors to couples for the first time, as the new service begins to accept joint claims in Hammersmith, Inverness, Rugby, Bath and Harrogate.
And we have now rolled out the Claimant Commitment, which has been introduced in all jobcentres across Britain. It spells out what we expect from jobseekers when they search for work. Over 600,000 Claimant Commitments have been signed – resetting the relationship between benefit claimants and Jobcentre Plus help.
The key to Universal Credit is that it makes work pay. It will improve work incentives to claimants both in and out of work, support childcare and make 3 million households better off.
It provides a framework to move towards full employment and to create a culture of work throughout society. It is essential that at the same time as transforming the benefit framework, we take this opportunity to create a labour market regime to fit it.
So this department will continue to develop policies that encourage labour market participation for people on out of work benefits. We will continue to focus on raising the employment rate, reducing worklessness and driving down economic inactivity.
But Universal Credit can provide a much stronger focus on earnings progression and supporting people through to financial independence from the state, not just abandoning them at the doorway to employment. It will also bring many more people (particularly housing benefit recipients and the partners of benefit claimants) into active conditionality and employment support for the first time.
So an established UC system, operating in a strengthening labour market is an opportunity for a new phase of reform.
I want us to build on the progress we have made since 2010, based on three key principles:
Firstly, we need a more efficient and more sophisticated regime for those out of work.
We need to move away from the inefficient, blanket approach developed in the 1990s to a system that focuses support on those that need it and builds on our very successful personalised claimant commitment.
In particular I want to develop new approaches to deal more effectively with people that cycle in and out of benefits often over extended periods of time. And we need to do much more to help disengaged young people, including those under 18, get the skills they need to move not just into work but into rewarding careers.
Secondly, we should better target our spending on labour market programmes, with a stronger focus on tackling entrenched worklessness - those claimants who have spent at least three of the last four years on working age benefits.
If we are to achieve our full employment ambitions, we will need to ensure that all people are able to take advantage of the opportunities offered by a strengthening labour market.
ESA claimants, young people without work experience, JSA claimants with mental health conditions, and members of troubled families are clear priorities.
We need to better understand people in entrenched worklessness, and how this group can then move into the labour market.
Thirdly, I want to create an in-work labour market regime, to ensure that UC claimants progress in work and ultimately achieve financial independence. Providing active support and challenge for UC claimants on low pay will be critical in ensuring that we protect benefit spend and do not repeat the failures of the tax credit system.
We need to look closely at the role of the skills system for in work UC claimants alongside this. We are steadily building our evidence base on what works. We have taken early steps towards this within UC Live Service and have a range of small scale pilots running over the coming months and years.
Taken together, these elements will help us to create a 21st Century labour market regime to complement a 21st Century benefit system. It will modernise our service and help achieve our full employment and social justice ambitions.
But in order to achieve this we need to continue working together, pushing the boundaries, remaining imaginative, innovative and inspired.
The importance of the support that the welfare to work sector provides cannot be underestimated. It transforms lives. It means that people, who once felt they had no future, can see the opportunities open to them. It means individuals in jobs, really feeling the impact of the recovery.
Families able to feel secure about their futures, breadwinners able to feel proud that they can support them, and children with that all-important role model to look up to, offering hope and self-worth, with aspirations for their own future transformed.
Thank you for your hard work and dedication over the past year. I am sure that together we will rise to the challenges to come.
The 2014 Youth Employment Convention sought to put young people at the heart of next year’s general election. The legacy report, sponsored by Shaw Trust, is comprised of 25 short essays from contributors to the convention, all experts in their field. It describes why youth unemployment remains a systemic issue despite an improving economy and makes the case for policy changes that will support the skills and employment needs of our most valuable national asset – our young people. It is hoped that that the report and the contributor’s recommendations will influence the manifestos of all the major political parties.
The convention sought to tackle a variety of issues including: whether we are any closer to the social mobility we seek; whether policy makers and employers really do have the ambition to address the challenges of youth unemployment and the skills deficit and what a shared responsibility to tackle both looks like and whether it’s achievable. The voice of young people was central to the convention – opening it with a youth debate, closing it with a call to action and contributing throughout the event.
