Examination of witnesses (Questions 142
- 159)
WEDNESDAY 26 JANUARY 2000
RT HON
TESSA JOWELL,
MR MARK
NEALE and MR
BILL WELLS
Chairman
142. Minister and your colleagues, you are very,
very welcome. Thank you very much indeed for so readily coming
to see us. We have had both of your officials before. We are looking
forward to the evidence that you give. We are really going to
concentrate on two things. One is the question of the investigation
which is "Is there a Jobs Gap?", and we will begin with
that, but then also we want to take the opportunity with your
presence to throw a few questions to you on New Deal which may
well be timely. Perhaps I can begin and say that you know we were
in South Yorkshire last week for a day and a half, two days, and
when we were there we were told that South Yorkshire had 13,000
fewer VAT registered firms and 68,000 fewer jobs than an average
for comparable regions. Do you think that is evidence that there
might be a jobs gap there?
(Tessa Jowell) Thank you very much indeed, Chairman.
This is clearly a specific and regional example of the question
that lies at the heart of your inquiry. I believe that the key
question that we should be answering in seeking the answer to
this question on a national basis is whether the structural lack
of demand in areas of traditionally high unemployment means that—to
link the second part of this afternoon's session—supply
side measures, like the New Deal, which is very much focused on
investing in people to make them more employable, are futile in
circumstances where the infrastructure to generate demand is simply
not there. There are generalities that apply to the labour market
throughout the country but, also, there are considerable variations
within labour markets. If I can just perhaps give you, Chairman,
the figures for South Yorkshire, which I know that you visited.
In South Yorkshire in the autumn of last year there were 560,000
people of working age in employment, with an employment rate of
71.1 per cent. The ILO level of unemployment, which as you know
is the standard measure that we use, was seven per cent. Between
autumn 1997 and autumn 1999, both the employment level and the
rate increased in South Yorkshire. Employment rose by almost 30,000
to 560,000 and the employment rate rose by 4.2 per cent to the
71.1 per cent that I have quoted. The increase in the employment
rate in South Yorkshire was above the UK average. The other relevant
fact, I think, in looking at the elements of this conundrum was
that in South Yorkshire there were 50,000 vacancies notified to
the Employment Service Job Centres in the 12 month period ending
October 1999. Estimates suggest that something like twice this
number come up through other routes. People advertise in local
newspapers, they advertise through employment agencies. There
is a relatively even spread of job centre vacancies as a proportion
of the workforce across the country and, for the bulk of travel
to work areas, the share of the workforce which turns over each
year is in the range of seven per cent to 15 per cent and in South
Yorkshire the share is around nine per cent. What you have is
a picture of increasing employment and increasing turnover, but
I think your question requires also an answer to the second point
which is is there sufficient capacity, is there sufficient demand
in order to meet the increase in the number of people who are
available for work. That is the challenge of the Government's
approach to employment. It is the challenge in the Government's
approach to regeneration more generally, getting the right balance
between capacity and demand and the labour market being able to
generate the appropriate skills in order to fill the new jobs
that become available. But you will know, because it is a figure
I am sure you have heard many times during your inquiry, that
over the last two and a half years, since the election, we have
seen something like three quarters of a million more people in
work than in the spring of 1997, vacancies occurring all the time
and rising employment in every region of the country. That is
a long answer to your question but I wanted to put our response
as a Department and my response as the Minister responsible, in
that broader context, that we are very aware that we have to get
right both the balance of, if you like, demand side measures,
which are largely managed through the regeneration programme such
as that run by DETR and DTI, and the labour force measures which
are delivered by my Department. In relation to the number of firms
in South Yorkshire which are below the level of VAT registration,
to some extent that is a reflection of the kind of new businesses
which are increasingly emerging. We know that there is very rapid
growth in the small business centre so I think that in order to
judge whether or not there is a dysfunctional jobs gap, we would
need to look at that in the context of the other data that I have
provided for you. That supply side data suggests a dynamic labour
force.
