Examination of witnesses (Questions 260
- 274)
WEDNESDAY 22 NOVEMBER 2000
MR LEIGH
LEWIS and MR
PETER SHAW
260. Absolutely; yes. If you do then you must
go to see the other thing which we saw which was the Stride experiment
which really was deeply moving and partly shocking in a way. This
was called Tough Love and the way some of these people were being
dealt with was very tough indeed. Then we saw the man who was
running it who was a streetwise guy and came late to education
but was highly sensitive, very well informed. Most of us were
reconciled to his way of working when we saw that it was in the
hands of such a sensitive individual. If you go you must look
at it. We were going to refer again to our visit to the States.
Judy Mallaber partly asked this question which is about the difficulty
of transferring learning, about dealing with different clients
to here where our welfare systems are quite different. I am sure
you are very conscious of the difficulties. Nevertheless do you
feel that there are useful lessons to be drawn?
(Mr Lewis) Yes, I certainly do think there are useful
lessons to be drawn from US experience and indeed experience in
other countries. I am pleased that in a way that we did not experience
a few years ago we seem to have more visitors coming here to learn
from our experience and that is encouraging and reassuring as
well. There are examples and interesting things in the United
States from which we can draw. The way the demand-led strategy
has been incorporated there is interesting. There are many more
not-for-profit organisations there who have invested very heavily
in cementing really good relationships with employers and who
then work in a very, very intensive way with disadvantaged job
seekers. I do very much recognise your description of tough love.
The degree to which they are willing to be quite strong and severe
in terms of what is expected is quite interesting, but with the
goal that there is a job at the end of it with a very high possibility
of permanence attached to it. There are interesting experiences
in the United States which are certainly worth us looking at here.
At the same time, one is struck by the differences. It is a different
labour market, it is a very, very different welfare system, it
is a very, very different Employment Service indeed. We met with
US colleagues at the conference which Mr Shaw and I were in Australia
for and they would be the first to recognise that they do not
have the equivalent in either quality or reach of the UK Employment
Service.
(Mr Shaw) As an aside, in Australia I personally was
very impressed by how some of the Church bodies have developed
their role in terms of job matching and intensive help. I was
interested from a personal point of view that the Salvation Army,
the United Church and Mission Australia have done some dramatic
things. It is always worth learning from the way voluntary energy
can be used to work with the hardest to help and get very close
to them. That is one of the lessons from the intermediaries in
the US that we want to build on. In terms of transferring things
to this country, one of the values of using the Innovation Fund
to try different experiments, is to see which of them take off
in this country and can be models for future development. Some
will, some will not take off.
Chairman: We saw Mission Australia and we were
very impressed by what they did. Although I am a member of the
Salvation Army I did not see what the Salvation Army is doing
there but it was spoken of very highly.
Mr Pearson
261. To continue with the Innovation Fund, I
was wondering whether your thinking has progressed or changed
in any way since the launch of the Innovation Prospectus and having
the bids in and shortlisting the bidders, in particular with regard
to the £15,000 related payment and the related job retention
period which you are looking at.
(Mr Lewis) The simple answer is no. Those are still
the criteria. We have not changed the criteria which were in the
prospectus. It is worth saying that only a relatively small amount
of the funding is conditional on that £15,000 figure. What
Ministers are keen to test through the Innovation Fund is whether
we can learn from experience, learn from doing things differently,
learn from taking a novel approach. In a sense we do assume fairly
readily, perhaps too readily, that it is difficult to take people
from long-term unemployment other than into entry-level jobs.
What we are looking at through the Innovation Fund, what we are
trying to find out, is whether it is possible with the right support,
the right help, the right relationships with employers, to help
somebody who may have been unemployed for quite some time to enter
the labour marketplace at a higher level and retain a job. That
is the US experience; it is Wildcat's experience that you can
do that. It may be that we shall find that experience will not
transfer readily to the UK but it is worth us having a look. At
the moment those are the main criteria. We are actually at the
point where we have not yet in the third round of the Innovation
Fund, got to the point where any of the full bids have yet been
fully evaluated.
262. Fifteen thousand pounds means a lot more
in Dudley than it does in Dulwich.
