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Promoting social inclusion in the labour market
29
Nov
The Work Programme - the revolution starts here
We were expecting the figures to be poor, but not that poor. Tuesday’s first release of Work Programme statistics did not make happy reading – for providers, government, the long-term unemployed or those who work with them. Of the 878,000 people to be referred to the Work Programme, just 31,000 had found work and stayed in it for 3 or 6 months.
We published extensive analysis of the figures on the day – so if you want to know more about what the figures do and don’t describe, then look here. This includes analysis by provider, contract area, local authority, participants and payment groups; as well as comparisons with previous programmes and the wider economy.
So this blog isn’t about what the data says. It’s about what the figures mean, and what the implications are for the future. I’ve set it out around ten take-away messages from the release. So here goes.
The figures were worse than expected – but they were not worse than doing nothing
First, the Work Programme is not “worse than doing nothing”. There’s a wide literature on what works for whom in employment programmes, from the UK and internationally, built up over two decades. Programmes can only really be “worse than doing nothing” if they divert people away from jobs and towards other things that don’t lead to a job – usually, badly designed training programmes, or public sector job creation schemes. The Work Programme is neither of these, as the first evaluation report (also published on Tuesday) sets out. Apart from anything else, training and job creation schemes are really expensive – the Work Programme doesn’t have enough money in it to be “worse than doing nothing”, even if it tried.
Second, it follows from this that when they set Work Programme targets, the Department for Work and Pensions (DWP) and HM Treasury got their numbers wrong – badly wrong. It’s impossible to say precisely why their numbers were so wrong, because DWP has never published its methodology for how it calculated its so-called “non intervention level”. This in itself is a problem if you’re trying to convince providers and their funders (shareholders, banks, reserves) that performance targets are a credible basis on which to borrow and invest.
But why did they get them wrong? There are a couple of reasons:
- They used the best performance of previous programmes as the baseline for the first year of a brand new programme – making no allowance for the disruption of old programmes ending and new ones starting
- The economy turned out much worse than expected – our analysis suggests that this accounts for about a third of the difference
- They made truly heroic assumptions about how much better the Work Programme would be than predecessor programmes
Thirdly, spending on Work Programme participants has been lower than the Government planned. This is because so much money hangs on achieving employment outcomes – so a consequence of the large gap between the performance that DWP expected and what it got is essentially a cut in funding. We have not published detailed analysis of this (yet) but it’s likely to be in the region of a 25% reduction in spending per person. This is entirely counter-productive – reducing support available, and piling financial pressure on providers, at just the point when unemployed and disadvantaged people are likely to need it most.
We also need to acknowledge that the Work Programme performed broadly in line with previous programmes. As we set out in our analysis on the day, for the one comparable customer group across the Work Programme, Flexible New Deal and the predecessor New Deal programmes, the Work Programme came out broadly in line – no better and not much worse. Flexible New Deal was not a dismal failure, the Work Programme is not a stellar success. For those in the industry (and industry watchers) this isn’t a huge surprise – so fourth, let’s stop doing down the past, and learn from the best of all programmes.
Nonetheless, most contracts beat the DWP benchmark in at least one area
We’ve done more detailed (preliminary) analysis that suggests that in 25 of the forty Work Programme contracts, performance exceeded the DWP “minimum performance level” in at least one Local Authority area.
So fifth, while no single contract achieved DWP’s minimum standard, more than half of contracts exceeded this level in at least one area.
Variations within contracts appear to be much bigger than variations between them. This gets to the heart of one of the perennial problems in the (still young) welfare to work industry – it’s not so much about good providers and bad providers, what works and what doesn’t.
It’s about good local offices; the best leaders getting the best results; good local contacts, networks, markets and practice. And of course it’s also about a lot of areas where the opposite holds.
As ever, the challenge is to raise all areas to the level of the best – and it cannot be left to providers alone to do that. DWP need to lead the way.
In all of this we mustn’t lose sight of those out of work and on the programme
As I’ve said, providers are not doing “worse than nothing”. In fact, the recent evaluation report suggests that they are doing the sorts of things that work for most people, most of the time – they are helping them to build confidence and motivation, to look for and find the right vacancies, to prepare for interviews, to build the skills and work experience that employers want. They are making a difference.
