Examination of Witnesses (Questions 40
- 60)
WEDNESDAY 17 MAY 2000
RT HON
TESSA JOWELL
MP, MR JEREMY
MOORE AND
MR MATTHEW
NICHOLAS
40. I think what you have said about the 16-18s
is very interesting. I do not know how much you can go into further
detail today, but does this interface at all with the proposals
for the new services for young people and connections, or is this
something which is separate from that?
(Tessa Jowell) Yes; the important thing will be that
all these services connect, but we have got to pull these young
people back into the mainstream and find them where they are and
try to put in place the kind of support which is going to repair
them enough so that they can begin to stand a chance of benefiting
from the New Deal.
41. Moving on to something that is connected
to what we have just been talking about, you yourself, earlier
on, referred to what you said at the previous Committee meeting,
and I quote: "we have to aspire to saying that nobody will
leave the New Deal for Young People illiterate or innumerate,
and that is a very bold ambition." And you have said a little
bit already about the numbers of the young people who are not
even at NVQ Level 2. Can you tell us a little more about the progress
that has been made in delivering on what you said to us in January,
when you attended, and how far you see the New Deal as the ideal
vehicle for delivering these goals on numeracy and literacy and
how far it must be achieved through other work of the Department,
or indeed of other Departments?
(Tessa Jowell) If I can just start by telling you
what has been put in place, and what has been put in place is
really a programme that, for the first time ever, systematically
screens young unemployed people in terms of their level of basic
skills; so that, as I have said, when a young person joins the
New Deal they are automatically screened in order to assess their
basic skills, unless they come along with evidence like a GCSE
certificate, for instance, which shows that they have got English
and Maths to NVQ Level 2. The second thing is, this is, as you
will understand, a very sensitive area for a lot of young people,
and even more so for adults, many adults live their lives on the
basis that they have to conceal the fact that they cannot read
and write properly, and become very adept at concealing that.
And so what we have also done, since I last appeared before you,
is to put in train special training of a thousand personal advisers,
with the Basic Skills Agency, in the identification of gaps in
basic skills, in order that they approach this, with young people,
with the degree of sensitivity that means that young people are
likely to want to co-operate with the programme, recognise that
they need more help and then accept the help which is on offer
to them. So I think that that is a very important step forward.
What was previously a rather random process is now a systematic
and automatic part of the Gateway. And, against this, it is worth
just saying that 41 per cent of the young New Dealers on the Gateway,
41 per cent, had left full-time education by the time they were
16, 22 per cent had reported, themselves, basic skill problems.
And, as I told you last time, I think that the most shocking figure,
in terms of capturing this lack of literacy, is that an estimated
40 per cent of young people on the New Deal Gateway cannot read
the basic instructions on a medicine bottle; it is equivalent
to not being able to use a telephone directory, look up information
in the Yellow Pages, take down a telephone number. And so, if
you look at the kinds of jobs that are available in the modern
labour market, you can see how many jobs those young people are
excluded from, and therefore why we place such enormous emphasis
on the importance of basic skill acquisition. It is about employability,
but it is also about tackling the persistent risk of social exclusion
that comes with illiteracy.
42. Do you have an estimate of what the total
cost could be of achieving the goal that you have set?
(Tessa Jowell) The additional investment in the Gateway
is, I will give you the figures—I will come back in a minute,
and I will give you the figures for the Gateway. But when I referred
to the costs, the cost per person for the New Deal, and indicated
that the costs were likely to rise, the intensification of the
Gateway is likely to increase the cost, I think, by about £400
a person, a substantial element of which will be help with basic
skills. If I can just add to this point, I think that we are also
likely to see the proportion of young people who go on to Full-Time
Training and Education basic skills courses also increase.
Judy Mallaber
43. Can I ask, because this is important, how
much we know about how easy it is to get those people to go in
for basic skills training, because, certainly, previously, we
have had evidence of people not turning up to all kinds of providers,
not just on literacy and numeracy and Gateway, because maybe they
find it hard to turn up, or it is too intimidating, and what success
are we having in getting people there and getting them engaged
in those courses?
