Promoting social inclusion in the labour market

Inclusion Blog

03
Jul

Fit for Purpose? Transforming employment support for disabled people and those with health conditions

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:

  • Into work’ – for those closest to returning to work, with some specialist support
  • Health and disability employment support – for those needing more intensive and joined up support to secure employment
  • Supported Employment and rehabilitation – for those with the most significant support needs

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 

27
Jun

Youth Employment Convention 2014

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. 

Convention overview 
Youth Employment Convention 2014

Dave Simmonds - Chief Executive, Inclusion

Baroness Stedman Scott, Chief Executive, Tomorrow's People

Lottie Dexter, Chair, Million Jobs Campaign
#

Samuel, Member of the Youth Panel

Lord Baker, Former Conservative Education Secretary

Gulwali, Member of the Youth Panel

Barbara Spicer, Interim Chief Executive, Skills Funding Agency

Francis, Member of the Youth Panel

Rhian Johns, Director of Policy and Campaigns, Impetus 

Tony Wilson, Director of Policy, Inclusion

Susannah Clements, Deputy Chief Executive, CIPD

Stewart Segal, Chief Executive, AELP

Mark Fisher, Social Justice Director, Department for Work and Pensions

24
Jun

Full employment: a recovery that works for everyone

Posted in Employment by tony.wilson

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:

  • Job creation – where ‘intermediate labour markets’ and wage subsidies can increase the hiring of disadvantaged groups – but need to be well designed and often have low take-up
  • Targeting disadvantaged areas – by reforming employment programmes to make sure that they don’t penalise those in weaker labour markets, and ensuring that investment like the Regional Growth Fund benefits the unemployed
  • Supporting disadvantaged groups – where we make recommendations on the design, delivery, targeting and joining up of support – particularly for disabled people, young people and the long-term unemployed
  • Quality, sustainable employment – by supporting low paid workers to progress (in line with our previous work), and through new tripartite sectoral bodies in low-paying sectors

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.
   

25
Apr

Fit for purpose? Fixing the Work Programme funding model for ESA claimants

Posted in DWP programmes by tim.riley

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:

  • That spending should be restored for new participants to the same level as was originally intended – but foregoing the ‘savings’ that have already been banked by the Government;
  • That in return for increasing funding we should expect increased performance;
  • That the model should remain strongly outcome-based, so that risk is shared between the taxpayer and those providing services – in our proposal, around three quarters of funding would be linked to jobs; and
  • That funding should be highest for those that need the most support (and specifically, those who used to claim incapacity benefits).

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.
  

09
Apr

Ethnic minority employment – where now?

Posted in Employment by tim.riley

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.

Local Authorities
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.

Employers
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).

Conclusions
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.
  

27
Mar

Tackling long-term unemployment: Better than doing nothing?

Paul Bivand compares US and UK performance in the long-term unemployed getting sustained jobs

Only 11 percent of those who were long-term unemployed in a given month returned to steady, full-time employment a year later.

This is the headline that has been appearing in the media all across the United States - but usually shortened. It comes from a Brookings Institution study looking into whether the long-term unemployed have the same impact on earnings and inflation as the short-term unemployed do. It finds that the long-term unemployed have about a one in ten chance of moving into employment in the next year.

So, how does this compare with performance in the UK Work Programme?

The US study uses as a data source the US equivalent to the Labour Force Survey, so their long-term unemployed are equivalent to our ILO unemployed (not just those on Jobseeker’s Allowance).

What the US team means by ‘long-term unemployed' and 'steady, full-time employment' is given by a footnote. This says:

Steady employment in this context means that

  • someone who was unemployed for 27 weeks or longer in month t
  • was employed full-time for four consecutive months starting in month t+12.”

For comparison, Work Programme Job Outcomes for the main group of jobseekers aged 25 or older are defined as:

  • someone who was on Jobseeker’s Allowance for 52 weeks or more on referral and
  • was employed for a total of six months

So, the US study includes people who had been unemployed for half the duration of the JSA 25+ group, and the definition of a job is four (consecutive) months not six (total) months. This looks as though the US group are significantly closer to the labour market than Work Programme participants (or, previously, New Deal participants).

How do Work Programme figures compare? For the JSA 25+ group, across the programme, we estimate an equivalent figure would be 15%, rising in the latest figures to 18%. For JSA claimants aged 18-24, the average would be 18.5%, rising recently to 24%.

These figures, for longer term unemployed, and using a more testing Job Outcome definition, are much higher than the US findings.

What is evident in addition, is that the UK does not have the same issue as the USA of people leaving unemployment to economic inactivity. In the US study, more than one third (33.7%) of the long-term unemployed have become inactive.

So, there are big US-UK differences.

