Tony Wilson, Inclusion's Director of Policy, outlines Inclusion's view on the Spending Review, as delivered by Chancellor of the Exchequer, George Osborne, on Wednesday 26 June.
As expected, this is a tough settlement for government departments and heralds a further squeeze for people on low incomes and those out of work.
The introduction of a one-week waiting period under Universal Credit is concerning and may be counter-productive. Waiting days are not new: currently, claimants don’t usually get paid for the first three days of a Jobseeker’s Allowance claim. And in other countries these periods can be much longer (for example it is two to three weeks in New Zealand). However the government’s Policy Costings suggest that it will apply to the whole of a Universal Credit claim – including housing, child and disability elements. If this is the case then it will increase risks of rent arrears and debt, and quite likely make it harder for newly unemployed people to sort their finances out and start looking for work.
The reintroduction of quarterly in-depth interviews with jobseekers, and weekly signing-on, is in principle positive. This will largely reintroduce the levels of support that existed up until April 2011. However it is essential that this leads to more support for jobseekers and not just more compliance activity. It will be a difficult balance for the Department for Work and Pensions to both increase quality support for jobseekers and also manage a 10% reduction in its operating costs.
It is also welcome that the government is committing itself to substantial investment in support for disabled people and those with health conditions. Ninety-five per cent of ESA claimants – 2.4 million people – are receiving no support from employment programmes and see an adviser twice a year at the most. Testing new ways of supporting these groups, and joining up with health, adult care, skills and other services, is long overdue.
On the overall welfare cap, the Chancellor has avoided difficult decisions for now. However the government will need clear plans at the Budget for how it is going to work and where the savings will fall. It is not a surprise that state pensions have been left out but it looks like the Winter Fuel Payment, bus passes and other pensioner benefits could be in play. There are no easy answers here, but unless these are included then the axe will fall even harder on those on the lowest incomes – both in and out of work.
For more on the Spending Review, please see our news section.
Fran Parry, Inclusion's Director of New Business and Partnerships, blogs on youth unemployment, the EU, and the great opportunities available to the UK government.
You may be forgiven for not knowing this. European political, financial and business leaders met last week at the Europe: Next Steps conference to discuss youth unemployment and agree some policy steers to address the issue across the region. The cast list was impressive and included the heads of state of France, Italy and Spain (Hollande, Monti and Rajoy), German Finance Minister Wolfgang Shaeuble and Labour Minister Ursula von der Leyen and the heads of the European Investment Bank and the World Trade Organisation, amongst numerous others.
Youth unemployment is now at the top, or near the top, of the political and economic agenda in the Eurozone. However while our continental partners make plans, including how to allocate a pot of funding of 6 billion Euros set aside to address youth employment issues in the period 2014–20, we appear to be remaining on the sidelines. Why? Clearly part of the reason must be that we are outside the Eurozone. Part of it is probably that we are reluctant to recognise that the EU has authority on this (it doesn’t have 'competence' on labour market policy, in the EU jargon). But part of it is also likely to be that with so many different government departments involved, and so little co-ordination, we simply struggle to speak with one voice on youth unemployment – at home or abroad.
It’s extraordinarily difficult to see where the final responsibility for youth employment lies in the UK. As our 'fragmentation analysis' last year set out we have policy and programmes emanating from DoE, BIS, Cabinet Office, DCLG and DWP as well as local initiatives and ESF-funded programmes but who is coordinating it all and from where? There’s a laudable exception in the Scottish Parliament where Angela Constance holds the portfolio of Youth Employment Minister and new Junior Education Shadow Minister Tristram Hunt appears to have taken on the opposition responsibility for youth employment. But it’s unclear who in the Coalition ministerial team has the final say on what’s going to work most effectively for the long term prospects of our young people and the impact that must have for the turn around of UK plc?
There wasn’t any 'silver bullet' last week. European leaders acknowledged youth unemployment as an urgent priority and came up with limited though sensible proposals. As well as the German Finance and Labour ministers urging the conference to make good use of the available EU funds, including the aforementioned 6 billion euros (5.1 billion pounds) ring-fenced for youth employment, there was also agreement that there should be a focus on encouraging SMEs to take on young recruits. Finance Minister Wolfgang Schaeuble also spoke of the need to preserve Europe’s welfare model. If U.S. welfare standards were introduced in Europe, 'we would have revolution, not tomorrow, but on the very same day,' he told the conference.
