Examination of witnesses (Questions 160
- 174)
WEDNESDAY 21 JUNE 2000
MR CHRIS
BANKS, MS
AMELIA FAWCETT,
MS STEPHANIE
MONK, CBE and MS
RUTH THOMPSON
Chairman
160. Can I just pursue a couple of small points.
Stephanie quite rightly said that one approach with the black
and ethnic minority groups is reaching out into the community
through intermediaries. One, do these intermediaries exist? Do
they exist in a form that we can actually use now? Are they capable
of being grown fairly quickly? Can you offer an opinion on that?
(Ms Monk) They do not exist on a sufficient scale
now. There are pockets of experience but not sufficient. Do I
believe they can be developed? I think Amelia can comment on that
from her US experience.
(Ms Fawcett) I think the situation is as follows:
are there sufficient intermediaries who can do both the searching
of the pool in the ethnic minority community and the training
and the work with employers? The answer is no, clearly there are
not. However, to take an example from what we are going to do
in Newham, Community Links does not have the ability to scale
up, but they do know the ethnic minority community extremely well
so we are working with NewTec in Newham who will do the training,
be our partner, work with us and other financial services firms,
and then Community Links will feed them with people from the ethnic
minority community in Tower Hamlets and Newham. So it may be in
the early days that you have to take two pieces of this and get
two organisations working together but there is not so far a sufficient
number of one-size-fits-all intermediaries, no.
161. Amelia, flexibility, which we are always
urging upon Government in all of our reports and we always think
they are getting the message but I am not absolutely convinced
that the kind of flexibility which you are looking for is as yet
on track, would you offer a comment on that?
(Ms Fawcett) To the extent that the Government is
now actively looking at a demand-led strategy, is putting money
into intermediaries and may continue to do so, and is beginning
to revisit some of these programmes, I know the Task Force would
like to see less of a layering of the programmes, then I think
the Government has, initially, taken some steps to make the system
more flexible. Obviously there is still more to be done.
Mr Pearson
162. Can I explore the nuts and bolts and ask
a question. If intermediaries are adding value to your organisations
by providing job ready individuals, I understand you pay the individuals
on a TEC firm basis.
(Ms Fawcett) Yes.
163. What are you paying the intermediaries?
Are you paying them a hiring fee in the same way that you would
a recruitment agency?
(Ms Fawcett) We are not, no. They may get some philanthropic
funding generally. Wildcat is heavily funded from the States.
Community Links, whom we initially dealt with, are certainly funded
by us but on a different scale. They are effective, Wildcat is,
because they are a cheaper employment option. People get the same
amount of money but I am not paying advertising costs, I am not
paying agency costs, so I am not funding them per candidate at
all. That is pretty much the way the NewTec system will work as
well.
164. If they were to start to charge for their
services you would say no?
(Ms Fawcett) No, if it is value for money I would
pay them whatever I think is the appropriate rate but that has
not been an issue to date. They are not running a profit organisation
and they get adequate funding pretty much from the public sector
as well as the private sector. One additional point, in the financial
services sector initiative, clearly a number of employers, mine
is one, have kicked in on a one off basis funds to the programme
to help the kick start to intermediaries who just do not have
the financial resources to do this. It is not being done on a
placement basis, it is being done on a project basis.
165. Do you see any indications from the large
established recruitment agencies who maybe want to go down market
and get into this business, possibly one of the ways of developing
intermediary organisations agencies would be not creating intermediaries
from scratch but using some of the organisations that are already
there to fill that gap and look at the different recruitment pools
and strategy?
(Ms Monk) In fact some recruitment organisations have
actively participated in the New Deal programme, for example I
know Manpower have been an active supporter and participator in
this. If the background of the organisation is a conventional
recruitment background then the task is more than that, the task
is substantially more, and they would need to take on specialist
staff for the agency to fill the complete role of an intermediary
or they would need, as Amelia said, to put together a nodular
a partnership, that could supply that full set of services. I
think it is a perfectly viable solution for them to be involved
but they would need to recognise there would be a front end which
is probably a key to it, which is preparing people, and a back
end, which is continuing to give support. Neither of those are
current skill sectors of the majority of people involved in recruitment.