Behind these numbers, there are also big differences in the support and requirements that are placed on long-term unemployed people. In the USA during the recession, workers eligible for unemployment insurance could receive it for up to two years. As a condition of their benefit, claimants have to record what they have done to look for work in a ‘work search log’ and submit it as part of the benefit payment process. The precise process differs between states, as the USA is a federation, but a work search requirement is required for federal funding. It is apparently normal in the USA for the submission of the worksearch log to be electronic, and subject only to face to face meetings for occasional audit checks. (Those who exhaust entitlement to unemployment insurance may be eligible for Food Stamps, which have their own requirements – which are different in different states, but broadly require participation in programmes.)

In the UK by comparison, worksearch requirements are very strong. The normal UK requirement by both Jobcentre Plus and the Work Programme is for face to face meetings and sight of jobsearch activity, backed up by evidence. Alongside this, there is usually access (for jobseekers at least) to regular adviser interviews and support to look for work. There is strong evidence that ‘activation’ support of this kind for unemployed people, particularly the long-term unemployed, helps to keep people close to work and improve the speed at which people get back into work.

So, UK (or perhaps, GB, as Northern Ireland differs) performance for the long-term unemployed exceeds that found in the USA. Various factors can account for this, but work search monitoring is both more stringent in the UK and involves personal interaction. So if 'doing better than nothing' means doing better than the USA, then the Work Programme clearly meets that test. The evaluation of the programme may also, in due course, help us understand whether it’s more effective than the support available through Jobcentre Plus.

Are the Long-Term Unemployed on the Margins of the Labor Market?; Alan B. Krueger, Princeton University & NBER, Judd Cramer, Princeton University, David Cho, Princeton University, Brookings Institution, March 10, 2014

12
Mar

How to support those furthest from the labour market into work

Posted in Welfare to work by tim.riley

Whilst the Work Programme is now performing broadly in line with expectations for most JSA claimants, its ability to support those further from the labour market – and in particular those with health conditions and disabled people – remains a cause of real concern. At Inclusion we have been doing a lot of work on the causes and consequences of this for a few different projects, and will be publishing more in the next few months on what we can do about it. But in the meantime, recent research by us shines a light on some good practices in supporting those furthest from work.

Recently we evaluated a programme, Want to Work, that shows what a properly resourced programme can offer to those furthest from the labour market. Want to Work is financed by the European Social Fund and run by Jobcentre Plus, offering employment support to inactive people in Wales. It is a voluntary programme, with some overlaps with the ‘voluntary’ access groups in the Work Programme. Supporting these customers presents significant challenges. Over 40% of customers were disabled, nearly a quarter were lone parents, and 30% were not claiming benefits and therefore not receiving any mainstream support to get into work. One in ten had been out of work for over a decade, and the programme was targeted at the most disadvantaged wards in Wales, such as the Valleys, where weak labour markets make finding work hard even for those without these barriers to work.

Despite this, the programme got 49% of customers into work. We conducted impact analysis and found a propensity score matched control group of similar inactive people in the Labour Force Survey were significantly less likely to get into work than Want to Work customers. Moreover, 80% of Want to Work customers sustained work for 10 months or more, and further impact analysis again showed that this was significantly better than a control group.

So what was the secret of success? Well, the main factor in the programme’s success is not that surprising; a customer-focussed advice and guidance regime delivering holistic support to tackle all of the barriers keeping customers out of work. Personal advisers were able to spend enough time with customers to give them the support they needed, and had the flexibility to see customers with more or less frequency depending on their needs (or constraints) at any particular time. A strong focus was put on building trust with customers and 97% of customers thought that PAs were friendly and approachable, making them probably the most popular group of Jobcentre Plus advisers in the country. Advisers were accessible, giving mobile phone numbers to customers and responding quickly to questions and requests. Moreover, there was a strong focus on supporting them to work towards jobs that they wanted to do – and enough flexibility in the use of discretionary funds to make some of the more unusual aspirations of customers realities (helping one customer to set up a mobile dog grooming service comes to mind).

But while Want to Work is lucky enough to be in the position to do the basics well, it does do other things that others should learn from. In particular, wherever possible, it embedded its services within the communities it served to ensure that it could support customers who didn’t normally interact with employment services. Staff were based in libraries, community centres, housing associations, and even religious establishments, including a mosque. Being embedded in the communities they served meant that PAs had excellent knowledge of, and strong personal relationships with, a range of other services on offer meaning they could refer customers to the specialist support they needed.

It had also made real efforts to link up to health services. Some PAs were based in GP surgeries and strong links had been established with a range of other healthcare services. These other services noted that it was very unusual for them to have any links with employment services but found it was beneficial for their customers. A real strength of the programme was that PAs had been seconded from a range of different backgrounds, including the NHS.

All of this came together when supporting those furthest from the labour market, those customers who had not worked for years and who had serious barriers to work. For these customers, the first key stage was engaging them. It was noted that talking about work too early could actually be harmful, frightening customers and making them disengage. PAs talked about building trust and building confidence as the key early aim, rather than focusing on job search. This at first meant small steps, like getting customers to attend short, free training courses delivered by other partners, to build confidence and show them that they could interact in a group setting. This was often a big step for customers, so PAs would call them on the morning of the training to bolster their confidence and make sure they turned up. After these small steps, PAs would begin picking up the pace when customers were ready, reacting always to their judgement of how quickly customers were ready to go. The fact that PAs took the time and effort to react to customers’ needs engendered trust and spurred customers on to intensify their job search. Of course, they were not successful for all customers, but this level of personalised support often led to a range of soft outcomes that benefitted customers.