What was agreed was that the youth employment crisis will be a central theme at the June EU leaders’ summit on 28 June. As an indication of the seriousness that Germany takes its own youth unemployment (low by European standards at 8%) and the wider European picture (23.6% European average, with Greece at 64% and Spain more than 50%) Angela Merkel, the German Chancellor, invited EU labour ministers to a youth unemployment conference in Berlin on July 3, timed presumably to align with Skills Ministers’ trips to support their Apprentices at World Skills in Leipzig that same week.
UK ministers should be encouraged to contribute to these events. Failing to do so would suggest a blinkered response to arguably the biggest social problem facing Europe and the UK. Not least there are some myths that need to be busted about what has worked and what hasn’t and lessons to be shared about how limited funds can be most appropriately invested, and how not. This will all necessitate a level of candour that it would be refreshing to see.
It’s clear the EU wants to prioritise youth employment and to fund member states to test new approaches. There’s a huge opportunity here for the UK government and for individual local authorities to harness this to innovate and evaluate new approaches. The big irony – and imperative – is that while we’re at the leading edge internationally in running active labour market programmes, we are near the bottom of the class on youth unemployment. So, it could be argued that we have things to learn from our European colleagues, much to contribute and certainly nothing to lose from being at the party.
Fran Parry, Inclusion's Director of New Business and Partnerships, blogs on the Youth Employment Convention and how we can deliver a solution to a system that, up to now, has generated disappointing results.
One of the more sobering elements of the Youth Employment Convention, held in London on 8 and 9 May, was Will Hutton’s exhortation that we should be ‘very angry’ and for a few uncomfortable minutes we were. We felt guilt, responsibility, and failure. We felt the pain of the financial mess that is resulting in a whole generation of young adults enduring a recession the likes of which none of us have experienced before. We felt anger and we undertook to ensure that we followed up on the wise words of an invigorating two days with some tangible actions. Now it’s important that we do so and build upon the momentum of the event.
The Convention sought to listen to young people and to understand how it feels to be unemployed and cast adrift at the time of your life when you are at your most optimistic, and at your most vulnerable. We heard from young job seekers about where they think the shortfalls in the education, employment and skills systems lie and what actions they think would address these shortcomings most effectively. A youth panel kicking off the event was impressive: 10 young people, from diverse backgrounds, helping us understand things from their perspective, eloquently, thoughtfully and with passion. Here’s just a flavour of what they, and young people contributing throughout the event, said would assist young people to transition more successfully in to the world of work:
On day two of the Convention we put the employers under the spotlight and asked them to tell us what the essential attributes are that they look for in young recruits. This is how they described what they are looking for:
None of this is rocket science. None of it seems unreasonable. None of it is particularly surprising. So, why then do we still have a system that young people consider ill prepares them for the transition to the world of work and which employers say is yielding disappointing results? Most notably this system is not, in the main, producing young recruits with the attributes employers state they need. Why do we continue to fail both the supply and demand side in such a fundamental way?
Clearly the ‘bonfire’ of a number of supporting services has had its effect. The demise of Connexions, Education Business Partnerships, Work Experience, Aim Higher, Enterprise Education funding, and Youth Services amongst others, will all have had an impact. But let’s not kid ourselves that there was ever a ‘Golden Age’ when careers information, advice and guidance was top quality for every child and universal work experience was tailored to the interests and ambitions of every youngster. There wasn’t. We aren’t harking back to something. We are looking at creating something fresh, dynamic and fit for 21st century purpose. Something that young people tell us they want and will respond to favourably. Further, employers tell us they are prepared to do what they can to support work experience and transition choices if they are supported to do so. The trick will be ensuring that there is an appropriate infrastructure to encourage and enable this support.
So, there’s clearly consensus about the problem and the end goal and, necessity being the mother of invention, the time seems right to turn the talk in to action. The big conundrum is how we deliver the solution. Do we allow a thousand initiatives to bloom (and the Convention demonstrated numerous examples of the excellent activity that is going on), or is there a danger that many will perish and fewest will survive in the neediest areas?
Somehow we need to get a grip on all the programmes and activities that are being undertaken and bring them together under common purpose as a universal offer to all 13–21 year olds. Could we create some kind of infrastructure to assist the development of best practice and the sharing of ‘what works’? If so what would this look like, how could we ensure equal access and what would the desired impact be?