(Tessa Jowell) Let me ask Matthew Nicholas to deal
with that question, because these are daily transactions in Job
Centres and he can share a bit of that experience with you.
(Mr Nicholas) I think we are seeing exactly the same
position as we have seen with young people's attendance at some
other providers; because it is such a sensitive issue and they
are reluctant to face up, often, to the need for literacy and
numeracy, and because it reminds them of going back to school,
at some stage, it is quite difficult negotiating with them to
turn up. So it is a very difficult and sensitive area, and that
is why we are training our advisers with the Basic Skills Agency;
so it is not one of the easier areas. I do not have any statistics
to show what proportion of people are not turning up. It requires
much more sensitive handling, I think, than almost any of the
other referrals to Full-Time Training and Education.
(Tessa Jowell) I would just add to that, that, because
we have moved, with the intensification of the Gateway, from what
had been a rather more random process of basic skills screening
to one which is systematic, this is, again, an area, I think,
that is a question that will be easier to answer at the beginning
of next year, as compared with now, when we have had six months'
experience of running the intensive Gateway. But it is a very
good example of an area in which we would look for further improvement;
if we found that young people were not turning up for their basic
skills courses, we would want to put in place further help, in
order to increase the likelihood of their turning up. And one
of the areas in which, increasingly, we do want to build feedback,
given that we have now got nearly 200,000 young people who have
had experience of finding work, helped by the New Deal, is to
build young people's experience much more directly in the design
and development of the New Deal.
Chairman: Can we just touch on ethnic minorities.
Mr Twigg
44. Another area which has been much commented
on, and which I know you yourself commented on recently, is the
poor experience of many black Caribbean clients with the New Deal.
Could you tell us just something about your assessment of the
different experience of non-white ethnic minorities, in particular
black Caribbean young people, and what is going to be done to
improve that?
(Tessa Jowell) I am happy to provide the Committee
with the latest figures both for ethnic minority participation
in New Deal and the rates of movement from the New Deal into jobs.
Stephen is absolutely right that there is not a single consistent
pattern across all ethnic minorities; the experience of young
Chinese New Dealers, Indian New Dealers, is much closer to the
experience of white New Dealers than is the experience of black
Caribbean young men. But there are some optimistic signs; let
me just give you the optimistic sign, before I move back to the
general points of strategy. If you look at the Units of Delivery,
where there have been very high levels of improvement, one, covering
part of my own constituency, in Southwark, has shown a substantial
improvement over the last year, and that is a Unit of Delivery
which covers a very large number of, typically, New Dealers in
Southwark and New Dealers in Lambeth are young Caribbean men;
and so we are beginning to make progress. One of the things that
we are doing, which I think the Committee might be interested
in, and this takes us back to the discussion about intermediate
organisations, is working with what was an American-based organisation,
called Wildcat, who have been quite successful in the development
of what is called a Welfare to Wall Street programme, and they
are working with us in beginning to open up opportunities for
young people from Tower Hamlets, from the Boroughs south of the
river, open up opportunities in the financial services sector.
There is no reason, but at the moment it does not happen, that
young black men from Lambeth and Southwark get jobs in the Bank
of England, or Morgan Grenfell, or any of the other large City
financial institutions; they are facing skill shortages and difficulties
in recruitment. And what we are looking to do is to put together,
with Wildcat, a sort of Intermediate Labour Market which will
be demand-led, very much focused on the requirements of employers,
that will look to provide young people with the training that
these institutions are looking for in their new recruits; and
I think that is one way, one very practical way, in which we can
move things forward. There is also some very good work, looking
at what more can be done for young Caribbean men, being done by
the Employers' Coalition, that covers London, which is under the
very energetic leadership of the Chief Executive of Coca-Cola,
Chris Banks. And I recently had a presentation of the obstacles
to employment for young men in Southwark, and, as I say, it is
a combination of lack of basic skills, lack of confidence and
lack of aspiration, and much less than you would expect evidence
of employer discrimination. Which is why, I think, we have seen
the improvement in the performance of the Unit of Delivery, and
also why the Wildcat programme that I have described briefly to
you may well be a very productive way of addressing the particular
labour market problems that ethnic minorities face.