(Mr Lewis) I understand that very much of course and
in that sense there is a differential criterion built in. Rather
than build in huge complexity we would want to go for some simplicity.
This is an Innovation Fund. I do not think either the New Deal
Task Force or ourselves or our Ministers would say we necessarily
believe we have that absolutely right on the first go. If in the
light of our experience that simply does not seem to hit the spot,
then I am sure we shall want to look at it again.
263. In many ways it is not your question, it
is a Government policy question, because you have been set certain
criteria. I was wondering whether I could probe Government's thinking
on why a flat rate £15,000 figure across the country was
deemed to be appropriate.
(Mr Shaw) We have come up with a general overall figure
at the moment. As this thing develops, if particular innovations
are extended more widely, we shall need to look again at this
figure. In getting a simple pilot off the ground, we were content
with a flat rate figure.
264. What is the thinking on the six-month period
for output-related payments for retention, when other schemes
were for three months and that has been pretty much the norm under
the Training and Enterprise Councils? Is this part of the innovation
ethos that you wanted to reward longer term sustainability?
(Mr Shaw) There is a general issue about retention
and sustainability and that is becoming a more important indicator.
The issue is not just a job lasting a day or two but jobs lasting
26 weeks. It was building on that and saying that if we are having
some pilots let us really test a longer sustainability period.
265. Your view is that this might be extended
more widely across Government programmes.
(Mr Shaw) It is too early to say but in testing innovation
approaches you are wanting to see what the real substantial long-term
impact is and therefore a 26-week figure seemed a good one to
use for this purpose.
(Mr Lewis) There is a continuing debate about whether
you help somebody more by getting them into a job full stop. Or
whether you help them more by getting them into a job with as
good a chance as you can possibly give them that they will be
able to retain that job. I do not think it is an either/or. If
you end up at absolutely one end of the spectrum rather than the
other, then you are probably defeating your overall objectives.
We are moving away in the Employment Service from a concentration
on job entry as the overriding consideration to one in which we
have a more balanced portfolio of job entry and retention as both
important issues which we ought to be looking at. This year, as
part of our APA, in two parts of Britain, in our Northern region
and in Wales, we are actually piloting a retention target. We
are measuring the proportion of people we place into jobs who
remain in those jobs for at least 13 weeks.
266. We could debate this for ages but as you
know there is an awful lot of research evidence which says getting
a job in the first place makes you a lot more employable. I should
certainly have concerns that people might be forced to stay in
a job for six months when they could actually get promoted to
a job elsewhere and be far better off. However, there are incentives
in the system to reward the company to keep them for six months.
You must be aware of those and presumably the pilot is testing
out some of those to see what the pressure points will be.
(Mr Shaw) I think so. Also, one of the reasons for
using 26 rather than 13 was the output related funding aspect
of it and giving those participating quite a strong incentive
to ensure there is sustainability in the jobs which are created.
Mr Allan
267. May I take you briefly back to the outcome
related payment system. Unless my ears were deceiving me, I thought
you said that a differential criterion was built into the system.
Then I understood Mr Shaw to say no, it was a £15,000 flat
sum. Could we just clarify what the current system is, that it
will be £15,000 in Dudley or Dulwich or Sheffield or Salisbury,
and whether there is any thinking going on as to whether that
could be changed or whether that is now set in stone.
(Mr Lewis) I am sorry if I inadvertently misled you.
As I understand it, the £15,000 is a universal figure for
this part of the prospectus. It is not changed geographically
at this moment.
268. You are not aware of any discussion on
that.
(Mr Lewis) No. This is an innovation fund, we are
looking to learn as we go, this is one element of the prospectus
but I am sure we shall want to look at the practical experience
of operating it and see if it seems to be working well.
269. To return to the substance of the Innovation
Fund proposals, you referred when talking about the Australian
examples, to how you are impressed by some of the working of private
and non-profit organisations to deliver labour market intermediation.
Can you just describe to us the challenges that this presents
in terms of ensuring economy, efficiency and effectiveness of
public spending?