Contributors to the report include: Lord Baker of Dorking, who argues that the “skills mismatch” is holding back economic growth and makes a direct correlation between the UK’s “weak commitment to technical pathways” and our high NEET rates; Dame Tessa Jowell MP, who calls the 25% youth unemployment rate in the capital, a “scar on London”, and argues for a “skills guarantee” ensuring that no young person leaves school without the necessary skills to secure, progress and succeed in work; Stewart Segal of AELP appeals to government to integrate BIS and DWP supported programmes so that a clearer and more effective offer can be made to young people and Mark Fisher of DWP reminds us that even as youth employment rises it is the most disadvantaged young people who will be left behind unless strong and effective partnerships are made that can effect their life chances.
Perhaps the most important contributions though are those of the youth delegates - young people who are experiencing the education, skills and employment system right now. Francis Augusto, Youth Ambassador from Talent Match London, says that “politicians and decision makers should take responsibility for failing a great proportion of young people.”
More must certainly be done and, building on the dynamic conversation over two days at the convention that involved young people, employers, providers of support services, commissioners, policy makers and stakeholders, this legacy report draws together the best of the thinking that came out of the event.
Today we publish the final report in our Fit for Purpose project, setting out how we can reform employment support for disabled people and those with health conditions. And there is a clear case for reform.
Just over half of all disabled people are out of work, compared with one in four of those who aren’t disabled. Disabled people who are unemployed are far less likely to find work, more likely to become long-term unemployed and more likely to be disadvantaged in other ways too. But just one in ten of those who are out of work are receiving employment support – with just one in two hundred on the specialist programme ‘Work Choice’.
We call for a significant expansion in support, alongside reforms to how that support is delivered. At present, most disabled people and those with health conditions who are receiving support do so through the Work Programme. Yesterday’s National Audit Office report confirms our previous analysis: that the Work Programme is now performing fairly well for those who are closer to work but is not working nearly as well for disabled people and those with health conditions.
In our interim report, we show that this is in large part a result of the Government setting the wrong targets (a fact that the Government has finally acknowledged, in yesterday’s NAO report), which has led to systematic under-funding for those furthest from work. As a consequence, funding for those with health conditions has fallen to £550 per participant compared with original plans of £1,200.
In today’s report, we set out how a new system should work. We draw on a wide review of approaches in the UK and overseas, as well as twenty in-depth case studies of innovative approaches. We also tested our ideas through focus groups with disabled people and those with health conditions.
We call for a new approach, with a clear national framework within which local and national partners – across employment, health, local government, skills, housing and so on – can design and build the right support. The framework should include a common process for assessing the needs of disabled people and those with health conditions, and then referral into one of three levels of support:
These levels need not be commissioned as distinctly separate programmes – indeed there are arguments for having fewer programmes but clear streams of support within that. However, the national framework would ensure that there is consistency in who is able to access support, what levels of support would be available and how we measure success.
Our report sets out growing evidence on what works, but also that there is a mixed picture on how far this is reflected in the design and the delivery of support. So this framework would be underpinned by a ‘What Works Unit’ to stimulate innovation and sharing and to fund new approaches to service design and delivery, as well as by a renewed focus on workforce development and quality management.
Critically, we also call for a more co-ordinated approach to employer engagement. Employers play a central role in creating opportunities for disabled people and in providing support to those in work. There are many good examples of how employers, disabled people and their services are working together (like this), but these are often within a fragmented and complicated system of programmes, contracts and funding. We need a simpler system – which focuses in particular on improving awareness and education and on working through trade bodies and employer groups.
Today’s report draws on expert input from twenty-five organisations that work with and support disabled people and those with health conditions, as well as from service users themselves. We set out the case for reform, but also that reform is possible. There is a growing consensus that we need to do more to ensure that employment support is fit for purpose – today’s report, we hope, sets out how.
The full report is available here: http://www.cesi.org.uk/publications/fit-purpose-transforming-employment-support-disabled-people-and-those-health-conditions
The Youth Employment Convention 2014 was the UK's biggest convention addressing youth employment and achievement. It brought together those working in the employment and skills sector with young people for an exciting two days of debate, discussion and learning.
Please click on the pictures below to watch some of our panellists and speakers thoughts on youth employment and to get an idea of what was discussed.