So it would be quite a major change on their part. Again, as Amelia
said, certainly as a large employer of people, I am very willing
to pay a sensible fee for placement of good quality people but
at the moment that is not the situation we are in and, therefore,
there would need to be quite a different proposition from an employer's
perspective if it were to be a fee based relationship. You need
to have really job ready people because they would be going competitively
into the market against conventional recruits. So it is a different
situation now but maybe it is a desirable end point in that the
quality of their outcome is so good that they say "We can
afford to charge you for what we deliver".
(Mr Banks) There is a bit of experience in Hackney
where Reed delivers New Deal where I think, to be honest, the
jury is out to a degree on the extent to which that is more successful
than other delivery mechanisms.
Chairman
166. Sure.
(Mr Banks) Nevertheless the performance target was
exceeded by 50 per cent last year. Although the jury is still
out and there are lots of other factors at play. There is some
evidence of success there as well.
Mr Pearson
167. The other question I want to ask is the
wider strategy question, how intermediary organisations fit into
the New Deal or whether New Deal ought to be restructured or substantially
modified and we build more on intermediary organisations than
you do providing the New Deal programme. You mentioned, Amelia,
that is where you put your money in intermediary organisations.
Are you saying "Well, we ought to think about our strategy
in dealing with long term unemployed people" or are you saying
"Well, we need to put some extra money into that because
the one size fits all Gateway does not work"?
(Ms Fawcett) I am not sure whether changing the New
Deal right now in some massive way is an option. It is certainly
true that the Gateway works for some people, there is no question,
but it also does not work for others, including some of the people
that Mr Pearson is referring to. Therefore, I think there is a
role for both. One deals with one sets of issues and clients and
the Gateway will still do. As we have seen, it has worked, there
are lots of people in jobs and staying in jobs. It is not that
it does not work at all and we ought to completely abandon it,
it is just the opposite. There is more we can do to strengthen
it and the Government can do in terms of funding the intermediaries
and consulting them to help the system work.
(Ms Monk) I would like to endorse that. I would like
to pick up, if I may, linked to that answer an earlier question
about flexibility. There is one aspect of design in the programme
that is run at present that could aid the flexibility of this
enormously and that is a flexibility around the options which
at the moment are like four parallel tramlines. You elect to go
on one option and come out the other end of it. In fact in many
instances there could be a development pathway, someone could
come in and spend some time in the environmental option and then
go on to an employment option or a training option. They could
be used more flexibly and be more valuable if that was built into
the system. I would endorse the view about strengthening what
we have got and working with what we have got and evolving from
it but then recognising that as it stands there is a whole raft
of people who are outside its current reach and need to find a
much more profound solution for their needs.
(Ms Thompson) Can I add on flexibility, I agree there
is a role for both. In the prospectus which I have sent on the
innovation fund in terms of flexibility I do have concerns about
the hurdles which are in there to attract intermediaries over
the Tyneside area. The starting salary that will attract a payment
for the intermediary is said to be around about £15,000 per
annum which is about the average pay for any good full time job
in the North East. What I would not like to see is if we have
a fragile state and use the intermediaries that there will be
no bids or a lack of interest because they feel they are not able
to fulfil the criteria in order to put in that bid. That would
be one area in terms of flexibility to make the scheme sensible.