143. I do not think any of us would suggest
the supply side measures are futile in any way, quite the contrary.
I think what we are asking is are they enough? I think in a sense
you have answered that question quite positively because you have
said what is required is a balance between demand side measures
and supply side measures.
(Tessa Jowell) I think it is the calibration of the
two approaches which is absolutely critical. Obviously we have
a clear strategic approach but also, through the Employment Service,
what we are increasingly trying to ensure is better matching of
vacancies to the skills of the people that are available. In an
area like South Yorkshire that poses a big challenge because there
has been a dramatic change in the labour market over the last
20 years. Many of the old jobs, as you will know, have gone, but
they have been replaced by new jobs. I know that one of the lines
of inquiry that you have been interested to pursue has been whether
there are differences between men's employment and women's employment.
I think that one of the things that we have to overcome, and it
will require all the efforts of the Employment Service and employers
working together, is a certain prejudice among people who are
without work about the kind of jobs that are increasingly coming
up. I think that employers are beginning to respond to that. There
is no point in continuing to advertise vacancies in the hospitality
industry if the people who are without jobs see those as—what
I would put in quotes—"bad jobs with no prospects".
I think that what is encouraging from the hospitality trade as
one example is that they recognise the importance of, firstly,
engaging with the Employment Service, secondly making sure that
people who are looking for work know what is on offer and thirdly,
offering prospects.
144. Sure. I think if you are unemployed in
Grimethorpe, where we are told that it takes two buses and an
hour and a half to get to where the jobs are, if I may say, there
may be some people who would think that your answer is slightly
unsympathetic—I am sure that was not what you meant—because
there is a very high level of inactivity amongst males who were
formerly employed in the mining industry and once they were made
redundant at the age of 45 they have tended to assume that there
are no jobs for them ever again. In fact the previous government
rather encouraged them to go on to Invalidity Benefit. I know
that is a problem which the Government is trying to wrestle with.
That problem in South Yorkshire is a very real one and it sometimes
looks as though the DTI and the Department of Environment, Transport
and the Regions are taking rather a different view from your own
Department, ploughing huge resources into trying to block what
they see as the demand gap, and occasionally it looks as though
the Department for Education and Employment is banging on about,
"All we need to do is increase the employability and mobility
and there is not much of a problem", and I am sure that is
not your view.
(Tessa Jowell) No. The answer is that we need to do
both and perhaps we can be absolutely clear about that; we need
to do both. I entirely take your point about the people who live
in those areas who are without work who may have worked for many
years, most of their adult lives, and because the industries have
gone they have lost their jobs and they have not found new jobs,
and I think they would take it as unsympathetic to hear a minister
with a London constituency saying, "Don't worry, there are
plenty of jobs available, just you go and find them." That
is absolutely not our approach. That is why what we have to understand
is how we can, if you like, help to re-shape local labour markets,
understanding the structural obstacles which exist for people
in moving from inactivity to employment. Those structural obstacles
may be to do with transport—and we are trying with the DETR
to address that, they may be to do with training, or lack of skills,
or they may be to do with lack of confidence and lack of self-esteem,
or they may be to do with lack of child care or other forms of
family support. So I hope that through the increased strategic
role we want to give the Employment Service for understanding
and responding to its local labour market, we can get a proper
fit between the demand side policies, as you rightly say, which
are led by DTI and DETR, and the supply side measures, building
employability, which my Department is responsible for.
145. You gave a long list of things which they
might be, and I agree with every one of them, but would you also
concede it might just be because there are insufficient jobs?
If it were true there were insufficient jobs, it could be all
our efforts on the employability and mobility side could be slightly
wasted because I think you would be the first to admit that if
there is not a job at the end of the day then training and employability
and mobility is quickly dissipated.