45. Do you think this process itself has helped
to challenge employer discrimination?
(Tessa Jowell) I think that it has. The survey that
the Employers' Coalition did, which has not yet been published
so I had better be careful what I say about it, which was a survey
of young people themselves, and what it indicated was that young
people themselves did not believe that employer discrimination
was an obstacle; now that is slightly different, be clear about
that, from saying that it is not an obstacle. But I think that
it will help us tease out what is a very complex area. When we
announced the last set of New Deal figures, I did so in Sparkbrook,
in Birmingham, where, again, the experience is slightly different,
the ethnic population is quite different, overwhelmingly young
Asian men, and I was very impressed there by the extent to which
the local Unit of Delivery had put in place some very imaginative
provider facilities that very directly met the aspirations and
ambitions of the young men that I had the chance to talk to. But,
just to deal more generally with your point, we have set parity
of outcome for young people from ethnic minorities, regardless
of ethnic origin, and white New Dealers, as one of our Core Performance
Measures, and, although we have eight Core Performance Measures
altogether, there are two we attach greatest importance to, at
the moment, one is the improvement in the rate of young people
into work, the second is achieving parity of outcome for young
people. The one which is now increasingly important is the Core
Performance Measure in relation to retention, and we are doing
some piloting of the impact of that Core Performance Measure with
the Employment Service at the moment.
Chairman
46. Minister, you might be interested that we
hope to see the work of Wildcat when we go to the States in mid
July. So we will come back and report for you on that.
(Tessa Jowell) We are working with them, both in relation
to the financial services sector and also IT, so I think that
it will be interesting to hear your reactions to the work they
do.
Mr Brady
47. I am afraid I am going to return to statistics,
but I will be careful to name my sources, for the benefit of Judy
Mallaber; first of all, the green budget produced by the Institute
for Fiscal Studies, which put it really quite succinctly, where
it said: "A clear trend of increasing employment and falling
unemployment for 18-24 year olds has been in place since 1994,
long before the introduction of the New Deal." And the figures
that lie behind it, which are sourced from the Office for National
Statistics, the NOMIS database, show that from May 1993 to May
1997 there was an outflow, so I am not confusing stock and flow,
I want to be very clear about that, I am talking about flow, there
was an outflow of long-term youth unemployment of 4,916 a month,
on average; from May 1997 to April 1998 the flow was 4,079 a month;
and from April 1998 to the present day the average flow has been
2,771 a month. So that does lead to the conclusion that long-term
youth unemployment was falling more rapidly before May 1997 than
since, but, perhaps more disturbingly, from the point of view
of the Government and its New Deal scheme, that it has been falling
less quickly since April 1998 when the New Deal was put in place,
than it was before April 1998 when the New Deal was put in place.
Why?
(Tessa Jowell) First of all, the New Deal for Young
People was piloted in the first year of the Government; it became
a national programme and picked up as a national programme over
the subsequent two years. Chairman, let me say that I think it
would be an extremely good idea if we were able to reach a definitive
conclusion about these figures. I have not seen the IFS study,
and, frankly, I do not think it is reasonable to comment on an
aspect of the study which is quoted—
48. Minister, I am using Office for National
Statistics figures; that is what I would like you to reply to?
(Tessa Jowell) Yes; on the ONS figures, the independent
research, and you do not have to take my word for it, the independent
research that the Government commissioned, or the DfEE commissioned,
in order to evaluate the New Deal, showed conclusively that in
the first year of the New Deal's operation long-term unemployment
among young people fell by 40 per cent, as a result of the New
Deal. The figure now is close to 60 per cent; not all of that
is directly attributable to the New Deal, but the conclusions
that I hope the Committee will rely on is the independent analysis
that has been conducted by NIESR. We have asked them to update
their assessment of the macroeconomic effect, and we hope that
those figures will be available to us in the autumn. But it is
beyond dispute—it is beyond dispute—that long-term
unemployment among young people has fallen by 60 per cent since
May 1997, and that on the independent assessment of the NIESR
40 per cent of that reduction is a New Deal effect.