Chairman
168. Can I just pursue something which is puzzling
me a little. I think we have all agreed that further intermediaries
would be welcome and necessary. I think we have all agreed that
they do not exist in sufficient numbers at the moment. You have
also told us that you do not think the Employment Service is an
appropriate organisation for this task, hence the work of the
intermediary obviously. You have also said that employers are
not really the appropriate people to do this. Now that really
leaves private recruitment agencies, that we have touched upon,
who need to learn new skills of the intensive working with disadvantaged
people or community organisations who have a lot of experience
of working intensively with people but who do not have the employer
demand-led expertise at this stage. Are there any other sources
of growing intermediaries? We were interviewing the Chambers of
Commerce last week and they said they would be interested. Do
you think that is a possibility?
(Ms Monk) I think the suggestion of perhaps a consortia
approach, not expecting one organisation at this stage to be able
to supply all the skills is a real early possibility whilst people
regroup and assemble themselves to meet this newly defined need.
I do think that is a prospect. I think if there is some realistic
funding matched by a clear set of standards about the expectations
of people who engage in this over time you could evolve more organisations
to meet the need, but I think in the short term we are going to
have to be a bit imaginative about how we put together the sets
of skills required using the people who have got a background
in different elements of what is needed and getting them working
together with employers and the Employment Service who have a
continuing role to play but recognising where people's strengths
are and putting the right resources behind that in a partnership.
169. Chris, and then, Ruth, I was going to ask
you about the Tyneside experience.
(Mr Banks) I have a feeling that that partnership
is definitely facilitated and helped by coalitions, certainly
in London, and that is a way of working with intermediaries and
with companies across sector and in individual sectors and I think
that the employers have a really important role to play in helping
build organisational capability within those intermediaries in
terms of making a long-term commitment, creating that true open
business partnership that I was talking about earlier and also
providing real feedback on performance and progress which is the
thing which will help the organisation learn and improve. I think
the combination of that within the structure of coalitions and
with appropriate and substantially different funding will be enough
to make a difference so that we can then see it and replicate
it because what you will probably have detected is that it is
relatively early days and what we cannot do is point to a picture
of success and say there it is, now let's replicate it. So it
is about getting it off the ground.
170. So the things I mentioned, the coalitions
and sectoral approach, all of these need to be explored. Ruth,
what about Tyneside?
(Ms Thompson) What I was going to say is the essential
ingredient which has made a difference has been a proper understanding
of what the final job is, what it looks like, what it involves,
what its future prospects might be and to that end I think there
is a responsibility on employers to be able to specify what that
job is, what sort of person, what sort of skills would be needed
to succeed in the job. Getting that piece of knowledge is important
whether you are the intermediary organisation or the Employment
Service and therefore that is the starting block that really needs
to be driven out, I think, and that is where the Employers' Coalition
in Tyneside, I am advised by the Employment Service, has made
a big difference because they do actually have a group of employers
with whom they can debate what the job market looks like. A lot
of strategic partnerships are not sufficiently represented by
business and employers and that is a necessary component part,
I think, of any joint venture. Thereafter, I would repeat exactly
what Chris has said.
Mr Twigg
171. I had a number of questions on the role
of employers and employers' coalitions which you have largely
answered so I just need to put one question which is do you think
the model of the coalition should become a universal model for
the New Deal throughout the country?
(Mr Banks) I think you can point to London and indeed
to the work of a number of coalitions as having made a difference
and having genuinely added some value so to that extent the more
of it you do the better. There are some caveats I should share,
not least the fact that there is still an element of goodwill
in running the coalitions and behind the coalitions and in order
to get the momentum a number of member companies have had to make
resources available in order to seed money, to in some cases pay
for the breakfast and normal things, the running costs. I think
we are encouraged by the fact that there are now some coalition
funds to allow us to get on a more business-like basis, but to
date it has been very much about the employers' goodwill being
used in order to get the coalition members together and add the
value. So I would counsel learning from the work of those coalitions
that have been more successful which are well resourced which
have got proper secretariats and professional people helping to
make sure that there is progress on the key project, that the
structures of coalitions (which include central groups, task forces,
cross sector initiatives as well as themed cross-functional initiatives)
be looked at and the best bits copied, including proper resources
and funding, rather than saying it looks like a good idea to get
employers engaged, which it clearly is, now let's try and replicate
that, without the appropriate mechanisms and processes in place.
