FOURTH REPORT
The Education and Employment Committee has agreed
to the following Report:—
EMPLOYABILITY AND JOBS: IS THERE A JOBS
GAP?
INTRODUCTION
1. The benefits of a strong economy have not been
shared equally across the country. Ivan Turok and Nicola Edge,
in their study of the jobs gap in Britain's cities, argued that
there was a continuing longterm downward employment trend
in cities.[1]
David Webster's analysis of International Labour Organisation
(ILO) unemployment rates also pointed to high levels of unemployment
in some coastal and rural areas and in the coalfields.[2]
Other studies showed that geographical differences increased when
broader measures of unemployment were used.[3]
The recent Cabinet Office report on the "North/South divide"
argued that the variation in economic and social conditions was
a complex issue, but it recognised that some parts of the country
continued to suffer from the decline in traditional industries.[4]
2. The policy response to structural unemployment
has encompassed both demand and supplyside measures. A range
of regeneration initiatives has been implemented, with varying
degrees of success, since the 1960s. Regional Selective Assistance,
administered by the Department of Trade and Industry (DTI), and
the remaining Enterprise Zones, administered by the Department
of the Environment, Transport and the Regions (DETR), are two
current initiatives aimed at influencing business location decisions.
The Single Regeneration Budget, now administered by the Regional
Development Agencies, has also had a major emphasis on job creation.
In the most recent period, increased attention has been paid to
the supplyside of the labour market. Active labour market
programmes, aimed at improving the employability of the unemployed,
are now in use in most OECD countries. In the UK, the Government's
response to unacceptable levels of longterm unemployment
was to institute a number of New Deals as part of its welfaretowork
initiative. The most highprofile of these was the New Deal
for Young People which was introduced in 12 pathfinder areas in
January 1998 and extended nationwide in April of that year. As
the headline rates of unemployment have fallen, the supplyside
policy approach has increasingly been accompanied by the message
from Ministers that there are now plenty of jobs in all parts
of the country and that it is the responsibility of the unemployed
to take up these opportunities.
3. We have devoted much of our time in this Parliament
to monitoring the development of the various strands of the New
Deal, producing two reports on the New Deal for Young People[5]
and another examining the New Deal for Lone Parents.[6]
We examined the New Deal for Disabled People in our report on
opportunities for disabled people.[7]
Our report on active labour market programmes in Australia also
made recommendations on how the New Deal for Young People could
be strengthened.[8]
We have supported the New Deal which has benefited many young
people.
4. This inquiry has taken place during a time when
active labour market polices are in a state of flux. In the recent
Budget Statement the Chancellor of the Exchequer announced changes
to the main New Deal programmes, building on the adjustments announced
in the PreBudget Statement last November. The New Deal for
25 plus will now offer a range of options similar to those provided
in the New Deal for Young People.[9]
Overall, the planned expenditure on the various employment New
Deals has declined from the levels anticipated in the November
Pre-Budget Statement.[10]
As a result, the unallocated portion of the Windfall Tax receipts
now stands at £900 million.[11]
The projected expenditure on New Deal for 25 Plus has increased
to reflect the enhanced provision. In addition, fifteen fullyfledged
Employment Zones came into effect in April 2000. These are sited
in areas of highest unemployment and will use Personal Job Accounts,
which draw on a range of funding streams, to improve the employment
chances of the longterm unemployed (see paragraph 73). The
Comprehensive Spending Review, which will set Departmental spending
limits for three years from 2002-03, is due to be published in
the summer. Decisions made in the next few months could determine
the nature of active labour market policy into the next Parliament.
This report is aimed at influencing these decisions and the manner
in which existing active labour market policies are implemented.