(Tessa Jowell) Which is why training for employability
and building a new skill base have to take account of (a) the
nature of the jobs which are there and (b), obviously, the skills
of the people who are currently in the inactive part of the labour
market. So it is not arithmetically to do with there being not
enough jobs. I certainly think it is much more to do with aligning
the skills, the experience, and continued training with the people
who are looking for work.
146. Are you really saying that you think there
are sufficient jobs in the economy as a whole? There is certainly
not a match between the ILO measure and the number of vacancies.
If you go to other measures of unemployment which take into account
the number of disabled people who want jobs, the number of over-55s
who want jobs, the number of single parents who want jobs, who
are outside of those definitions, you may be in the realm of 3
million people wanting jobs with, on the Chancellor's reckoning,
a million vacancies.
(Tessa Jowell) That is a very important definitional
point which I know has taken quite a lot of the Committee's time,
from looking at previous evidence. Our benchmark is the ILO unemployment
rate which, as you know, is the combination of the claimant count
plus those other people of working age who are available for work
and who are actively seeking work. That is how we measure unemployment.
I entirely accept your point, but we do not build it into the
ILO count, that there are other people who are outside the labour
market who, with the right kind of help, support with training
and so forth, could work and want to work. If you like the aspiration
of the Government is to ensure work for those who can work, security
for those who cannot work. I think we are just at the beginning
of beginning to penetrate parts of the potential labour market,
people who are inactive and might work, were the opportunities
available. I think the problem with the lumping-them-altogether
calculation of unemployment which you suggest is that it ignores
the multitude of reasons why those people are inactive. It may
be they have moderate disability, it may be they are looking after
sick and disabled relatives, it may be they are looking after
children and they have been out of the labour market for a very
long time, and we are beginning to open those pathways upto these
people through the early pilots, of the New Deal for 50-plus,
the New Deal for Disabled People, and the New Deal for Lone Parents.
All of those I think are programmes which are in their infancy
but which recognise that if we really are going to maintain the
labour market capacity which demand suggests we need, then we
have to look to expand the labour force, and for social justice
reasons as well as economic reasons we have to tackle the very
high levels of structural unemployment which exist in the inactive
population which you are defining.
Chairman: Thank you. Judy?
Judy Mallaber
147. I was going to ask about the definitions.
Just to follow on slightly from that, do you not think there might
be an argument for using a broader measure of unemployment because
we may, by excluding those who are treated as inactive whom we
know want to work, be excluding whole categories. We may be excluding
women rather than men because they do not feel they have to regard
themselves as inactive because they think there is no chance of
them getting to work because there is no child care. One of the
groups we identified when we were looking at part-time workers
was the range of part-timers who did not want to work the traditional
40 hour week or whatever but did want to work more hours than
they were currently working. It may be the definitions of unemployment
which we are using are very much understating the problem and
are also gearing our employment programmes in certain directions
rather than others which may be discriminating against certain
people.
(Tessa Jowell) I would not in any sense want to do
other than ensure that the data about the labour market and the
changes in the labour market are transparent and available. I
would apologise to nobody for the sincerity and determination
of our Government in increasing employment; increasing employability
through the three-pronged approach of macro-economic stability,
supply side measures and regeneration. As to whether we should
redefine the basis of calculation, I am unconvinced by the case
which might be made for that. The measure we use is a standard
measure which enables us to compare our rates of unemployment
with other European countries, which is increasingly important.
It is a standard benchmark and it does not distract in any way
from our efforts to bring from the inactive labour market and
into the ILO count precisely the people that you are talking about.
But it would be over ambitious on their behalf and on our behalf
to assume that somebody who has been out of work, somebody in
South Yorkshire who has been out of work for 15 years say because
they have a bad back is going to make a single leap, from inactivity
to employment. It is likely that they will need the intervening
help and support which is available for people who are inactive,
advice about training, advice about job search, and help with
finding a job. That is very much the underpinning purpose of ONE,
which I know you know particularly quite a lot about, which is
the Single Work-Focused Gateway, dreadful term but that is what
it is. With effect from April, in the pilot areas it will be a
requirement that all new claimants among people of working age,
for all benefits, have a work focused interview as a condition
of their benefit claim being processed. So before they go on to
benefit they will have the opportunity to consider the likelihood
of their being able to work. Now I think that is a better, more
realistic, more practical way of approaching the measurement of
unemployment than increasing the pool to include potentially the
whole population of working age as you suggest.