(Ms Thompson) I would echo that. In order to succeed
the coalition needs to have a supporting secretariat. I have certainly
seen a significant difference in the two years that the Tyneside
Coalition has run when there has been that dedicated resource
there. Similar to the experience in London, that resource is funded
primarily or substantially through the employers who are part
of the coalition, so it was welcome that resources have been now
made available. What we do need is to have people made available
who will be the ones who properly administer and support the coalitions.
I think the coalitions can play a very important role in accessing
other employer networks which I do not think are fully explored,
because there are a lot of well established networks in the business
community and we do not tap into those sufficiently well. The
other good thing about coalitions, particularly if you tap into
those networks, is that you can spread working models of success
much more rapidly. You will engage other employers, and the engaging
of other employers is important. Today a lot of what has happened
has been an explanation of the mechanics of the New Deal rather
than an explanation of the way in which the employers can participate
because usually employers believe they cannot participate if they
do not have a likely recruitment programme coming up. They think
it is a barrier to participating in the New Deal scheme and in
fact there are a number of ways in which employers can play a
vital part and that is not being well spread as a message amongst
employers. So I do believe that there is a significant role that
is untapped at present and which extra resources could help meet.
(Mr Banks) May I make one other point which is related.
Having got off the hobby horse about funding and organisational
capability, I think it has proved—and I can speak on behalf
of London—a very useful forum for employers to engage with
the Employment Service, which is difficult on an individual employer/local
ES office basis, by comparison with representatives of employers
sitting with representatives of the senior management of the Employment
Service to agree what we are going do about it. We have developed
a really positive relationship with the Employment Service Regional
Director in London, Stephen Holt, where we have got shared objectives
and we are working together on solutions to get there which I
do not think would have been possible without the structure of
the coalition. The second thing is that having a group of business
people around the table with the Employment Service people does
undoubtedly bring more focus on performance because that is what
is the life blood of our business life and therefore allows us
to agree what those performance criteria are, how we are going
to measure success and then only do those things which are likely
to improve deliverable improvements in performance and achievement.
It took us about a year in London to get all of that sorted out.
Now that we have, it has allowed us to make really focused resourcing
decisions and other decisions to make sure that we pull on levers
likely to make a difference, and that would not have happened
without the coalition.
Mr Twigg: Thank you.
Chairman
172. I was interested to hear what you said
there, Chris, because I was going to ask a rather more general
question about the Employment Service with whom all of you have
now worked very closely. You said it would not have worked without
the coalition. That was very significant, I thought, because I
was going to say is the Employment Service meeting the needs of
employers? I would infer that your answer to the question in most
parts of the country is no. Would I be being unfair in that inference?
(Mr Banks) It is patchy in the sense that there are
some areas of the employment market where the Employment Service
is really well equipped to satisfy and you will not need me to
explain those. There are other more specific and targeted needs
which employers have which it has not been easy for the Employment
Service to provide and the sort of account management skills that
are needed by the Employment Service to work with employers are
really at quite a high level relative to historically where they
have been operating. I think what the coalition has provided is
a forum for summarising and then surfacing those concerns of employers
and then making sure that, as you say, we then do something about
it. Members of the coalition had not had strong partnerships with
the Employment Service before, as a coalition we do, and I would
suspect that is not the case in other areas and other colleagues
would be able to comment.
(Ms Thompson) I would say, and I know that the Employment
Service in the North East would agree with me, when we first started,
any requests for information or suggestions for improvement were
met with a robust defence by the Employment Service and we had
to overcome this somewhat defensive attitude in that it was not
a criticism, it is not an attack, it was an open debate with a
common sense of purpose. There were debates around employability
but there has got to be job placement at the end of the day. A
lot of that cultural defensiveness has disappeared and certainly
the Employment Service facilitating the development of the transport
sector as an example is a demonstration of the significant move
forward in terms of our working relationships. A lot of it has
been centred around, however, making sure that there was this
exchange of what our objectives were and what we were looking
for in terms of performance and I think once that was clearly
understood we really started to move.