However, there is also evidence that providers are being selective in how they offer support – the evaluation finds that providers routinely provide more intensive support to those closest to work; with less evidence of tailored and intensive support for those with the greatest barriers. To be clear – this does not necessarily mean that people aren’t getting the support that they need. But it may suggest that one impact of lower than expected performance, and therefore lower funding, has been to reduce the scope to provide more intensive, and expensive, support to those with the highest need – like disabled people, those with health conditions and those with chaotic lives. And as the performance data showed, disabled people in particular have been less likely to find and sustain work.
So, sixth, we must not forget the real impact that over-ambitious targets, lower than expected performance and lower funding has on those on the Programme. There are a number of ways that this could be addressed, which we’ll be returning to in the coming months.
So where do we go from here?
Good analysis by ERSA, using more recent data from providers, suggests that performance has really turned a corner in the last six months or so. In fact, we plugged the figures into our model and it looks like providers are now closing the gap that we’ve seen this week. So seventh, let’s not rush to judgement on whether the Work Programme is working or not – future data will show a much improved picture. It still won’t be where DWP expect it to be, or where it arguably needs to be to make real inroads into long-term unemployment, but it will be showing welcome improvement.
Eighth, linked to this, talking down the Work Programme does no-one any favours – least of all participants themselves. It makes it harder to get vacancies, harder to join up with partners, and it makes those who are funding the programme (shareholders, trustees, investors, boards) more likely to get nervous. The Work Programme is here to stay – for those who want to see it fail, higher unemployment is not a price worth paying.
So finally, leaving to one side (for now) the longer-term lessons from this week, there are two things that we think need to happen now.
The Department must break its culture of secrecy on data, performance and good practice. The Department has the means to shine a light on exactly what is being done in the best performing areas and contracts – it needs to share that performance data and show what providers are doing in those areas, why and how.
And finally, we need urgently to distil the key lessons for other, future “payment by results” work. One lesson is not to expect the moon on a stick, at least not straight away. Another is that models need to be responsive to changes that could affect performance (so called exogenous risks). A third is to deliver on open government – with transparent data, sharing of good practice and the space for innovation and testing. And fourth, obviously, is not to forget the people that we are trying to help in all of this.
The Work Programme is still the centre piece of the Government’s payment by results revolution. Contrary to reports, the revolution has not failed. But we need to learn from these figures, and focus on delivering the results that we all want to see.
29
Nov
Time is running out for the legal loan sharks, but now the hard work begins...
Time is running out for legal loan sharks in the UK. On Wednesday night the government finally decided to provide the new regulator, the Financial Conduct Authority (FCA), with the power to cap prices in the consumer credit market. It has taken a long, hard, campaign to get here.
In the winter of 1998, whilst working as a money adviser in the West Midlands I was asked to meet a group of lone parents to talk about the problems they faced in the run up to Christmas. They told me about the way many of them were targeted by door to door money lenders like Provident Financial, and how those loans, which carried a cost of £65 for every £100 they borrowed, meant they subsequently struggled to heat the home and in some cases feed themselves properly. They told me how a loan taken in haste to buy Christmas presents for the kids would rapidly lead to a cycle of borrowing to pay off borrowing; to hopelessness and depression. It was that group of lone parents who convinced me that something needed to be done.
Working with other money advisers we managed to get some media attention that year and that brought with it the support of a great many local churches and community groups who were also starting to take action on the issue. In 1999, Niall Cooper, the National Co-ordinator of Church Action on Poverty, and I joined forces to formalise the campaign giving it the name ‘Debt on our Doorstep’. We had two simple aims – to get an interest rate cap and force the banks to provide affordable credit to people on low incomes. And, we set ourselves two years to get the job done.
Over all the years since, we never swayed from these basic aims, and somehow we just kept going. The campaign has been as well informed as any could be. My thanks go in particular to Professor Udo Reifner in Germany, and Professors Iain Ramsay and Toni Williams here in the UK, but we have been aided by colleagues and contacts too numerous to mention, drawn from all around the world. Their willingness to talk through how caps work in practice has been invaluable. The campaign has also remained connected to the people most affected by the problem throughout, and London Citizens and Church Action on Poverty both deserve particular credit for ensuring this has been the case. And, of course, over the past two years we were fortunate to have a simply amazing advocate for the cause in Stella Creasy MP.