Yesterday saw the publication of new research by us for the TUC (pdf): on where we are in the labour market, how we got here, and what we need to do to get to full employment.
Before the recession, we were close to an economist’s definition of ‘full employment’ – unemployment about as low as it could be without causing inflation. But if you were out of work and disadvantaged, or living in a disadvantaged area, it probably didn’t feel like ‘full employment’: there remained wide variations between employment rates for different groups (25 percentage points lower for disabled people, over 15 points for lone parents) and wide differences between areas.
It was for this reason that Labour announced in 2005 an ‘aspiration’ of achieving a new measure of full employment – an employment rate of 80%. But this remained just an aspiration, and today achieving 80% would require 3.3 million more people in work. The current Government, too, have become converts to the cause of full employment. However in as far as they have offered any definition, it appears to be to achieve the highest employment in the G7 – a distinction that the UK held during the mid-2000s, when the jobs market remained an unequal place. We need a new definition. In our report, we follow the work by Kayte Lawton and Tony Dolphin and argue that full employment should mean 80% of the population that are not in education and not above pension age in work, alongside significantly narrower employment gaps for those groups and areas that are furthest behind.
So how are we doing?
Our research sets out how the first decade of Labour Government saw a job almost, but not quite, done. Employment opportunities improved in general and improved specifically for many of those previously furthest from work – disabled people, ethnic minorities, lone parents, older people, and people living in the most disadvantaged areas. But as noted, these gaps remained wide.
With the recession, remarkably, our analysis shows that employment gaps continued to narrow for most groups – however since 2011 that narrowing seems to have levelled off, particularly for disabled people and for ethnic minorities. Most concerning, though, has been trends for young people not in full-time education. Richard Exell’s blog spells this out in more detail. Our report is not, as the Government has said, ‘wrong, misleading and irresponsible’: young people not in full time education have gone from being much more likely than average to be in work, to being much less likely – and that has happened since the 1990s.
Our report sets out new analysis on movements into work from unemployment and inactivity. We find that unemployed people saw their likelihood of finding work fall by one fifth during the recession – a huge fall – and that this has only recovered fractionally in the five years since. These 'hiring rates' were lower for women and have fallen further than for men since the recession, and have also fallen by more than average for young people and for the lowest qualified. The long-term unemployed do worse than the newly unemployed, and hiring rates for disabled people and ethnic minorities remain well below average (but have recovered ground lost in the recession). We also find that city regions (Manchester, Tyne and Wear, West Midlands Met, London) have done better than their hinterlands.
Overall, then, what began as a cyclical fall in attachments to work appears to be becoming structural. Even at a time of rising employment, if you’re unemployed it’s almost as tough as it was in the recession to find work.
Achieving full employment must be about the quality as well as the quantity of work. So lastly, we look at trends for different forms of employment and different occupational groups. As well as finding strong growth in job starts to insecure work, we also show that recent employment and pay growth (since 2011) has been greatest in higher paying occupations. Many lower paying jobs – and in particular administrative, elementary and caring roles – have seen larger falls in real earnings and far smaller growth in employment.
So – despite a recovery in headline employment, we remain a long way from full employment that works for everyone. But what do we do about it?
We set out four priorities, and the evidence on ‘what works’ for each. We call for action on:
One of the most striking things from our research, as from other recent studies, is that employment has not fallen by more – or that the position for disadvantaged areas and groups has not got worse. But our research sets out just why we cannot be complacent now. Achieving full employment must mean ensuring that everyone has the opportunity to share in the recovery – with support for those furthest from work, for the weakest areas, and for high-quality, sustainable jobs.
Today, Inclusion publishes a new report, Making the Work Programme work for ESA claimants, which sets out the problems with the funding model for Employment and Support Allowance (ESA) claimants, and what could be done to fix it. The report is a part of a wider project called Fit for Purpose, supported by 22 organisations and looking at the future of employment support for people with health conditions and disabilities. The final report will be available in the summer.
Specifically, we argue that a toxic mix of a weak economy, low referrals to the programme, changes to the rules on who is referred, under-performance and setting the targets too high in the first place have combined to lead to big shortfalls in funding and support for those on the programme.