So, the lessons from Want to Work are, in a sense, obvious. A well run, appropriately resourced programme, well networked with other local services (including health services), providing holistic, customer-centred advice and guidance is successful and is valued by customers. Our analysis suggests that Want to Work led to a significant positive impact on participants compared with those who did not take part. The key question is whether we now learn from this, both within the Work Programme and after it’s gone.
  

10
Mar

Labour's Jobs Guarantee: the sums add up

Posted in Employment by tony.wilson

Today’s announcement that Labour would extend to the end of the next Parliament their jobs guarantee for long-term unemployed young people is welcome. As I said in 2012, the Coalition’s impact assessment of the Future Jobs Fund shows that the last jobs guarantee worked: with those who took part far more likely to be in work and off benefits fully two years after taking part, and a ‘cost per job’ that would bear scrutiny against programmes before and since.

The only surprise is that Labour hasn’t announced this sooner. Part of the reason for the delay will be the relentless briefing by Conservative politicians that the ‘numbers don’t add up’ – often hiding behind ‘official’ figures that are at best deeply flawed and at worst deliberately misleading.

The Government’s estimate can be found here (the second attachment), which states that the Jobs Guarantee for young people would cost £1.04 billion for one year. These figures are wrong in three important ways:

  • First, they ignore any offsetting savings from not paying people benefits. All official Government costings take into account direct savings from doing something at the same time as accounting for costs. In this case, if someone is in a subsidised job they are by definition not on benefit. This is not a hard number to work out: the Government’s FJF impact assessment, for example, gives us an answer (4-5 months not on benefit). In addition to this, the FJF analysis shows that on average participants went on to spend 41 days fewer on benefit over the following eighteen months. This can also now be accounted for, following changes to the way that the Office for Budget Responsibility do their costings. This is explained a bit more at the very end of my blog here. Overall these offsetting savings, alongside associated savings in administration, reduce the costs of the policy by about a third.
  • Secondly, the ‘official’ costings use data from 2012 rather than the most recent data. Bizarrely, they argue that they have used this data due to “limitations of the data available, specifically a lack of forecasts for unemployment broken down by age and duration on benefit.” This is despite the fact that forecasts are routinely used in costings for the Government’s own policies, and forecasts of up to twelve months into the future are really easy (as those people will by definition already be claiming benefit). Currently, as Labour says, around 60,000 young people a year are flowing through twelve months’ unemployment – so using the right figures reduces the volumes by at least a further third.
  • And thirdly, the ‘official’ costings are based on a maximum possible cost per job placement, rather than estimating the actual cost per placement. Again, given that the Government has published data on the Future Jobs Fund (which shows that 11% of participants left their jobs early), it is odd that this ‘official’ estimate doesn’t do this. They appear to not even know that the figures exist, stating that their assumption that everyone stays on for six months is “reasonable based on … low FJF attrition rates”. 

Taking this all together, we would estimate that the actual cost of delivering a youth Jobs Guarantee – even allowing for inflation and higher National Minimum Wages – will be in the region of £200 million per year.

Three years ago I was at HM Treasury and responsible for policy costings for employment programmes. So I find it particularly troubling that figures could be published as ‘official’ estimates that are so obviously flawed and that do not follow any of the normal conventions for policy costings – conventions that were followed in the last Autumn Statement and will be followed again at the Budget. The figures used by the Government are simply misleading. If political parties want to publish misleading statistics, that’s their choice. But governments of all colours have a responsibility to publish costings that are fair and impartial – and that hold opposition parties to the same high standards that they would hold themselves to.

Leaving costings to one side, £200 million is still clearly a lot more than nothing, and the Conservatives are right that Labour has a responsibility to explain how it will fund its five-year Guarantee. A bankers’ tax may more or less do it (although bear in mind that Labour is also committing to a wider guarantee for long-term unemployed adults). However there’s also two other ways that we could help meet these costs.

First, Europe. By coincidence, the European Union has set aside €3 billion of European Social Fund money for Member States to deliver job guarantees for young people. Most Member States have submitted plans for how they will spend this money. The UK, however, has not. The amount available? €193 million. To deliver a jobs guarantee in the UK.

Secondly, the Youth Contract. Two weeks ago the Government published its latest statistics on take-up of the Youth Contract wage subsidy. (This was alongside other research on the Youth Contract, our summary here.) So far, the Youth Contract has delivered 10,000 subsidy payments over eighteen months, against a target of 160,000 over three years. On its current course, the figure will probably rise to around 30,000 – which will be an underspend of £300 million. We called this in 2011 and again last summer, and virtually nothing has happened in the meantime.

So a Guarantee is affordable, likely to be effective, and there’s even money available from Brussels. The sums add up.