But whilst we can celebrate the fact that the new regulator will be able to take action, we also have to mourn the fact that the money lenders have been ruining the lives of our friends, families, and neighbours for all the time that government failed to act.
The fact of the matter is that things have been getting worse not better. Provident Financial, who as a result of our campaign, were found to be making an excessive level of profit by the Competition Commission in 2005, now charge £82 for every £100 they lend. And in the years since we started our work we have witnessed an explosion of payday lenders charging astronomical rates of interest with virtually no checks on whether people can afford to pay. The writing was on the cards for the industry when, earlier this month, albeit after years of slumber, the Office of Fair Trading finally stood up for low income consumers and released damning evidence of the lenders' failure to comply with even the existing, and frankly woeful, rules in this respect.
We must ensure that the FCA does a much better job. Simply changing the name on the door will not do. The FCA must now set out a clear plan of action to determine how it will use its new powers – not in concert with the lenders to enable them to carry on business as usual – but with us, and to deliver justice for hard up households across the country.
Because justice is what this campaign has always been about. We know that the lenders borrow their money from the banks and financial markets at rates which are currently on the floor. They lend it on at sky high rates to the poorest. The FCA must now be prepared to open the box and reveal just how much money has been going from the banks to the money lending industry. Although government’s decision to give the FCA a power to cap rates has grabbed the attention, we also won another significant victory over the Financial Services Bill this month: as government has also agreed to require the FCA to consider how well people can access affordable credit when carrying out its duties, and has indicated that it will require banks to release details of how much lending they are doing in our poorer communities.
So after all this time both of Debt on our Doorstep’s aims are now on the verge of being realised. What next? Work harder; follow the money, and hold the FCA to its task.
24
Nov
The Future Jobs Fund worked. But we shouldn't bring it back – we can do even better.
I ran the Future Jobs Fund.
For most of 2009 and a large part of 2010, I pretty much lived, breathed and slept FJF. I wasn't the only one, of course. In the end I was heading a team of about 25 civil servants. We designed the criteria for the Fund, promoted it to bidders, assessed bids, designed the grant agreement, awarded grants (over 300 in all), supported people to share learning, and did all the work on grant management, compliance and validation.
In all, we disbursed over £600 million and created 105,000 new jobs. I am hugely proud of what we achieved, and of all those who achieved it.
Although I ran the Fund, I didn't create the jobs. They were created by people like Groundwork (6,000 of them, working with the National Housing Federation); Shaw Trust; the Scottish Wildlife Trust; the Royal Opera House; the Football League Trust; Action for Chidren; Age Concern; New Deal of the Mind; the Network for Black Professionals… As well as by loads of Local Authority led partnerships – like the one in Manchester, that created 8,000 jobs alone.
In my time I met Jobs Fund employees doing all sorts of things. A trainee tree surgeon in Birmingham. A caseworker in Bristol supporting refugee women to access health services. Someone in Hartlepool who as far as I could tell was pretty much running the FJF programme there herself. The list went on – London, Newport, Kent, Glasgow – everywhere I went, I met people doing proper jobs, earning a wage, building self esteem, learning skills, making networks. Many of them had never worked before. None of them had worked for at least six months.
The Future Jobs Fund was not perfect. It was expensive - £6,500 per place, which I think we could have got down to £5,000 with a bit of creative thinking (in particular from the Skills Funding Agency, but also employers). I felt that it became increasingly poorly targeted – at one point, nearly half of all young people who'd been on JSA for six months were getting FJF jobs. There were no targets for getting people into subsequent employment. And the private sector was notable by its absence. Inclusion found the same things, in the only independent national evaluation of the Fund: loads of good practice, some bad, but some strong and enduring impacts. You can read a summary here.
But no programme is perfect. Far too often, particularly in welfare to work, we let the great be the enemy of the good. And finally, yesterday's impact assessment by DWP (pdf) has shown conclusively that for all its small imperfections the FJF had a big impact. I won't dwell on the analysis (for a great summary read this blog by Jonathan Portes), only to say that the impacts described are huge by the standards of employment programmes.