(Ms Fawcett) It is not all dire news on the Employment
Service. If you think of a personal adviser of the New Deal, that
is an account manager. It is not structural and culturally pervasive
throughout the whole of the Employment Service but, in fairness
to them, certainly in the London Employers' Coalition, we have
seen some significant progress in trying to better understand
the employers and be more employer-led from top to bottom. My
concern sitting on the New Deal Task Force is over the new ONE
initiative where you are adding the Employment Service to the
Benefits Agency which far outnumbers them in terms of people and
it is a very different culture. I would worry that the progress
that we have made with the Employment Service, which Chris and
Ruth have very well demonstrated, is going to be lost in that
employer-led demand-led focus (which, as I said, is also to the
benefit of the client) and could be subsumed in a Benefits Agency
which has a very different culture, and I would be very concerned
about that.
173. I am glad you put that on the record because
we share your concern or at least have some concerns there. Stephanie,
would you like to add something?
(Ms Monk) The Employment Service itself has been through
a huge cultural change programme over the last two years and now
on top of that is going to be placed another huge cultural and
organisational and structural change to what people are doing.
Clearly the skill sets of people who work for the Benefits Agency
and the Employment Service are quite different and there is going
to have to be a big exchange of learning. All of this is going
to be quite diversionary at the point at which we are hoping to
see a transformational further evolution of the New Deal. It is
not ideal. In terms of the further progress of the New Deal you
would want to have built on what has clearly been a huge shift
in the Employment Service's understanding of employers and its
willingness to partner. Certainly if you are able to aggregate,
as we did through the hospitality sector approach, or through
a coalition, and you have a sufficient critical mass in dealing
with the Employment Service (which has been very attentive in
trying to give the best service that they can) that would be useful.
I think one of the difficulties down at the individual employer
level and individual personal adviser level is that the task is
enormous and again because in a sense the initial challenge to
the personal advisers was to be client focused there have been
some outstanding examples of how committed individuals are and
they have taken on a massive job both in terms of challenging
and in terms of handling the individual client difficulties, or
the caseload which they have carried particularly in the inner
cities which is huge and you would never find mirrored in a conventional
organisational situation. They have been wrestling with an unrealistic
level of task and therefore we found variable performance between
one Employment Service office and another as to the quality of
work that they can deliver. I think we would all want to be very
positive about the efforts that they have made and the progress
that they have made. We have travelled a long way since we started
out on this and we all share a real concern that although the
objective of the Benefits Agency and Employment Service together
is laudable, one sees some good pragmatic benefits from it, it
does present a real threat to the quality of attention that is
paid to the New Deal, particularly if the ambitions for it are
to be about sustainable employment and not just about placement.
174. I think you have probably seen from our
reports that we agree with you about the changing culture of the
Employment Service over these two or three years and we have underlined
very much the position of the personal adviser as being absolutely
key to the development of all the New Deals.
(Ms Monk) Absolutely.
Chairman: All the active labour market policies.
I would personally hope that with the combining of those two agencies—our
judgment here might be a little coloured by what we saw in Australia
where things were very much further in advance in the joining
of the two or multiple agencies in a customer focused service—that
the opportunity would arise for us to grow a really learning organisation
where the personal adviser would be key to that learning, and
if we can also get much nearer to the employer as a client then
we could have a very powerful learning organisation for really
changing fundamentally the welfare state and spending that money
very much more wisely. Thank you very much indeed for your evidence.
It has been very stimulating to us. We have enjoyed it immensely
and perhaps we can keep up the dialogue. Thank you.
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