Our calculations suggest that around 11% of ESA claimants that are required to take part in the Work Programme would have achieved a ‘job outcome’ if the Work Programme had not been introduced. The DWP, however, set their estimate at 15%. These targets have been missed in every contract, and as a consequence – because the Work Programme is a ‘payment by results’ programme – funding to support ESA claimants has been substantially lower than DWP anticipated.
Of course, you could see this as a policy success; performance has been below expectations, but the DWP has not had to pay so much to providers, so the risk of failure has been successfully transferred away from tax payers. But this would be a pretty short-sighted view. The state still picks up the tab through the benefits bill, and lower funding means more people out of work for longer, and receiving less support. We estimate that the money available to providers to deliver services to ESA claimants (based on DWP spend on ESA customers) is likely to be about 40% lower than was originally planned, with DWP likely to spend on average £690 per ESA claimant compared to an estimated £1,170 when the programme was designed. And this is expected to get worse; as of April 2014 there are no more ‘attachment payments’ paid to providers when customers join the Work Programme, meaning that, at current performance the DWP will pay providers on average only £550 per participant – which needs to cover two years of support.
When these figures are grossed up, taking into account lower referral numbers as well as lower performance, we estimate that the Government will invest less than half of what it intended to on supporting ESA customers through the Work Programme - with spending around £350 million compared to the £730 million expected.
In the event, we find evidence that Work Programme providers are actually spending a bit more than they receive from DWP on ESA participants, in order to maintain some levels of service. In effect they are cross-subsidising from outcome payments for Jobseeker’s Allowance participants. Whilst this may be helping to paper over the problems with the payment model, it is clearly neither satisfactory nor sustainable in the longer term.
Our report sets out an alternate model that we argue should be implemented for the remainder of the programme. This new funding model is based on four key assumptions:
Our proposed payment model is below.
Without reform, in our view the funding model for the Work Programme is set up to fail ESA claimants, particularly those joining over the next two years. Whilst we and many others are rightly thinking about what should come next with ‘Work Programme Mark 2’, it is critically important that the Work Programme Mark 1 works for ESA claimants. Our report shows the failings of the current payment model for ESA groups, and a way forward that is achievable and would cost no more than the Government had planned.
On the 3rd April Inclusion and BTEG held our second annual Ethnic Minority Employment conference. We think this event is particularly important because we are concerned that reducing the inequalities between ethnic groups has fallen off the agenda of the current government and we want to do what we can to drive up the profile of the debate. After all, the employment rate for ethnic minority groups is a whole 13 percentage points lower than for the white population, and this gap in employment rates is actually up around 2 percentage points since May 2010, having fallen steadily over the previous decade. Clearly this gap needs to narrow. As Omar Khan, Director of the Runnymede Trust, pointed out at the event, this is not just a matter of social justice, but also an economic imperative for the country.
Employment rate gaps between BME and white population
This blog present some key themes that were discussed by the 60 delegates who attended the event.
The DWP and Jobcentre Plus
In February 2012, the Government published its integration strategy, Creating the conditions for integration. This strategy rejected a Whitehall dictated approach of national programmes working with particular groups, instead focussing on support determined and delivered locally and based on the individual needs of customers. For the DWP this means that national programmes will not necessarily deliver support targeted at the particular needs of BME customers, but that Work Programme providers and JCP, through the Flexible Support Fund, could commission such targeted support if they felt it was needed. (The complete lack of transparency about how the Flexible Support Fund is spent and what it achieves doesn’t help us determine how far this is happening).
We were grateful to a number speakers at the event who talked us through what is happening at the moment. Junior Johnson, Head of Work Programme Division, demonstrated that ethnic minority customers are actually doing better in the Work Programme than white customers, and Renae Lowry from Shaw Trust London, a Work Programme Prime doing particularly well at supporting BME customers, explained what she thought was the key to Shaw’s success, including ensuring her staff represented the local communities they served and challenging local employers to do the same. Prathiba Ramsingh and Michelle O’Connor from Jobcentre Plus in London talked us through an excellent pilot Flexible Support Fund project in Brixton that aims to link up young black men and employers. And Tim Conway, explained how IDS’s focus social justice also helps ensure that policy understands and tackles the root causes of poverty rather than just its symptoms.