Nor am I going to attack the Government for closing the Fund. The decision was made in May 2010 but the Fund continued to create jobs until March 2011 – alongside the guarantee of a job or training place for all long-term unemployed young people. In fact the very large majority of FJF jobs were created under this Government – 70,000 of them.
At the time the decision was made, youth unemployment was falling, growth forecasts were strong, and the Work Programme was slated to begin in April 2011. So the mistake wasn't to close the scheme to new bids – it was not to re-open it when youth unemployment starting rising again, the economy didn't recover, and the Work Programme was delayed. But of course by then the argument had moved on – as had almost all of my team (including me).
Instead, what I'd like to focus on is where we go from here. Long-term youth unemployment is now higher than it has been in at least two decades and is still rising. There is £1 billion available through the Youth Contract, but mostly tied up in wage subsidies that are hard to claim and of low value.So here's an idea:
Why not devolve some of that subsidy money – not all of it – to our big cities, where most long-term unemployed young people live. Why not give them (through City Deals or Local Enterprise Partnerships) the flexibility to spend it on creating new, sustainable jobs targeting the long-term unemployed. Why not challenge them to combine that with skills money, European money, their own budgets, the Work Programme. Set targets for how many jobs they will create, by how much they'll reduce unemployment , and how many they'll support into unsubsidised jobs. And why not do it now.
The money is there already – it's just not being spent. So, now, is the evidence. So we shouldn't bring back the Future Jobs Fund. We can do even better than that. We must do better.
22
Nov
Spotlight on mentoring: but do we know if it works?
This week Chris Grayling announced the ‘next steps’ of the rehabilitation revolution at the Centre for Social Justice Good Society event. Grayling explained education will be put at the centre of work with young offenders, that confidence in legal aid will be restored and that payment by results will penetrate all aspects of rehabilitation to maximise outcomes and reduce costs. A key facet of these next steps is that each person leaving prison will be met at the gate by a mentor to help set them on the right path.
This is not a new idea. Many probation trusts have enlisted the help of volunteer mentors for years, and charities such as St. Giles’ Trust have been equipping offenders with the skills to become peer mentors, with positive results. The National Offender Management Service (NOMS) has already been piloting mentoring interventions. This decision was made, however, before the final results of the NOMS mentoring pilots were established.
Inclusion’s experience researching mentoring began with ‘Models of Mentoring for Inclusion and Employment’, MOMIE, an ESF-funded project which saw Inclusion co-ordinate and evaluate mentoring projects with third sector and public partners. The target groups were: ex-military who had come into contact with the criminal justice system in the UK, Roma youth in Hungary and individuals in receipt of unemployment benefits in Portugal. It set out to test the efficacy of mentoring compared with peer mentoring, namely mentoring by an individual who shares a background or experience with the mentee. Peer mentoring has been popular for some time in the drug rehabilitation field and, in our experience, can provide some positive results, particularly around the provision of emotional support and where the mentor and mentee come from the same excluded group, with little connection to wider society. Our results suggested non-peer mentoring is more likely to help with practical issues, where referral and specialist support is required, such as with mental health issues and offending.
When referring to the mentoring that many voluntary organisations provide, Grayling said 'I strongly believe it is making a real difference'. This is the crux of the mentoring issue. It is inherently seen by many as a good thing. Inclusion recently conducted an evidence review of mentoring evaluations. We found that evidence to support the efficacy of mentoring, when measuring hard outcomes, such as its effect on employment and re-offending, can be inconclusive. Positive results are sometimes called into question by a less than robust methodology and the fact that it is difficult to unpick the effect other interventions have on an individual if they are accessing them at the same time as they are being mentored.
Whilst mentoring can seem like a cost-effective option, Inclusion found that there are substantial costs attached to an intervention with unconfirmed results. The Ministry of Justice’s plans will rely heavily on volunteers. The support, supervision and training needed by the co-ordinating organisation to ensure the smooth running of a mentoring programme for both parties, i.e. the mentors and the mentees, requires huge investment. It is vital that investment in mentoring allocates adequate resources to supporting the mentor during what can be a rewarding but sometimes emotionally taxing experience. It is also vital that mentees are adequately referred to professional services and that the mentor is not expected to fulfil these functions when they are not equipped to do so. Despite there being important issues to take into account, Inclusion supports mentoring, as our research gives early indications that it can be effective in helping a person achieve soft outcomes and move towards employment.