Mr Brady
148. Minister, the preliminary evaluation of
the New Deal in which some of these figures were being produced
just after Christmas—
(Tessa Jowell) Just before Christmas.
149.—that suggested there was a relative
under performance in areas of higher unemployment and inner city
areas. Would you say that is a fair assessment?
(Tessa Jowell) The macro economic evaluation, to which
you referred, reached a number of important conclusions about
the New Deal for Young People after its first year of operation.
I do not think that those conclusions are part of that evaluation
and that information is readily available from the performance
monitoring that we publish regularly. I think it is very important
that we do. Yes, certainly the performance of the New Deal for
Young People in inner city areas, in terms of young people moving
from the Gateway into jobs has been lower than it is in other
particularly rural areas, or less intensively deprived areas.
That is something we are looking at very closely. You need to
look at the whole picture. Let me just give you an example. If
you take an inner city area like Sheffield, in terms of the number
of young people who move from the Gateway straight into work,
it is I think the second to worst performer in the country. However,
if you look at the proportion of young people who move from one
of the four options into work, it rises up the ranking is somewhere
about the middle. Now what that says is that the young people
who are coming on to the Gateway in Sheffield—having talked
to the Employment Service about this I know this is the case—are
very disadvantaged young people. As you will also know, what we
are increasingly finding in the young people coming on to the
New Deal, is that something like four out of ten of them have
serious lacks in basic skills, at such a level that without help
through the New Deal their long term employability is in doubt.
That is important because the New Deal is not just about getting
people off the unemployment tally and into a marginal first job,
it is about building employability so that they go into their
first job, they stay in that job and then they go on to another
job. That is a crucial point. Now the challenge in achieving that
in inner city areas is greater than it is in other parts of the
country where the levels of deprivation are not so intense. That
is why we are intensifying the support, particularly help with
basic skills, and particularly what is described as help with
presentation, but is very largely about building confidence. These
are young people for whom the availability of jobs is likely to
be in retail, is likely to be in hotels, is likely to be in catering.
Now if you do not know how to shake somebody by the hand, if you
do not know the importance of looking somebody in the eye when
you meet them for the first time, if you are not confident about
writing down telephone numbers, or taking telephone messages,
these very basic skills, then it is very unlikely that you are
going to be able to hold down a job in the long term. What we
want to deliver on to these local labour markets is young people
who are capable of holding down the job they get at the end of
the New Deal but then also holding down successive jobs after
that. We will not do it unless we address these serious problems
of gaps in basic skills.
150. How does the percentage of those in inner
city areas in particular, going into the non employment option
compare with the national average, is it higher?
(Tessa Jowell) The picture is not consistent because
in some New Deal inner city areas, which are clustered together
for the purposes of monitoring, the performance is actually very
good. I would quote Plymouth, North West Wales and Sefton as examples
of areas which we classify for purposes of New Deal monitoring
as inner city deprived areas, where their achievements are substantially
better than my own constituency in Southwark, Lambeth—
151. Can you give an idea of comparative percentages?
(Tessa Jowell) I will certainly give you that. In
fact, I am going to ask Mark Neale who has got the table in front
of him to give you the range and then I am happy to deal with
your questions on the basis of that.
(Mr Neale) In terms of young people moving into jobs
from the New Deal, the range at the moment is about 66 per cent,
two thirds in the best performing areas, these are of young people
who joined the New Deal between April and June 1998, to around
about 40 per cent in the less well performing areas. That is the
kind of range that we are talking about. If you look at the proportions
of young people entering the non work options, you would tend
to find that the proportion entering further education and training
is higher in inner city areas than the national average.