However, concerns remain. Treating people as individuals is great, but if this means you fail to strategically tackle common issues faced by certain groups of individuals (for example, employer discrimination on the grounds of ethnicity, language barriers to work) then it’s less great. Whilst the Work Programme is doing well with BME customers, the Work and Pensions Select Committee report on the Work Programme found that there is much less specialist support on offer to customers than expected. Similarly, whilst the targeted programmes being piloted by JCP look very interesting and could end up being rolled out more widely, the Brixton programme we heard about only supports 16 young people. Clearly, whilst these initiatives are to be welcomed, there’s a huge amount left to do.
The DWP is not the only public sector body interested in employment rates of BME groups – local government has a huge role to play as well, particularly with the Government’s desire that action is taken a local, rather than national level. However, the resources available to local authorities have and will continue to decrease as austerity continues to bite. And there is the concern that the localism approach, whereby decisions about spending are devolved to the lowest appropriate level, may negatively affect BME communities that do not actively participate in local politics and are therefore not “at the table” when decisions are made.
So, what can local authorities do given the increased responsibility but decreased resources they have? Shilpi Akbar, Assistant Director for Employment at Birmingham City Council, gave a few ideas. First, local authorities still have hefty budgets to commission a range of services, from highway maintenance to cultural activities, and should make the most use of their procurement powers to make sure employers play their part. Second, local authorities can make better use Section 106 agreements in planning policy to the same effect. Finally, better joining up of different pots of local money can be effective; the Brixton project noted above was possible in the form it took because JCP and Lambeth Council both contributed money. Islington Council current has an independent Employment Commission to plan a local approach to reducing unemployment in the borough, bringing together the Council, the local FE College and JCP (amongst others) – forums like this seem to present the perfect opportunity to think strategically about how to join up local budgets.
But the public sector can do all it wants if employers continue to discriminate against ethnic minority jobseekers. Liz Mackie and Claudine Reid talked respectively about how negative perceptions of young black men and ethnic minority women limit their ability to enter and progress in the labour market. Omar Khan discussed how supposedly positive ethnic stereotypes (‘Asian guys are good at IT…’) can limit their success in the workplace (‘…so they should stick to this rather than becoming a manager’).
And the research evidence backs this up. A study found that those applying for jobs with names that suggest they are from ethnic minorities are significantly less likely to be called for interview compared to those with ‘white sounding’ names. Once in work, ethnic minority groups on average have lower hourly earnings and are disproportionately over-represented in routine and semi-routine occupations. These differences still apply when other characteristics, such as qualification levels are controlled for, suggesting discrimination from employers.
So, many employers would benefit from unconscious bias training, encouragement to use nameless application forms or even using external interviewers / progression panels in some cases. Some, however, have queried whether voluntary action from employers is enough to achieve greater equality, given that many private companies (and SMEs in particular) do not seem to consider discrimination to be a problem (the public sector, on the other hand, has a legal duty to proactively promote racial equality).
So where does this leave us? The short answer is: a long way from where we should be. Omar Khan suggested that, in one way, the situation now is more depressing now than it has been for a while, in part because gains in educational attainment in school and higher education participation for BME groups have not translated into greater parity in the labour market (notably, a recent study found that “After controlling for personal characteristics, all minority ethnic groups make better average progress in attainment through secondary school than do white students” ).
Moreover, the indications are that the current government doesn’t take race equality as seriously as it should. The Equality Impact Assessment for the Benefit Cap expected that 40% of households affected would be BME families, compared to 17% of JSA claimants, 16% of the lone parents claiming IS and 9% of ESA claimants. However, it offered no additional support to help ethnic minorities affected by the cap. The Government also “called time” on Equality Impact Assessments, and in 2011 decided not to implement ‘dual discrimination’ regulations in the Equality Act. The justification for the latter was that, along with cutting other regulations, it would save UK businesses £350 million a year.
But one would have hoped that £350 million across the whole economy was a price worth paying for closing a loophole that could make it effectively legal to discriminate against someone on the basis of, for example, the combination of their race and gender. One must be very suspicious about a government that considers this acceptable.
Our event on the 3rd of April was one of three we’re arranging this year looking at the issues facing BME groups, with generous support from the JRF and Roast Restaurant. The next two will examine Entrepreneurship and Apprenticeships. They will be well worth attending.