These are hard questions but the Convention demonstrated the will of many individuals and organisations to set about tackling them. And, in all honesty, what could be a better shared objective than doing the best by the UK’s young people and creating some positive energy from that anger Will Hutton generated.
Inclusion wants to move the conversation onwards – contact us at email@example.com
Last week, plans were announced which will dramatically alter the way probation services are delivered; putting a large proportion out to competitive tender. Attempting to address the fact that short sentence (<12 months) prisoners leave custody without supervision from the Probation Service, Chris Grayling is justifiably demonstrating concern for the prolific short sentence offenders who cycle in and out of prison and incur great cost to the public purse. It seems logical to introduce some form of provision for a group who have the highest rates of reoffending of all prisoners.
However, does the need to rehabilitate this heterogeneous group and reduce the costs associated with them necessitate the privatisation of a large part of the probation service? Is prison the best place to begin the rehabilitation of these non-violent offenders in the first place? How will the new contracted out services differ from those already delivered by offender managers?
“By competing the majority of services, and achieving a more efficient public sector service, we can extend rehabilitation to this group within allocated budgets and we will go ahead to put this new provision in place.”
An element of blame is implied in this statement. The prisoners Grayling is most concerned about are those very prisoners out of the control of the probation service- prisoners serving sentences of less than 12 months. The plans will involve a greater number of offenders under supervision (by new privately run services) but a reduction in the proportion of offenders supervised by the public sector.
The Probation Chiefs Association has expressed serious concerns over the government’s proposals to fragment offender supervision across organisations and sectors – with low and medium risk offenders outsourced to providers and high risk offenders retained by the public sector. It fears that information exchange will become more complex and that the introduction of national contracts with new actors will be at odds with local approaches to reducing crime, thus damaging long established relationships between local partners. All of which could potentially add to the risk of failures in public protection. The timescale of the reforms, as we have come to expect from the coalition, is incredibly ambitious. A new probation service is to be set up across 21 regions creating new services and competitive mechanisms by autumn 2014.
A key aspect of provision for offenders under the reforms will be mentoring. The causal link between social interventions, mentoring being just one example, and behavioural change is complex as Inclusion is finding through our continued research into the efficacy of mentoring as a social policy intervention for disadvantaged people. Our research to date shows mentoring can increase confidence, motivation to job search, and reduce drug and alcohol use (not to be underestimated when working with some of the hardest to help). Whether a mentor is a peer (has some shared experience or identity with the mentee) or a non-peer mentor is a discussion absent from ‘Transforming Rehabilitation: A Strategy for Reform’. There are inherent definitional difficulties in the term ‘peer’, and, even when you think you have established a reasonable basis on which to match two people, there will be reasons why one type of mentor should be chosen over another in different circumstances. These circumstances can be highly nuanced and the choice of mentor(s) should be given careful consideration. Decisions will need to be substantiated by more than Grayling's hunch that ‘There are some really good examples out there of making good use of the old lags in stopping the new ones. We need more of that for the future.’
Despite the above mentioned positive initial findings, proof of the hard outcomes that Grayling needs to make this plan work, such as employment and reductions in reoffending remains elusive. It may be that a mentor may work best as part of a wider range of services offered to a disadvantaged person, be they an offender or someone experiencing long term unemployment and social exclusion. Provided that offenders are being given access to a range of services to deal with complex and varied needs and that mentors are supported adequately and not relied upon too heavily, it could be ‘worth a shot’.
In the current climate is being ‘worth a shot’ enough though? The problem lies in the fact that mentoring, a method with varying and unconfirmed results, will be delivered as part of payment by results contracts, as BBC Home Affairs Editor Mark Easton drew out in his blog (referencing our research). The challenge is that third and private sector organisations alike will have to meet performance targets set by the Government in order to recoup the upfront costs of running such services but without the data to know whether those targets are realistic – and what precisely drives performance in achieving them. The payment by results model has already thrown up problems with the Work Programme -as our evaluation of its commissioning has shown- providers are finding it harder to finance operations than they anticipated and the payment structure is not driving innovation as intended.
Voluntary and Community sector organisations with a great deal of experience in this area will be delivering the proposed mentoring. The cost and scale of evaluations robust enough to prove efficacy are expensive and time consuming, a challenge for small organisations delivering services on the front line. The myriad variables that can bring about a change in a person’s behaviour are extremely difficult to measure and are often not easily attributed to the work of one organisation. Randomised Control Trials, the golden standard in proving statistical significance, are difficult to administer for such social interventions in front line environments. VCS organisations are getting help to demonstrate their effectiveness through a NOMS contract awarded to Clinks and New Philanthropy Capital which, it is hoped, will be able to support them in navigating the minefield that is evaluation in a payment by results world.