152. Again, a rough idea of the range?
(Mr Neale) I cannot tell you that off hand but we
can let you have a note on that.
Mr Brady: I would be grateful for that. Also,
I wonder whether you have an idea of national average of those
going into work and the non work options just for comparison?
Chairman
153. If you cannot give us that now, it will
be perfectly acceptable for us to have a note.
(Tessa Jowell) We have got those figures but we are
just about to publish the next set of figures and I think you
would prefer to have the most up-to-date figures rather than ones
which by the time you get them will already be out of date.
Mr Brady
154. Thanking both of you for that. Minister,
if I could move a little bit further on to a more general policy
point.
(Tessa Jowell) Just before we leave that point, can
I just add that clearly it is in the inner city areas—going
back to what we were saying at the beginning—that the investment
in regeneration more generally is also a very important part of
underpinning the achievement of young people getting jobs as a
result of the support and help that they have received through
the New Deal. Two other things. The Policy Action Team Report
on Jobs was focused on precisely these sorts of questions. Mark
Neale was the author of the Report and he may want to say one
or two things about it. It was a very sympathetic analysis with
some very clear prescription of the way in which we begin to tackle
the levels of disadvantage which are obstacles to employment in
inner cities. One of the issues that we are very concerned about
and have introduced as a performance measure for the New Deal
is the much less success that people from ethnic minorities have
in getting jobs as compared to young white people. I speak from
a constituency where the unemployment problem is the problem of
young Caribbean men. It is a different story if you represent
Bradford or if you represent Birmingham or perhaps even Enfield.
But we are very concerned about the need for action in this area
and are putting a number of measures in place to address this,
which we see as a failing to date.
155. I am grateful for that, Minister. In the
example which you were giving at the beginning about South Yorkshire,
I think you said that the increase in levels of employment there
was higher than the average, which seems on the face of it to
be slightly surprising. Is that because there is an average taken
across urban areas and rural areas within South Yorkshire or is
there some other reason for that?
(Tessa Jowell) The UK employment rate is now 74.2
per cent, which compares with the European average of 62.5 per
cent, so we are performing well compared to other European countries.
But I think the important conclusion is not that that is consistent
but that it is a figure which represents across the country a
range which I think from memory extends from 45 per cent to 89
per cent I know in previous evidence you have looked at the cluster
of those local authorities which fall below the European average
of 62.5 per cent. It is important to look at these employment
rates and indeed the unemployment rates in the context of very
local variations. That will tell you more about what needs to
be done to tackle the sort of issues you are addressing than simply
taking the national figure.
Chairman
156. I was very impressed by the Policy Action
Team report on jobs and I hope it is not going to mar Mark's career
by me being so complimentary about him!
(Mr Neale) I dare say I will survive, Chairman!
Mr Twigg
157. You referred earlier on to the issue of
transport and mobility and I just wanted to raise a couple of
aspects on that. On the visit last week to South Yorkshire the
question of transport links was cited by a number of people the
Committee met with. Can you tell us a little about the work which
is being done on a cross-departmental basis to deal with the question
of poor and expensive transport links and how that impedes mobility?
Then, a related question, on the issue of commuting. Are you looking
at, and what would you see as, the pros and cons of providing
free travel to interview and discounted travel to work, particularly
for those areas with low levels of employment and poor transport
links?
(Tessa Jowell) As you have identified, this is an
extremely important issue and the job seekers' rules which provide
the framework for those young people define the distance and time
rather ambiguously as "reasonable travelling time".
I think when Bill Wells and Mark Neale were before you before,
Bill said this was taken as about an hour. There are concessionary
fares available for young people on New Deal to help with this.