(Mr Lewis) Yes, though inevitably one is into territory
which can be theoretical as well as real. A balance always has
to be struck between delivering a service on a national basis
where you have obvious economies of scale, where you can maximise
your reach and effectiveness and your use of skilled people and
resources. On the other hand, where you are willing to fund people
to work much more intensively with individual employers locally.
I just do not think you should be too prescriptive on that basis.
Value for money should always be a test, it should always be a
test whether you are looking at a nationally provided service
or whether you are looking at bids for a much more discretionary
locally based service. I do not think these are either/ors. We
should be willing to look at what works criteria.
270. In that context, one thing which will be
important is the financial control and audit arrangements which
apply to those organisations. I recognise that there is a tension
across any form of grant giving or funding to small voluntary
sector organisations, in particular that if you make the audit
arrangements too tight you strangle the innovation and it is a
question of not killing the goose which lays the golden egg. Are
there national criteria for that and do you have any indication
as to whether or not you think you are able to get the balance
between ensuring public money is not wasted—and we do see
some scandals—and ensuring the voluntary sector organisations
do innovate?
(Mr Lewis) I feel that tension very personally, because,
unlike Mr Shaw, it says somewhere above the door, if not in letters
but symbolically, Accounting Officer. I am the Accounting Officer
for every penny the Employment Service spends and if we were to
have some great difficulty then I would no doubt be along the
corridor in front of the Committee of Public Accounts to explain.
It is always a balance; always a balance. There must be, and I
believe this passionately and everyone inside the Employment Service
will tell you I believe it passionately, a set of proper controls
over the use of public money. Particularly if you are operating
in an output funding regime you need to be sure that those outputs
are actually there before you pay for them. There is a tension
at the other side that if you so encumber the system with forms
and controls and checks and audits and balances to the point where
small organisations feel they simply cannot cope, and we have
heard those issues about New Deal bureaucracy for example which
we have attempted to tackle, then you can fall off the cliff at
the other end. Those are tensions which you are always trying
to find the optimum line between.
Mr Pearson
271. May I just pursue a more philosophical
and general question? One thing which interests me is the boundary
between the public and private sector. It strikes me that the
Employment Service exists, at least in part, because of instances
of market failure in the job market. There are areas, particularly
when talking about disadvantaged people, where there is a rationale
for the Employment Service to operate and to make the job market
work more efficiently. It seems to me that one of the reasons
for this inquiry is that we have looked at the boundaries and
one of the gaps has potentially been the requirement to have demand-led
approaches because certain people have been losing out and more
efficient methods might be found to get them into work. It also
seems as though the professional level is a case where we are
talking about mature adult professionals who have been unemployed
for a significant period of time and tend to be excluded from
the job market. Are there any other particular gaps which you
see at that philosophical level? At that level as well there is
debate as to what extent we have an entrepreneurial public sector
which actually competes with the private sector in some of these
areas. Would anybody like to offer some comments in that area
as well?
(Mr Lewis) I am happy to offer some comments. I do
so with a restraint and a caveat that in a sense it is very much
for Ministers and the Government of the day to decide what it
would like its public Employment Service to do and what kind of
public Employment Service it wishes to have. I, as its Chief Executive,
am here to deliver what the Government of the day believes a public
Employment Service ought to be doing. I am a great believer, as
a public servant, in having an entrepreneurial public service.
I do not mean necessarily that that means we want to have public
services which go out to seek to make profit as such. What I do
think we should have are public services which are willing to
be innovative, which are willing to take risk, by which I do not
mean wild uncalculated risk, but risk in the sense of being prepared
to try things in a calculated and properly thought through way
which would not perhaps otherwise be done. Let me give an example.
We launched Employment Service Direct a little under two years
ago, a telephone job broking service. That was inevitably a risk.
We could not know before we launched that service whether there
was a market for it. We had to spend money to put the infrastructure
in place to take all of those calls which we hoped would materialise.
We might have got that judgement plain wrong. It might have been
a product for which there was not a market. We might therefore
have had to explain to our own Ministers and perhaps to Parliament,
to this Committee, why we had thought it right to invest so much
money in that endeavour. As it happens, that has been a tremendously
successful service. We have taken over four million calls as a
result of introducing that service. I do believe that public service
should be prepared to be entrepreneurial and innovative. I do
not believe that it is incompatible to have an entrepreneurial
public service and a very healthy private sector. To the extent
that it is within the framework that Ministers ask us to operate,
I am interested very much in looking at how we can maximise cooperation
and participation between those two.