The questions remain, how will providing someone with a ‘mentor’ to steer them on the right path make a difference? Will these new volunteer mentors simply become unpaid probation officers? What outcome measures will be used to assess the effectiveness of mentoring? Is it fair, or even possible to try to attribute hard outcomes to a yet unproven model? Will public money be wasted rather than saved?
See Lydia's previous blog, 'Spotlight on mentoring: but do we know if it works?' here.
It’s been a quiet weekend for Budget watchers. Last year the Coalition partners fell over themselves (and each other) to tell us what would be up the Chancellor’s sleeve – with only the granny tax and cut in top-rate taxes to take the headlines on the day.
Unsurprisingly, it’s been a tighter operation this year. An interview on Marr signalling announcements on pensions and social care (and ruling out a Plan B…); some hints on raising the tax threshold and introducing childcare vouchers; and today’s announcement that the Government will accept “nearly all” of the Heseltine review (paving the way for some shuffling of cash between Departments on Budget Day).
But so far, not a word on jobs nor on welfare – which for the last three years have dominated Budgets and fiscal events. So why not?
On welfare, the likelihood is that we have seen all the cuts that we will see – at least until the Spending Review this summer. But on jobs, the signs are that the Government is starting to believe its own press releases – record employment (driven entirely by older people working longer) and falling unemployment.
But beneath the headlines, there are deep causes for concern.
First, long-term unemployment has doubled in the last four years – with now nearly 900 thousand people unemployed for more than a year. The Work Programme, which promised so much, has not yet delivered – and at least part of the problem now appears to be a straightforward lack of cash. The reason is simple enough: the Programme is largely funded on employment outcomes, the Programme hasn’t achieved the outcomes that were expected, and therefore payments – and programme funding – are far lower than expected.
As our analysis sets out, the consequence is that funding per person on the Work Programme may be around 25% lower than the Government and providers had banked on. As a result, we are now spending less per person on supporting the long term unemployed than we’ve done probably at any point since the 1990s. And we have near record long-term unemployment.
Secondly, things are even worse for young people. At a time when youth unemployment is falling (a bit), long-term youth unemployment as a share of the population is higher than at any point in a generation and is still rising. The Youth Contract earmarked around £300 million to fund wage subsidies for taking on long-term unemployed young people, but this appears to have made little impact so far. As we set out in our report two years ago, such schemes tend to have low take-up (at most 10,000 payments a year) and high deadweight (perhaps 50-80% - with DWP’s first research suggesting a similar level for this incentive). So at most, this is reducing long-term unemployment by a couple of thousand a year.
And thirdly, those areas with the weakest labour markets have seen the biggest increases in unemployment in the last five years – and they continue to lag behind. In fact the 10% of local authorities with the highest unemployment in 2008 have seen the share of their populations that are unemployed increase by three times as much as the 10% of local authorities with the lowest unemployment (a 2.4 percentage point increase compared with 0.8 percentage points). There are few surprises in the top ten list: Hull, Middlesbrough, Hartlepool, South Tyneside, Blaenau Gwent, Wolverhampton, Birmingham, Redcar and Cleveland, Sandwell and Blackpool. Addressing these regional and local inequalities must be an urgent priority. If everywhere had seen the same increases as the best 10% of areas, unemployment would be nearly 400,000 lower today.
So what should the Chancellor announce? In our view, a large part of the answer must lie in supporting and strengthening local partnerships – through City Deals and Community Budgets where those exist, and Local Enterprise Partnerships where they don’t. For a start, as we have argued for some time, the money that isn’t being spent through the Youth Contract wage subsidy should be devolved to City Deal areas – who at the same time should be freed up to combine that money with apprenticeship funding, European money, and Work Programme and Jobcentre Plus provision to do more to tackle long-term youth unemployment. A number of cities have models in place (for example in Leeds, through their own youth guarantee (pdf)).
The Government should also look to reinvest some of the hundreds of millions of pounds that it is saving in lower job outcome payments through the Work Programme. The money could be placed with local partnerships – who could then agree their priorities with Work Programme providers and Jobcentre Plus on how it would be used to tackle long-term unemployment in those areas.