There is no doubt that more targeted help is required for those leaving prison who have served less than 12 months. Without recourse to a probation officer, mentoring can provide an individual with some much needed support. Prison leavers are entitled to day one entry to the Work Programme and it is the role of providers to attach them as soon as possible on release. However, attachment rates for prison leavers are particularly low when compared with most Jobseeker's Allowance claimant groups. This suggests that something is going awry when prisoners walk through the gate. This is a challenging transition for many offenders and mentoring could provide a bridge in this instance to life on the outside. The GateMate campaign, an alliance of organisations who deliver mentoring from this very point, can certainly go some way to filling this gap.
Inclusion is building on the work accomplished through MOMIE and is now setting up a further evaluation to test the impact of mentoring on reducing reoffending and increasing employment outcomes. MEGAN, Mentoring for Excluded Groups and Networks, will be conducted in partnership with London Probation and third-sector partners in Portugal (Aproximar, SCMA) and Hungary (Bagasz). It will include the provision of support to migrants who have come into contact with the criminal justice system and will build on the work already done with Roma youth. Through MEGAN, Inclusion will be adding to the body of knowledge on mentoring and trying to answer the most important question: does mentoring work?
05
Oct
The Work Programme and the Voluntary Sector
By Dave Simmonds, Chief Executive of Inclusion
NCVO’s new survey on the Work Programme should make uncomfortable reading for Government and the prime contractors. At long last there are now some half decent facts to back up the warning voices from the voluntary sector. However without taking away from the very difficult situation that some charities find themselves in, there is also cause for some comfort in the survey.
Survey findings
The survey got responses from 98 voluntary organisations – 25% of those that DWP claim are involved in the Work Programme. That is certainly sufficient to give a good snapshot of what organisations are experiencing.
The headline figure is that nearly half (47%) thought that contracts were at risk of failure in the next six months. A further 26% thought that their contracts were at the risk of failure before the end of the contract period in 2015. However, 28% thought the contracts were viable. So the question has to be asked – how can 28% make it work whilst the rest cannot?
Mixed picture on referrals
The main clue is in the numbers of unemployed people that have been referred by the prime contractors to the survey respondents. 35% have received no referrals at all and a further 15% have only received between 1 to 10 claimants. So 50% have virtually had no business to speak of. It is not surprising that contracts will be at risk if voluntary organisations are not given the people to work with. It’s like a Virgin train never getting any passengers.
Presumably the 28% who are making it work are those who are getting higher numbers of referrals – in other words, if you get the people you stand a better chance of making the finances work.
So why are so few people coming through to voluntary organisations? Our analysis has shown that (to April 2012) the total referred to the Work Programme is 15% higher than DWP estimated in 2010.
However, referrals from people on health-related benefits (mostly Employment Support Allowance) are only 37% of DWP’s estimate. So if prime contractors recruited voluntary organisations to support those with health problems it is not surprising that many are reporting very low numbers. If this situation is to be turned around then DWP need to significantly increase the referral of Employment Support Allowance (ESA) claimants – and quickly before the specialist contractors (often, but not always, voluntary organisations) disappear from the Primes’ supply chains.
An added problem is that recent anecdotal evidence is suggesting that total referrals (JSA and ESA) are slowing for prime contractors – and this will likely exacerbate financial viability for all contractors, including the voluntary sector.
Sector wide problems?
What needs disentangling is whether the survey is a reflection of a systemic problem for all Work Programme contractors and what is symptomatic of how voluntary organisations have been treated by Prime contractors. Those issues in the survey that can be attributed to Primes’ behaviour are:
- delays in payments
- the perception by some that Primes are holding on to claimants that would benefit from being referred
- 29% were yet to receive a contract – presumably those with zero referrals
- whether the level of management fee retained by the Prime is ‘fair’ – the average is estimated to be between 15-20%
- 82% said that their Prime had not helped with the payment structure, presumably by passing on the same payment-by-results terms in their contract with DWP
- 66% say that their Prime does not share performance data.