In order to address this prospectively, for the future, as part
of the Comprehensive Spending Review, which will very much drive
the shape of the New Deal after the election, DETR are involved
with us in looking at the way in which the New Deal and measures
to promote employability will be taken forward. But this is a
multi-layer issue, as you have picked up, and certainly we can
help in a specific programmatic way by giving concessionary fares
to young people to reduce the cost of travel, but sometimes it
is not that the transport links do not exist but that they run
at the wrong times. Stansted Airport, for instance, had lots of
vacancies but the problem was that people could not get there
at the time when the jobs needed to be done. That is the kind
of issue, going back to what I was saying about the Employment
Service, where it could take a more strategic view of its local
labour market. That is precisely the kind of issue which I hope
they will engage with through the regional offices. You have to
have a strategic grip on that issue. You can deal with individual
problems of individual claimants one at a time, but where there
is a structural problem you want a fundamental solution to it.
So we are driving that forward through the involvement of the
DETR with this purpose as part of the Comprehensive Spending Review
and we are driving it forward by building the ES's local labour
market role. Then there are specific provisions to help with the
cost of travel which are part of the New Deal.
Judy Mallaber
158. Is the DfEE prepared to tackle other departments
where you come across blockages? When we were in South Yorkshire
an issue was raised, which is coming up in my area as well, about
the problem to do with the way in which fuel duty is allocated
for organisations which are trying to provide transport to get
people specifically to employment. That is an issue which would
be regarded as well within the DETR remit, particularly once I
discovered the Treasury claim that they had handed over responsibility
to them. Are you as a Department prepared to tackle them on some
of those very practical issues which are real bug-bears in terms
of meeting your objectives?
(Tessa Jowell) I would be delighted to raise that
issue. I, as Minister, and my officials rely on those issues being
identified and raised with us. That is one of the purposes of
what I am just about to do, which is to send out invitations to
all MPs, of all parties, for a series of meetings to take stock
of the New Deal on a regional basis, so we can identify those
kinds of obstacles to its more effective operation, and also look
at any areas in which there is an obstacle to its effective running
created by the policy of government departments. The answer is,
yes, I am always delighted to take up those sort of issues.
Mr Twigg
159. Moving on to another of the issues which
a number of people have raised with us, the question of information
about vacancies and in particular perhaps for low skilled workers
in areas of low employment or relatively high unemployment. Can
you say a little more about the action which the Department has
taken to improve the availability and quality of information about
vacancies?
(Tessa Jowell) We reckon that about a third of vacancies
are notified via the Employment Service, so the real level of
vacancies, just by rule of thumb, is likely to be three times
the number who are registered with the Employment Service. There
are two things which obviously we have to watch carefully. One
is the turnover rate of vacancies, because turnover suggests that
the labour market is dynamic. The second is where there is a stagnation
and vacancies sit around for weeks and months and those jobs remain
unfilled, and we need to address the reasons as to why that is
the case. But I think we need to speed up our response to vacancies.
I think that ONE is a way in which we will be able to do that.
I think also the way in which we will be using new technology
means, come the autumn, we will have the largest job notice board
in the world on the Internet, because we will be launching what
is called the Learning and Work Bank, which will bring together
information about careers, information about training, and information
about vacancies. What I am very keen to see is access to that
information about vacancies out where people are, so you do not
have to go to the job centre to get the information, you can get
it in the pub, you can get it in the cinema foyer, you can get
it in the supermarket, you can get it when you go to your doctor.
I think there are real opportunities for private sector partnerships
in doing that. Two weeks ago I was in Sweden and they have a very
highly developed jobs bank. It is clearly effective in accelerating
the rate at which jobs are filled. It is very user friendly, even
a techno-phobe could feel quite comfortable with it. It provides
the opportunity to fill in a CV, or to fill in a benefit claim
and also, it has comprehensive information about available vacancies,
cut by geography and type. I think that we have really got to
go into overdrive in relation to identifying vacancies and filling
them. I think we are just at the beginning of that process but
I hope we are going to see a dramatic acceleration in the year
ahead.
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