And lastly, the Single Local Growth Fund, if announced, must be big enough and quick enough to drive local growth. As our analysis of long-term unemployment also showed, it is a lack of growth that is driving a large part of the rise in long-term unemployment (just as it is also driving the gap between the richest and poorest labour markets). So the growth fund must have the scale to address these challenges and to do it quickly - for example through shovel ready projects in housing, transport and local infrastructure. But tackling worklessness must also be placed at its heart - with all bids measured on how they will reduce worklessness and tackle poverty.
Budgets have always been fraught with difficulty, particularly for unpopular governments. And in all likelihood, Wednesday will be light on big new policy and instead tread familiar ground on tax, local growth and caring (for children and older people).
In our view though, Wednesday must also be about jobs and in particular those that don’t have them. A Budget for growth and jobs.
With just under one month to go before the Bedroom Tax/ Spare Room Subsidy and Benefit Cap are rolled out as part of the wider package of welfare reforms, housing associations and local authorities are alerting their tenants of the changes. Work is underway to provide tenants with support, advice and guidance to ensure they are aware their Housing Benefit will be reduced and are prepared to make up the short fall from other income.
Recently, I was involved in two pieces of work on benefit claimants’ awareness of upcoming welfare reforms. Both of these experiences have led me to ask: are tenants prepared for the coming changes? If so, how prepared are they? And what is the best way to prepare and support them through the next few years?
First, my research with tenants, completed on behalf of the South East London Housing Partnership, involved conducting face-to-face interviews with people who will be affected by either the Bedroom Tax/ Spare Room Subsidy or the Benefit Cap. This research has aimed to understand how aware tenants were of these changes; explore what they were doing (if anything) to prepare for the changes; and finally, discuss what impact they felt these changes were likely to have on their family.
Almost all of the tenants I spoke to had heard very little about welfare reform. While some had been told about upcoming reforms by their housing association, or had received a letter from their local authority, many were not aware of the extent of the impact that these changes were likely to have on them. For a few participants, who are set to lose hundreds of pounds each week in benefits, the reality of the changes only dawned on them during our discussions – leading to some very emotional interviews.
Although this research was conducted some months ago, it remains concerning that these tenants had not been made aware of the extent of their reduction in Housing Benefit, or had been approached to think about their options for making up the shortfall in Housing Benefit.
More recently I was part of a panel of judges evaluating the bids submitted for the 'Welfare Aware' awards run by Allpay UK in association with 24housing. We were asked to judge the effectiveness of the housing associations' and local authorities' campaigns aimed at making their tenants aware of welfare reforms. Just under 30 housing associations and local authorities submitted bids – all of which were of very high quality and covered a range of different approaches. The panel was asked to choose the top 10 bids, which will go up for public vote soon on the 24housing website.
During the evaluation, we found that the approaches favoured by all judges had some elements in common. These mainly related to organisations' plans to support tenants through the changes and examples of good practice included customer segmentation. For example, one shortlisted organisation had not just developed a universal communications approach, such as social media like Twitter or Facebook, to communicate but had also considered the needs of different groups of tenants. They had developed a range of marketing material targeted at different demographics and circumstances, such as elderly tenants, or those with no internet access. Other shortlisted organisations had ensured consistent branding and messaging throughout their marketing materials to encourage tenants to recognise the messages about welfare reform. A few organisations had gone further and started to build local partnerships with local support organisations, signposting tenants to them for support and advice on the issues raised by the marketing campaigns. However, worryingly, evidence of how many tenants had been supported to begin making plans to address the changes to their housing benefit was lacking in most of the organisations' bids.
These considerations lead me to two questions that need to be addressed by those organisations who are supporting tenants, not just through Housing Benefit reductions, but also through welfare reforms such as Universal Credit. Firstly, how do we ensure that tenants fully understand how changes are going to directly affect them? Secondly, what is the best approach to support tenants affected by the imminent benefit reductions?
Inclusion’s research has recommended that making it personal for tenants, showing them how much they are set to lose, is an effective way of encouraging tenants to address the changes. Secondly the 'Welfare Aware' awards have revealed that the reforms are going to affect a diverse demographic. This means that to ensure all tenants receive correct and effective communication, there needs to be a wide range of marketing and communication of these changes. Lastly, and most importantly, tenants need to be advised on the realistic set of options they have. For those able to work, the returns from work are likely to be significantly improved (as we found in South East London). Therefore, ensuring that tenants are aware of the benefits of work, and ensuring that Jobcentre Plus is engaged and able to provide support, is critical. However, it is vital to ensure that those who are not able to work are given clear and effective support – including financial and budgeting support – to ensure that they can avoid falling into debt and at worst, being evicted.