These issues are not likely to be unique to voluntary organisations – they are just as likely to emerge from any survey of all sub-contractors, whatever their legal status. But these can, and should be, addressed by Primes – either by improving how they manage sub-contractors or consistently explaining their decisions backed up by increased transparency.
The systemic problems are more fundamental – they are the problems facing every single contractor from top to bottom and, put simply, come down to whether there is enough cash in the system. If not, there will be casualties – private, voluntary and public.
What in NCVO’s survey can be attributed to systemic problems? First, as already explained, the level and nature of referrals. It is probably true that everyone, from DWP downwards, has under-estimated the problems of forecasting flows onto the programme and how to maintain a steady stream of participants. This has made it more difficult for all contractors to plan their capacity, specifically the number of Personal Advisors employed and the specialist support needed for the most disadvantaged.
Because margins are so tight it means Primes have to rapidly change their capacity – both up and down. The pressure to do this has a number of consequences but for voluntary organisations it can lead to feast and famine, which can then lead to significant cashflow problems – both in funding expansion and maintaining capacity when there are dips in referrals. As NCVO points out, this is more problematic for those charities that have stricter regulations around the use and extent of reserves.
Second, meeting job outcome performance expectations is proving tougher for everyone. As we have consistently pointed out, there has to be an impact on job outcomes as a result of the double-dip recession. Despite the labour market holding up we are well adrift from the economic and employment forecasts at the time Primes put together their bids. We will get the first performance statistics next month but the betting is on they will be below DWP and Primes original expectations. This means there is less DWP cash in the system which then means all contractors have to borrow more and/or reduce costs.
The NCVO survey said nothing about performance – but then it’s not allowed to prior to DWP releasing the first official statistics. However, the voluntary sector needs to look at how they work together to improve performance – in the future this will be the best guarantee for sustainable contracts. None of NCVO’s recommendations address performance. This is where some leadership is needed both from the government and from the sector.
Collaboration on a solution
The survey usefully shines a light on the conditions that sub-contractors are currently working under. The voluntary sector needs to be careful in disentangling what is a general problem for the programme and what is specific to the voluntary sector. There are significant problems to be addressed on both counts and there are solutions which government, Primes and sub-contractors can work on together. In July at our Welfare to Work Convention I called for an “open and serious dialogue about Work Programme performance expectations and financing.” NCVO has shown why this is ever more important.
18
Sep
Youth unemployment - still (more than) a million reasons to act
If you’ve ever wondered what the point of Select Committees is, then you should read today’s report on youth unemployment by the Work and Pensions Committee. Youth unemployment is one of the most challenging, and contentious, issues facing us. And it’s complicated – not least with three main government departments and half a dozen or so different arms of the public sector involved. But the Committee has cut through all of that to a set of clear, straightforward and evidence-based recommendations. My only gripe is that it could have gone further still.
[I should at the outset declare an interest: I was a witness to the committee a few months ago and we also submitted written evidence. But I hope that doesn’t stop me from being an objective critic…]
Most importantly, the Committee is right that the Government’s Youth Contract will not be enough on its own to tackle youth unemployment. There are two, well-documented problems here: the first is that the recession has impacted young people more than most others; and the second is a decades-old (more structural) problem where at least one in seven young people is outside employment and learning.
As the Committee says, we will not tackle the first problem – the huge impact of the recession – until we get a return to growth. In the meantime, the priority must be to prevent long-term unemployment – and where it can’t be prevented, to tackle it. As we said in our evidence, we have real concerns that the Government’s target of paying 160,000 wage subsidies for long-term unemployed people is not achievable. Wage subsidies are not a new idea – they existed continuously from 1995 until 2010 (when the Coalition ended the Young Person’s Guarantee). The Youth Contract wage subsidy is no more generous than these schemes, and in some respects is more complicated for employers. Yet the Government is aiming to pay up to five times as many subsidies as were paid even in the best years of the last decade.
The Committee is right that the Department will need to do more to increase take-up, and may need to make the subsidies more generous for some groups. In my view, that also means making the subsidies much simpler for employers to claim – in particular by paying more of the money up-front.