49. So the figures we have given you, Minister,
are just plain wrong?
(Tessa Jowell) I would like to look at the figures,
I would like to look at the date, and all the rest of it. I am
giving you, as objectively as I can, the assessment of the impact
of the New Deal on unemployment among young people since May 1997,
and I think I have done that.
Mr Brady: I think that means you say the figures
are wrong, Minister.
Chairman
50. I think we might be able to help the Minister
here, because we have decided, earlier on this afternoon, that
we are going to go into a very thorough-going examination and
evaluation of the New Deal two years on; we have done several
preliminary investigations, as you know, as it has developed,
but, as a Committee, we will be going into the evaluations that
both you and other organisations have done, Minister.
(Tessa Jowell) Yes; and can I just be quite clear,
because I was not clear whether Graham Brady was drawing distinction
between all unemployment among young people or long-term unemployment.
The figures that I am quoting are for long-term unemployment,
which is defined at six months.
Mr Brady: The figures that I am quoting are
for long-term youth unemployment.
Mr Twigg: It must have been very high in 1993
then.
Mr Brady: It was, but it came down very rapidly
after.
Chairman: Extremely high. We look forward then
to the clarification of all of these issues with baited breath,
I think. Judy: personal advisers.
Judy Mallaber
51. Throughout, we have all said that personal
advisers are a pivotal part of the success of New Deal; do you
think that the fact that there have been increasing caseloads
on the New Deal for Young People has compromised the effectiveness
of personal advisers? And maybe you could comment on, when we
took evidence from the Permanent Secretary the other day we had,
it must have been, was it, the DfEE Estimates, or Annual Report,
which, within it, said that the levels of sickness in the Employment
Service were higher than for DfEE in total, and I just wondered
if you would like to comment on the effectiveness of personal
advisers and the pressure that is on them in terms of their heavy
workload?
(Tessa Jowell) First of all, the qualitative study,
which is tracking 6,000 young New Dealers, shows overwhelmingly,
as your question suggests, that what young people value most about
the New Deal is the relationship that they have with their personal
adviser, and that, indeed, the personal advisers themselves feel
a great sense of increased job satisfaction as a result of the
personal contact they can have. Now, in terms of caseloads, the
caseload of personal advisers varies from anything between 40
to 90, so there is clearly a range there, and the intensity of
contact that young people have with their personal adviser will
be determined very much by the personal adviser's assessment of
their needs. The qualification level for personal advisers is
set at NVQ Level 3, and already about 75 per cent of personal
advisers are qualified at that level. And what we are also putting
in place, and I have discussed with the Head of the Employment
Service, is an opportunity for career progression as a personal
adviser, so that the most highly trained and experienced personal
advisers will work with the most disadvantaged, most demanding
young people. So, in broad terms, the personal adviser, as a sort
of new innovation, with the New Deal, has proved to be very successful,
both for the young person and also in terms of the job satisfaction
of personal advisers themselves. To turn to, two issues, one in
relation to turnover and the second in relation to sickness; to
take turnover first. The picture is highly variable in different
parts of the country. I think that, from memory, turnover rates
in the north of England are the lowest, in some Job Centres at
about 4 per cent, whereas in the London area they can run as high
as 25, 27 per cent; and, obviously, if you have turnover running
at that sort of level, it does create a sort of disruption in
the quality of service that you can provide. So we are keen and
it is one of the measures that I explore very carefully every
time we do the performance review with the Employment Service,
is what steps are being taken to reduce turnover, and we certainly
think that, by increasing opportunities for career progression
for personal advisers, that is one practical step that we are
taking. Again, on sickness rates, I would be happy to confirm
this in a subsequent letter to you, but my recollection, from
the latest survey of Employment Service staff, is that sickness
rates are, in fact, beginning to come down; and, you are right,
they are an important indicator. And, I suppose, and I know my
DfEE colleagues will not take offence at this, I think that it
is a characteristic of front-line, sharp-end, however you like
to describe them, services that they tend to be more stressful
and that sickness rates tend to be higher, and the management
of that Service therefore needs to take account of that. And I
think that the Employment Service are very alive to that, and
the latest staff survey, which shows very high job satisfaction
rates, in the face of an increasing range of demands for modernisation
of the Service, shows that that management strategy is working.