Successive governments have seen increasing the lone parent employment rate as a critical factor in helping to reduce child poverty and long-term welfare expenditure. In part, this has been done by increasing the support and incentives for lone parents to enter work. Examples include the New Deal for Lone Parents, the introduction of mandatory work focussd interviews (WFIs) for lone parents claiming Income Support (IS), and the In Work Credit.
But as well as providing more support, the government has increased the expectation on lone parents to find work. In particular, lone parents are being moved much earlier from Income Support, which doesn’t require them to look for work, to Jobseeker's Allowance (JSA), which does, through lone parent obligations (LPO). LPO was introduced in 2008 and moved lone parents with a youngest child aged 12 or more from IS to JSA. In 2010 the age of the youngest child was reduced to seven, and since 2012 it has been five. The move from IS to JSA means being required to actively seek employment and being subject to a more stringent conditionality regime with the threat of sanctions if lone parents do not look hard enough for work. These expectations are now contained in a ‘claimant commitment’ which has been introduced alongside a tougher sanctions regime.
Recent research by the Centre of Economic and Social Inclusion (Inclusion) has examined the effects of moving lone parents from inactive to active benefits through LPO, as well as examining in more detail international evidence about sanctioning lone parents.
First sanctions. Inclusion today has published a paper, co-authored by Professor Dan Finn and Dr Jo Casebourne, which examines UK and international evidence about the application of sanctions on lone parents. The results suggest that stricter job search and programme requirements and the threat and implementation of sanctions can be effective at encouraging lone parents into work, with studies from the USA, Australia and some European countries finding positive results.
However, a number of caveats should be added. Some studies found that the threat of sanctions was more important than their severity and that front line advisers were more reluctant to impose penalties they thought too severe, especially where children were involved. Other studies found that sanctions were often poorly communicated, with one British study finding that few lone parents who had been sanctioned by Jobcentre Plus understood that this had happened, instead believing that they had been subject to a benefit adjustment.
Moreover, those sanctioned tend to be the most disadvantaged – and the significant barriers they face to entering work also apply to their ability to cope with tough sanctions regimes. There is some evidence that sanctions can disconnect people from welfare systems, and, in the USA, those who leave the welfare system as a result of a sanction are less likely to enter work than those who leave for other reasons, and they are also more likely to experience severe hardship. This suggests the possibility that sanctions might actually entrench and sharpen the experience of poverty for the most disadvantaged.
Moreover, the quality of work entered by those who were sanctioned is often lower; those who had been sanctioned often reduce their reservation wage, and enter lower wage, more unstable work.
Other Inclusion research, published late last month, examined the outcomes of a cohort of lone parents who had gone through LPO and had their eligibility for IS ended. On the whole, the findings are heartening. First, one third of lone parents were in work about a year after moving off IS, and nearly half had worked at some point since then. Second, this group of lone parents had (even) more positive opinions about work than they had when they were claiming IS. And third, there was a 40 per cent drop in the proportion of families living in low income and material deprivation if they had moved into work or increased the number of hours they worked. Whilst impact analysis was not conducted to isolate the impact of LPO in these changes (this will be published in 2013), it does prima facie appear that the LPO changes have helped these lone parents, who are considerably more disadvantaged than lone parents in the UK as a whole, move into work and move out of poverty.
But the research also points the way to a number of challenges for the government. First, in line with recent qualitative research conducted by Inclusion and the University of the West of England, it was clear that the support offered by Jobcentre Plus to lone parents can be improved; worryingly, one third of JSA claimants felt that Jobcentre Plus advisers had not offered them any help or advice. Second, levels of material deprivation and low income were still pretty high for these lone parents – partially as a result of work typically being at or just above minimum wage and part-time. And third, the importance of informal childcare in allowing lone parents to work was again highlighted, raising questions about policies, such as the benefit cap and under-occupancy regulations, that may force lone parents to move away from their family and friend support networks, as well as demonstrating the importance of making formal childcare more affordable.