5. The report focuses on the issue of imbalance in
the supply of and the demand for labour in specific geographical
areas, or "jobs gaps". It examines whether the existing
balance between demand-side and supplyside policies is correct
and whether the two approaches are sufficiently coordinated
at the national and local level. From the beginning of the inquiry
the main areas of investigation have been:
- the extent, and causes, of any geographical jobs
gap;
- which groups might be most affected;
- how successful the official measures, such as
the claimant count area statistics and those provided by the Labour
Force Survey, are at presenting the geographical disparity in
UK unemployment;
- the impact of any jobs gap on the effectiveness
of supplyside policies, such as the New Deal;
- the extent of local, national Government and
Europeansponsored initiatives aimed at creating a better
balance between the supply and demand for jobs at the local level,
and whether these are sufficient; and
- examples of good practice in this area.
6. As part of the inquiry Members of the Employment
Subcommittee visited South Yorkshire on 20 and 21 January
2000. They met representatives of the Doncaster and Wakefield
Enterprise Zone, The Dearne Valley Partnership, several organisations
involved in regeneration in Grimethorpe, Phoenix Enterprises in
Rotherham, the South Yorkshire Forum and the Centre for Full Employment
and the Black Community Agency for Regeneration and Development
(Black CARD), both in Sheffield. We are grateful to all those
in South Yorkshire who contributed to a most informative visit.
We are also grateful to those who submitted written evidence to
our inquiry, and to the representatives of the Local Government
Association, and the Prototype Employment Zones, who gave oral
evidence. We held informal discussions with David Webster, Chief
Housing Officer at Glasgow City Council and Ivan Turok, Professor
of Urban Economic Development at the University of Glasgow and
representatives of the Office for National Statistics (ONS) and
we are grateful for their participation. We are also grateful
to the Committee's specialist advisers, Dan Finn, Reader in Social
Policy at the University of Portsmouth, Dave Simmonds, Director
of the Centre for Social Inclusion, and Michael Ward, Director
of the Centre for Local Economic Strategies.
1 Turok I and Edge N, The Jobs Gap in Britain's Cities:
Employment Loss and Labour Market Consequences, Joseph Rowntree
Foundation, 1999. Back
2 Webster
D, Unemployment Convergence in 1990s Britain: How Real? Analysis
of Changes in LFS Employment, Unemployment and Economic Activity
on the UrbanRural Dimension 1993/94 to 1998/99, Employment
Audit, Employment Policy Institute, Issue 12, Winter 1999. Back
3 Beatty
C and Fothergill S, Incapacity Benefit and Unemployment, Centre
for Regional Economic and Social Research, Sheffield Hallam University,
1999; Gregg P and Wadsworth J, Economic inactivity, in Gregg P
and Wadsworth J (eds) The State of Working Britain, Manchester
University Press, 1999; Green A and Owen D, Geographical variations
in unemployment and nonemployment, Joseph Rowntree Foundation,
1998; Green A and Hasluck C, (Non) Participation in the labour
market: alternative indicators and estimates of labour reserve
in United Kingdom regions, Environment and Planning A, Vol. 30,
1998, pp. 543-558, 1998. Back
4 Sharing
the Nation's Prosperity: Variation in Economic and Social Conditions
Across the UK, A Report to the Prime Minister by the Cabinet Office,
December 1999, Chapter 2. Back
5 Second
Report from the Education and Employment Committee, Session1997-98,
The New Deal, HC 263; Eighth Report from the Education and Employment
Committee, Session1997-98, New Deal Pathfinders, HC 1059. Back
6 Seventh
Report from the Education and Employment Committee, Session 1997-98,
Pathways into Work for Lone Parents, HC 646. Back
7 Ninth
Report from the Education and Employment Committee, Session 1998-99,
Opportunities for Disabled People, HC 111. Back
8 First
Report from the Education and Employment Committee, Session 1998-99,
Active Labour Market Policies and their Delivery: Lessons From
Australia, HC 163. Back
9 Budget
2000 Prudent for a Purpose: Working for a Stronger and Fairer
Britain, HC 346, para. 4.20. Back
10 Cm
4479, Pre-Budget Report, HM Treasury, November 1999, Table 4.1. Back
11 The
amount of unallocated Windfall Tax money available for spending
on the New Deals grew from £270 million in Budget 99 to
£570million in the November 1999 Pre-Budget Statement. Back
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