52. The other aspect is that, earlier in your
evidence, you said that one area you were bidding for money from
the Treasury for, for the next three-year spending review, was
the Follow Through period, where you highlight that that is an
area where there has not been the same work put in, in relation
to personal advisers. Can I assume, from that, that that is a
bid which would enable more personal advisers to be taken on and
that will be specifically working with people over that period?
(Tessa Jowell) I think it probably would mean more
personal advisers being take on, but it would certainly mean more
personal adviser contact with young people in Follow Through.
And, again, and this is obviously part of the discussion with
the Treasury, but the judgement we have got to make is how you
maximise the useful contact which is more likely to get the young
person into work and avoid what is referred to as the dead-weight
cost; in other words, invest extra help which has no material
benefit in terms of the increased likelihood of the young person
getting into work. The challenge is to create more structure in
the Follow Through period, a stronger work focus and higher levels
of support for young people to get them into work.
53. And would that also include the work, the
use of mentors; and how successful and widespread has mentoring
been, within this process?
(Tessa Jowell) We are using mentors in the New Deal,
I think we have 3,000 mentors recruited altogether, and they are
being deployed by different Units of Delivery, and I think that
it is a function which, as the New Deal develops, is also very
much being developed. And one of the important things to work
out is the distinctive role that a mentor plays, as opposed to
the personal adviser, and one of the areas in which we think the
development of mentors would be extremely productive is in providing
support for young people who are doing work experience, and also
in-work support for young people. And here we would draw on some
of the Intermediate Labour Market experience from the States,
which underlines the value of people who may have been disadvantaged
in the labour market having somebody who can help them sort out
the problems that if they are not resolved will interfere with
their ability to continue to work. And that is the sort of potential
area in which we think mentors in the future will be very useful.
And recently I addressed, in Nottingham, a national conference
on mentors and mentoring in the New Deal, which established some
very clear ways in which to move mentoring forward.
Judy Mallaber: Another area for us to look at
when we go to the States.
Chairman
54. Indeed, yes.
(Tessa Jowell) See the Goodwill organisation, in Boston,
which, I think, has done some fantastically good work in this
area.
Chairman: Thank you for that suggestion. Ian,
can we move on briefly to the private sector-led Units of Delivery.
Mr Pearson
55. Yes, very briefly, given the time. I was
wondering if you could tell us, Minister, something about the
performance of the private sector-led Units of Delivery, compared
with the public sector-led units, and what initial conclusions
you have reached from this, as to the relative performance and
implications for policy in the future?
(Tessa Jowell) Yes, certainly. The first point is
that there is not a significant difference in the performance
of private sector Units of Delivery as opposed to the public sector,
ES-led Units of Delivery, and, as you will be aware, the private
sector-led Units of Delivery are fairly small in number, there
are about 12 in the 144 Units of Delivery overall. Where they
do differ is that the unit cost is somewhat higher than the unit
cost is now coming in at for the public sector-led Units of Delivery.
And there is a very specific reason for that, which is that the
contracts that the private sector Units of Delivery are currently
operating are contracts that were set when the New Deal was first
being established, on the planning assumptions that prevailed
at that time, and they will obviously be scaled down now, as the
new contracting round begins, and so in the second contracting
round we would expect that the unit costs would be lower than
they were in the first round, but in terms of performance there
is no consistent pattern. I looked up some figures on this before
I came to see you, and it might be interesting if I just gave
you some illustrations of the way in which the private sector
has, in some clusters, outperformed the other Units of Delivery.