But dealing with recession will not address the structural problems that some young people face. The answers here are far more around how we improve the transition from school to work: by reforming vocational education, better supporting young people in the choices that they make, and doing more to support those who slip through the net. So it’s welcome that the Committee has called on the Government to implement the recommendations of Alison Wolf’s report on vocational education, and that they make constructive proposals to improve the additional support in the Youth Contract for 16 and 17 year olds that are not in education, employment or training (“NEET”).
The Committee also highlights the incredibly complex landscape of provision for young people. Our research has identified forty separate funding streams, with a further seven planned, that are providing support to young people. These are accountable to at least five Departments and four agencies. It is no wonder therefore that some young people slip through the net.
In my evidence to the Committee, I said that I thought we’d reached the point where we need to streamline and simplify how we support young people to move from learning to work – with a single set of accountabilities, single set of outcomes and far better co-ordination of services. The Committee has argued, reasonably enough, that it’s not the right time for this sort of reform. But I disagree. With record youth unemployment, an uncertain outlook, and a more complicated delivery landscape than I’ve ever known, there’s never been a better time.
We’ll be saying more about this in the coming months. But in the meantime, I’d commend the Work and Pensions Committee report. And I look forward to the Government accepting every recommendation.
06
Sep
Welcome Mark Hoban - the hard work is just beginning
There’s a place in DWP headquarters for ex Employment Ministers. It’s a long wall, with photos for every incumbent going back to the Department’s launch in 2001, and some from its predecessor Departments.
If you looked at the wall now, one thing would be obvious. The photos stopped accumulating a few years ago. But by now they’ll have added a new one.
At two years and four months Chris Grayling was DWP’s longest serving Employment Minister. Incredibly, he was the only Employment Minister since their first – Nick Brown – to serve out a full calendar year. In between the two we had a succession of one year wonders: Des Browne, Jane Kennedy, Margaret Hodge, Jim Murphy, Caroline Flint, Stephen Timms, Tony McNulty, Jim Knight.
This instability in Ministerial teams in many ways dogged the latter years of the Labour Government. Ministers of State barely had the time to master their briefs, assert themselves with officials and win the confidence of their bosses – who changed almost as frequently – before it was time to move on. And the instability fed through into policy and delivery. (This was in stark contrast to their first term, where the old Department for Education and Employment had just two Employment Ministers – Andrew Smith and Tessa Jowell – both of whom oversaw major reforms before moving up to the Cabinet.)
Chris Grayling has been the most powerful Employment Minister of recent times and one of the most purposeful. There was no doubt who was in charge, what he stood for, and what he delivered: work experience, workfare and the Work Programme.
What next?
These will be big boots for Mark Hoban to fill. As our short biography sets out, he will bring a wealth of useful experience: an economist’s training, a grounding in business, and a deep understanding of the City and financial services (which will be particularly useful given the precarious financing of the Work Programme). From speaking to people who have worked with him, by all accounts he also mastered one of the most technically demanding and complex of Ministerial briefs: leading on both the Government’s “Solvency II” negotiations in Europe and the domestic reform of the financial services industry. And of course he knows his way around the Treasury and has the confidence of people there – prize commodities in DWP.
It’s far too early to say, though, what Mark Hoban’s Ministry will look like. From my experience of reshuffles – working in Private Office and as a policy official in DWP – the first few weeks go by in an almighty rush of presentations, meetings, late nights and the occasional carefully choreographed speech or visit. His first priorities will be getting his head around his brief, running the rule on his officials and building relationships with his new Ministerial colleagues. It will take far longer to learn whether he will enjoy the same freedom, and have the same focus, as Chris Grayling.
The challenges
Meanwhile there’s any number of challenges waiting for Mark Hoban. Right near the top of his list will be the Labour Market Statistics release next Wednesday. Recent jobs data has been remarkably strong given the state of the economy. But there are big questions on how long this can continue. So he’ll have to show that he understands the numbers and knows what the Government is doing about it – and he will have to tread the usual fine line between blaming problems and claiming solutions.