(Mr Shaw) Working Links is a very good example of
co-operation between the Employment Service and private sector
organisations in the employment zones. Ministers are particularly
interested to see how that develops, where you are drawing on
the strengths of both public sector and private sector together.
Chairman
272. That leads naturally into what may well
be the final question; it is certainly intended to be unless you
provoke me into something. When I speak to the civil service trade
unions, as you would expect I do from time to time, they always
suspect that there is a hidden agenda to privatise the Employment
Service and that really the Government which I support is almost
continuing the agenda of the previous Government. I was delighted
to hear what Mr Lewis said about his belief in the public service,
but with all of these innovations, which I wholly applaud and
support, do you recognise the worry that there may be some suspicious
people who rather fear that it is all about getting rid of the
public Employment Service, especially when we seem to see that
the private sector in the New Deal does not seem to be evaluated
with the same kind of rigour as one evaluates the public service?
Notwithstanding the lack of rigour then further contracts are
awarded to people who have yet to prove their track record.
(Mr Shaw) Ministers have made clear that the public
Employment Service is a fundamental part of the measures to help
people find jobs and at the same time a clear intention to introduce
the maximum degree of innovation which comes from working with
the private sector as well as the public sector. I do not think
Ministers are seeing an either/or situation here. The Employment
Service is a crucial part of the future, as exemplified by the
Working Age Agency taking on functions of the Employment Service
plus working age functions of the Benefits Agency. That in itself
is a strong identification with the role of the public sector
for the future here. It is a very strong endorsement of the importance
of a public sector. My experience in visiting Employment Service
offices is that they have experience of working with employers,
experience of working with private sector and they are keen to
get the ideas from the private sector as well. Also a personal
view is that the way people in the Employment Service have risen
to the challenge of New Deal and been so keen to take on the wider
role of the personal advisers is itself a tribute to people in
the public sector seeing something new needing to be done and
doing it with energy and vigour and doing it very well.
(Mr Lewis) May I add one comment, certainly not intended
to provoke you in any way? These are obviously issues which are
for Ministers to determine. I just have a simple belief that whether
you are running a service in the public or the private sector,
it has to be good, it has to deliver what its customers want.
If it does not do that, it does not deserve to exist, whether
it is in the public or the private sector. My real ambition is
that we create an Employment Service which is delivering as far
as possible what its customers want.
Chairman: Excellent. It has not provoked me
but it has provoked Judy Mallaber.
Judy Mallaber
273. It has stimulated a slightly side question
as I have the ONE service pilot operating in part of my area.
Mr Shaw talked about the enthusiasm with which people had gone
off to be New Deal advisers and do this, that and the other. Would
you care to comment at all on what seems to have happened, which
is that the best of your people have been enticed away into the
new service? Are you worried and what are your thoughts as the
new integrated services develop? Are you going to find that the
best ones disappear off? What position are you left in?
(Mr Lewis) The new integrated service is partly us;
one is the Employment Service and one is a private agency.
274. This is a private sector led one.
(Mr Lewis) No, I am not worried about that because
it is good for the career development of our people, it is good
to give people opportunity and although it is always tempting
as an organisation to say you cannot afford to lose X, they are
absolutely vital, actually giving X that opportunity to go away
and develop is in the end a good thing because it sends the right
signals within the organisation. One of the things I do begin
to worry about just a little bit more, and that I did not before,
is that more Employment Service people at more senior levels than
before are actually finding themselves receiving offers of employment
from others in the marketplace. In a curious way, although that
can be difficult for us at times, it is a bit of a back-handed
compliment to us as well. Increasingly some of our people are
recognised to have skills and abilities and experience which people
out there value. In general, giving people the opportunities to
develop, whether inside your organisation or outside, although
it may cause you difficulties in the short term, makes for a healthier
organisation in which people want to work and remain.
Chairman: Thank you very much indeed for your
answers. I forgot to thank you for your submissions which I personally
found very, very useful indeed. Thank you.
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