In North Essex, the private sector-led Unit of Delivery there
has secured a 50 per cent job entry rate, against a cluster average
of 44 per cent. Hackney and Southwark, and Southwark I have already
referred to, have seen an improvement of more than 10 per cent
which has been of disproportionate benefit to young ethnic minority
New Dealers.
Chairman
56. Was not that from a low base, Minister?
(Tessa Jowell) It is certainly from a low base, that
is absolutely right, and I think this is a point I made when I
came to see you last time, that the range in the performance of
the private sector-led units was certainly wider than the range
in the performance of the public sector-led Units of Delivery.
Chairman: Sorry, Ian, I did not mean to interrupt.
Mr Pearson
57. In the next contracting round, do you expect
the number of private sector-led Units of Delivery to increase,
stay the same, or decline?
(Tessa Jowell) I have no settled view on that. The
contracting round will proceed. What we are concerned about is
achieving value for money, achieving maximum innovation and flexibility,
and we will let the contracts to those providers whom we are confident
can deliver on that, bearing in mind that the nature of the New
Deal is constantly changing. And one of the areas that I think
is part of the negotiation is the balance. It is increasingly
important, I think, to allow more local flexibility, in order
that we improve the matching between young New Dealers and the
training that they receive and the needs of the local labour market.
So we would not proceed down any doctrinaire route which expressed
a preference for either one or the other; the judgements will
be made on the grounds that I have outlined.
Mr Nicholls
58. Obviously, when Graham Brady was referring
to the figures from NOMIS, and the figures from the IFS as well,
about the fact that a steep decline in youth unemployment has
been going on since at least 1993, the question of dead-weighting
arises, and you mentioned it yourself a moment or two ago. What
estimate do you have about the degree of dead-weighting in the
New Deal?
(Tessa Jowell) The NIESR estimate is about 50 per
cent, which, in their judgement, is what you would expect for
an active labour market programme like the New Deal. But if I
can just add to that, I think that is a pretty good guide figure,
and I think that what the research has shown us is really three
levels of effect. There are some young people who get a job and
only get a job because of the benefit that the New Deal brings,
and, in a sense, it is the young people themselves who are the
most powerful advocates of that view. But the second is that there
is evidence that there is a second group of young people who move
more quickly from unemployment to employment, as a result of the
help that they get from the New Deal. And the third group are
the young people who move into a better job, because they have
acquired basic skills, than they would otherwise have got. And,
so far, what the evaluation has captured is the first of those
three, the pure New Deal effect; but what is absolutely clear
is that there is the sort of broader, halo effect. But we keep
this judgement very much under review, and, as I think I have
indicated, in all the answers I have given so far, new investment
is a constant judgement between what the investment actually achieves,
in terms of increased employability and young people into work,
as opposed to the kind of progress that might have happened anyway.
59. Did you expect it to be as high as that?
I take your point on the qualifications you are making on some
perfectly fair points, but did you in fact expect that the dead-weighting
would be as high as 50 per cent?
(Tessa Jowell) That was broadly the estimate, because
that is the sort of estimate that is made by labour market economists
about the dead-weight effect of labour market programmes. My expectation
is much less important than that sort of objective benchmark,
and against that objective benchmark which formed part of the
NIESR conclusions. I think that we are on track, that we will
constantly monitor that. And can I just say, finally, on the figures,
before anybody runs away with any mistaken impression that somehow
the falls in the rate of youth unemployment was sharper before
the election, if you let me see the figures, give me time to consider
them,—
60. Absolutely.
(Tessa Jowell) I am quite confident that the points
I have made to the Committee about the New Deal impact in reducing
long-term youth unemployment by 40 per cent, a 60 per cent fall
since the election, will be set out in the subsequent information
I will send you.
Chairman: Thank you, Minister; like us, you
have been a seeker after truth, and so we will look forward to
that immensely. You have now been with us for almost an hour and
three-quarters, and it has been a long and exhausting session,
I think, for us all, particularly trading statistics across the
floor is particularly difficult. Thank you very much for the able
way in which you have dealt with the questions, and for the way
in which you have dealt with the statistics for us, too. Thank
you very much indeed.
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