At the same time, I hope that he drills a bit deeper into the figures to look at Jobcentre Plus. One of the most worrying trends in the last year, which has gone largely unnoticed, is that the likelihood of new claimants becoming long-term unemployed is rising. DWP has published some of this data, but looking further back we think that the likelihood of becoming long-term unemployed is higher now than it was even in the depths of the 2008-09 recession. Ensuring that Jobcentre Plus has the capacity, capability and tools to do its job – getting people back to work – needs to be right near the top of the new Minister’s “to do” list.
Linked to this, of course, is then ensuring that the Work Programme is tackling long-term unemployment. By now Mark Hoban will likely have been given a pretty frank assessment of where the Work Programme is. It will probably be along the lines that providers are missing minimum performance levels, some are facing cashflow problems, and supply chains are under enormous pressure. We think that this is largely – but not only – a function of the economy being much weaker than when funding levels were set. There will be few people better able than Mark Hoban to get to grips with this – Treasury knowledge, economics training, financial/ City expertise – but it won’t be easy. If the Government gets it wrong then we could be paying the social and economic price for years to come.
As if that wasn’t enough to be getting on with, Hoban will also need to decide quickly where he stands on (and what he does about) a range of other issues. Ramping up the Youth Contract. Engaging employers. The perennial problems of joining up employment, skills and specialist support. Sorting out DWP’s provision for families with multiple problems. The future of specialist disability employment support (with deadlines for re-tendering Work Choice fast approaching). Engaging (or not) with the voluntary sector. Working through what Universal Credit means for employment. Putting “jobs” at the heart of the Government’s latest growth initiatives.
This won’t be a job for the faint-hearted. Mark Hoban will probably now be getting a clearer idea of just what he said yes to on Tuesday evening. We welcome his appointment, and look forward to working with him in the year – or years – to come.
24
Aug
Mini jobs and the German employment "miracle"
Monday's news that the Treasury is considering introducing German-style "mini jobs" has provoked a robust response from Stephanie Blankenburg in the Guardian - mini jobs don't work in Germany and they won't work here.
The gist of the argument against is that there's been a big increase in mini-jobs since they were introduced in 2003, some of this may have "substituted" for higher paid jobs, and they may have contributed to wages being held down - which has increased inequality at home and made Germany too competitive abroad (in turn contributing to the debt problems in southern Europe).
Now I should say - I am not an expert on mini-jobs. But I do know that since a series of labour reforms by the German government in the mid-2000s, employment has increased - a lot.
This is best illustrated in the graph above (data here). Prior to 2003, male employment (the blue line) had fallen by 10% since reunification, while female employment had risen by about 5%. However in the eight years since, male employment has increased by 11% and female employment by an even larger 16%.
The difference before and after 2003 isn't explained by economic growth - which was basically the same either side (including the recent recession). And I doubt it's explained by German workers becoming hugely less productive since 2003 (although I've not checked).
So what the graph basically shows is that for broadly the same trend rate of growth, Germany has managed to massively increase employment - even through a deep recession - and increase it more for women than for men.
In effect, Germany has traded a smaller labour force with probably slightly higher earnings for a larger labour force with probably slightly lower earnings. That labour force has more women in it, and I bet if I checked it would also have more young people, more people from ethnic minorities, more from poorer areas and more from disadvantaged groups.
However, as Stephanie Blankenburg says, this has been accompanied by a rise in inequality. Greater real wage flexibility hasn't been accompanied by a national minimum wage, or universal cash transfers for those with the lowest incomes.
So why write about this?!
I don't actually think that we need "mini jobs" here - we've already got one of the most flexible labour markets in the world, and employers don't pay national insurance on earnings below £464 a month. Mini jobs can, and do, exist in Great Britain.
But the lessons from Germany are critical to how we frame our labour market policy. Is the lesson that we need to make the labour market less flexible, in order to protect wages and reduce inequality for those that manage to get a job, or that in a highly flexible labour market we need to ensure that the most disadvantaged don't lose out and that higher employment leads to fewer families in poverty?
If it's the latter, then that means a stronger minimum wage, stronger cash transfers for families on low incomes, more support to get a job for those furthest from work, and crucially it means doing more to help people progress.
No answers on how we do that today - it's Friday afternoon! - but how we design Universal Credit, improve the Work Programme and incentivise progression are all key. And we'll be saying more on all of those in the coming weeks and months.
