Employment Zones
73. From early 1998 prototype Employment Zones
(EZs) operated in five areas: Glasgow, Liverpool and Sefton, North
West Wales, Plymouth and South Teesside. The purpose of prototype
EZs was to: examine the role of intermediate labour markets; explore
innovative approaches to providing people with skills; and to
support individuals in their efforts to become self employed.
The Government stated that it would undertake a full-scale evaluation
of the prototype Employment Zones and would use this evaluation
to "inform the detailed development of the fully-fledged
Employment Zones".[202]
The fully-fledged Employment Zones will come into effect from
April 2000. Representatives of the prototype Employment Zones
expressed concern that the lessons learned "would be lost".[203]
We recommend that the Government should publish its full-scale
evaluation of the prototype Employment Zones and indicate how
the lessons learnt have been taken into consideration in the development
of the fully-fledged Employment Zones.
74. One of the roles of employment policy should
be to improve the employment opportunities of the "hidden
unemployed". The Policy Action Team on Jobs suggested that
the "hidden and missing" jobless needed better support.
It argued that this entailed reaching out to jobless people rather
than expecting them to access the support by themselves.[204]
The prototype Employment Zones were not targeted at any specific
group. We were told that clients included returners to the labour
market, lone parents, disabled people, and the very longterm
unemployed. In contrast the fullyfledged Employment Zones
will concentrate only on JSA claimants. The Policy Action Team
on Jobs suggested that pilots should be run in some Employment
Zones which would open up provision to an expanded clientele.[205]
In June 1999 the Government introduced ONE pilots which are now
operating in 12 Benefit Agency areas. On 16 March 2000 the Government
announced that the ONE initiative is to be expanded nationwide.
A new agency will be established during 2001, which will bring
together the responsibilities of the Employment Service and the
Benefits Agency for people of working age. ONE provides a workfocused
interview and access to a personal adviser for all new claimants,
regardless of the benefit claimed. There is no specific active
labour market provision in ONE, other than the personal adviser
service. The purpose of ONE is to maintain, or in some cases create,
a link between the world of work and those who have traditionally
been considered furthest from the labour market. It is this group
of clients that were targeted successfully by the prototype Employment
Zones. A recent study showed that 38 per cent of prototype Employment
Zone participants who had been unemployed for between two and
five years had found employment. In general, prototype Employment
Zone participants were twice as likely to enter employment than
nonparticipants in the same area.[206]
In our view there is an opportunity to carry forward the good
work undertaken in the prototype Employment Zones while at the
same time enhancing the provision available to ONE clients. We
recommend that the Government should pilot additional Employment
Zones in the original ONE areas, in which ONE clients who have
been in receipt of benefit for one year or more, would be eligible
for the full range of Employment Zone assistance.
75. The fullyfledged Employment Zones, in contrast
to the prototype Zones, will operate on a payment by outcome basis.
This has attracted some criticism. The Unemployment Unit suggested
that the structure of the incentive scheme encourages operators
to move people into employment at the earliest opportunity. This
might not always be in the best interests of the clients. The
employment has to be sustained before providers receive the larger
of two output related payments, but a sustained job is defined
as one that lasts for three months. The Unemployment Unit indicates
that many low quality temporary jobs fall into this category.[207]
We recommend that the Government should renegotiate the
design of the financial incentives in the Employment Zones. Providers
should receive a proportion of output-related funding when clients
have been in continuous employment (although not necessarily with
the same employer) for six months.
76. In some areas private sector companies have been
contracted to deliver the fullfledged Employment Zones.
In our report on the performance and future role of the Employment
Service we recommended that any deepening of the role of the private
sector, in ways which moved beyond partnership with the ES, had
to be approached with caution, until a proper evaluation of the
added value provided by the private sector in delivering the New
Deal had taken place.[208]
In its reply the Government recognised the importance of evidencebased
policy. It said it would pay careful attention to the findings
of the full evaluation of the New Deal, including evidence about
the value added by the private sector.[209]
Michael Richardson, Director of Employment Policy at the DfEE,
told us in March 1999 that it was "too early to pass judgement
on any private sector partnerships", but indicated that by
the end of 1999 there would be "serious evidence" on
whether the New Deal was delivering what it was intended to deliver.[210]
We strongly recommend that the Government should publish an
evaluation of the effectiveness of private sector providers in
the delivery of the New Deal.
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