All in all, these two reports show that ‘nudging’ lone parents towards the labour market and tightening sanctions regimes can improve their chances of entering employment and moving out of poverty. But they also serve a number of warnings: without effective employment support from Jobcentre Plus, clearer articulation of the sanctions regime, and cheaper formal childcare, the benefits of labour market activation policies may be considerably less effective than they might be. And the threat of sanctions on the most vulnerable lone parents creates the possibility that the disadvantage they and their children face is actually entrenched, rather than removed.
Sometimes, the old ideas are the best. Labour’s announcement today that they would guarantee jobs for the long-term unemployed repeats a commitment made in their last election manifesto, and one first floated back in January 2010.
At that time, the Conservative party said that they had "heard it all before". But they will be taking it more seriously now. Having staked a large part of their political strategy on welfare reform, this opens up the prospect that they may need to address something far more difficult: the huge growth in long-term unemployment and what to do about it.
A year ago today, I set this out as one of the key challenges for 2012. It was time to put away the dog whistle of “skivers and scroungers” and focus on building a consensus on what matters: supporting the most disadvantaged to get into work. But of course what we’ve heard instead has been a dog whistle being blown louder and louder. Shirkers against strivers. Fraudsters. Feckless families. Undeserving youth. And a relentless attack on immigrants.
As I said then, no political party can claim to be blameless in this. Bashing welfare was a dangerous game when Labour played it in the last decade (as they did, with snooper squads and drug tests and so on), and they arguably prepared the field for what has followed in the last two years. But the difference then was that the rhetoric was a justification for spending more rather than less – on the New Deals, jobs programmes, neighbourhood renewal and tax credits.
Now, welfare has become the one area where the government thinks that it can score points but also make big savings. To understand why, you don’t need to look much further than the annual social attitudes survey – while the value of unemployment benefits has fallen from about 18% to 15% of average earnings over the last twenty years, the proportion of people who think that they’re too generous has trebled: from 19% to 55%.
But just because that’s what people say, doesn’t mean it’s what they will always think. The Government’s cuts to benefits and tax credits, announced last month, are a case in point. Of course you can argue, as the Government has done, that it’s not fair for incomes for the poorest to rise faster than incomes for everyone else (although given that we’ve among the highest inequality in Western Europe, it’s a pretty odd argument). But it’s much harder to argue that it’s fair that a teacher, lieutenant or nurse should have their tax credits cut. Indeed polling suggests that support for the uprating changes is far from clear-cut.
So the more you cut, the less this looks like the shirkers versus the strivers, and the more it becomes something far more damaging: the decent earners (and pensioners) versus the rest. And for the rest, welfare spending isn’t going up because of shirkers – it’s going up because wages are going down (pushing up tax credits), rents are going up (pushing up housing benefit) and vacancies are stubbornly low (pushing up the rest).
These are the real issues for the coming years: jobs, housing and pay. In the long run, the only way we’ll reduce the welfare bill is by addressing these three things (with the Government increasingly banking on Universal Credit as the solution).
So today’s announcement may – just may – move the debate on to talking about these issues. And of course it also provides cover to oppose the planned cuts in benefits and tax credits – which may or may not turn out to be good politics, but as Jonathan Portes has pointed out, it’s probably good economics.
In principle, today’s announcement is also good policy. The Government has already demonstrated, in its impact assessment of the Future Jobs Fund (pdf), that just because something is expensive doesn’t mean it’s bad value. It turns out that the Jobs Fund more than paid for itself and was arguably one of the most effective programmes of its kind. I argued at the time that the money is already there to do even better than this: by better targeting it, joining up skills and employment funding, and focusing even more on sustained employment. If a jobs guarantee can do these things, then it’s good news for the long-term unemployed and good news for taxpayers.
Lastly, looking ahead, one thing is already clear from this week’s headlines on welfare and jobs: the focus in the coming year will be on welfare as never before. We can expect the rhetoric to ratchet up, but also this will be the year that the planned reforms really start to bite – with the rollout of Universal Credit; Council Tax Benefit, Social Fund and Disability Living Allowance being replaced and funding reduced; the overall welfare cap coming in; major reforms to housing benefit in social housing; and the ongoing impacts of cuts to housing benefit and tax credits made last year.
All of these reforms are fraught with challenges – for government, local authorities, voluntary groups and most importantly service users. None of us can afford for these reforms to go wrong. But we also cannot afford to lose sight of the issues that matter most in the long term: jobs, housing and wages. So this year, again, can we put away the dog whistle?