DETAILED RESPONSES TO THE REPORT'S CONCLUSIONS
AND RECOMMENDATIONS
Vacancies
1. It has been suggested that employers should
be compelled to notify Jobcentres of vacancies in order that the
number of total vacancies can be better assessed. Although this
would certainly improve the quality of labour market data, in
our view it would place excessive administrative burdens on both
business and the Employment Service. Nonetheless, now that the
Government has given greater prominence to vacancy data, the method
of estimating total vacancies need to be improved. We recommend
that the Government should show caution in drawing inferences
from vacancy data until it has established a robust method of
estimating total vacancies.
The Government agree with the committee that it is
inappropriate to compel employers to notify their vacancies to
Jobcentres. In addition to the reasons given in the report it
is also likely that other sources of vacancies, newspapers, specialist
employment agencies provide a broader range of job opportunities.
In fact, the general trend internationally is in the opposite
direction with countries liberalising the provision of vacancies.
Moreover, considering forms of vacancies other than Jobcentre
vacancies is a common part of the Jobseeker's Agreement which
aims to achieve the most effective way of getting a job. That
will generally include more than one form of jobsearch.
The Government does, however, agree that more information
on total vacancies is needed and ONS is currently exploring the
possibility of an employer based survey to try to estimate total
vacancies. The timetable for this is to start a survey on a preliminary
basis from October this year with the aim of commencing publication
of data during 2001.
DfEE also have work planned to relate information
from Jobcentre vacancies to other national statistics such as
estimates of new jobs from the Labour Force Survey to see whether
the rule of thumb that total vacancies are three times Jobcentre
vacancies is still applicable and whether it is generally true
across the country and by industry and occupation.
In the meantime, ONS suggests that notified rather
than unfilled Jobcentre vacancies are the most appropriate Jobcentre
vacancy series to use. This is the summary statistic they highlight
in the monthly labour market statistic press release.
2. We recommend that the Employment Service should
publish in its Annual Report details of the effectiveness of the
programme to improve services to employers, including the impact
of the strategy on its market share of vacancies.
In this year's Annual Performance Agreement there
is a new target for employer service. The target level is not
yet agreed but is likely to be set in July. Performance against
this target will be reported on the ES website on a quarterly
basis and in the ES Annual Report and Accounts for 2000-2001.
There are plans to consider the impact of the strategy
on its market share of vacancies. The Employment Service wishes
to ensure that its Jobcentres have a good range of vacancies,
by type and location, so that it can offer a more useful service
to jobseekers.
3. We recommend that the Government should undertake
an assessment of Jobcentre vacancy data to establish that they
are accurate.
Work to consider the Jobcentre vacancy data and its
relationship with total vacancies is already underway. For example,
there is the work of the DfEE described above. Also, the ONS has
been in contact with the Greater Manchester Low Pay Unit to consider
and answer some of the issues they have raised.
Jobs gap using broader measures of unemployment
4. We recommend that all Government statements
on unemployment should include the headline ILO measure, together
with the claimant count and the Want Work rate. Where it is not
possible to present the broader measures of unemployment, because
the geographical area in question is too small to provide robust
survey data, announcements should always explicitly recognise
the limitations of the claimant count.
The ONS considered how to describe the labour market
when it introduced the new monthly labour market statistics press
release in April 1998. The statistics are generally presented
in line with International Labour Organisation conventions. One
of the major changes was to give greater prominence to employment
including the employment rate (the proportion of the population
of working age who are in employment). The other advantage of
the employment rate is that it is the inverse of the proportion
of the population who do not have work which includes both the
ILO unemployed and the economically inactive.
The ONS recognise that different users have different
needs for labour market statistics. That is why the ONS publishes
a breakdown of economic inactivity. A 'Want Work' rate can be
derived from this breakdown. However, the Government does not
think that the Want Work rate provides sufficient extra information
to warrant use as one of the primary summary statistics for the
labour market. Consistency with existing guidelines and international
comparisons is important. The Government continues to believe,
ILO unemployment and economic inactivity are two distinct categories
which provide more information if they are presented separately
rather than lumped together.
In general the Government tries to provide information
on employment, ILO unemployment and the claimant count when describing
the labour market either at a national or local level. Although
the claimant count is not a complete measure of unemployment,
it is important particularly in relation to our welfare to work
agenda. Furthermore, ILO measures of unemployment are not available
for small geographical areas nor over such a long time as the
claimant count. This makes the claimant count the only choice
for certain detailed analyses of the labour market.
The Government commends the monthly regional labour
market statistics which provide a substantial amount of local
labour market information and have been improved substantially
over the past couple of years. The cross benefit analyses which
are being developed by the DSS and which are published quarterly
also provide important complementary information. There are also
international initiatives to harmonise the provision of indicators
complementary to employment and unemployment.
Performance of the New Deal
5. The evidence presented here leads us to conclude
that, in certain parts of the country, a lack of appropriate
jobs is one of the barriers to employment faced by
unemployed people.
In the context of the New Deal it is true, as the
report suggests, that inner city units of delivery have a relatively
poor performance in moving New Deal participants into work. Yet,
in cities, the number of jobs generally exceeds the number of
residents in work with commuters making up the difference. Also,
Jobcentre vacancies cover most industries and occupations with
the numbers of vacancies tending to reflect the share of employment
in that industry or occupation rather than whether employment
is rising or falling.
Therefore, there are a range of jobs created by the
market. The role of New Deal and other policies is to equip people
so they can take up the jobs; and help employers fill their vacancies.
The continuous improvement strategy for people on
the New Deal is partly designed to improve the performance of
inner city units of delivery and get more youngsters there into
jobs.
However, it still remains true that certain areas
have low employment rates and in recognition of this the Government
announced in the Budget, Action Teams for the areas of the country
with greatest labour market disadvantage. These include the major
conurbations where, over the past few decades, employment has
declined. There is an existing suite of area based initiatives
whose aims include raising the quantity of local jobs, including
the New Deal for Communities, the Single Regeneration Budget,
European Structural Funds and Regional Selective Assistance. These
complement the drive to raise standards of education to equip
people with the skills and knowledge they need to be able to take
up jobs.
Achieving better co-ordination at national
and local level
6. We recognise the difficulty in attaching specific
local employment quotas to grants. We are concerned that the refocusing
of the RSA, and the focus of the Enterprise Grant, on skilled
jobs might make it more difficult for local people in deprived
areas on benefit. We recommend that in the administration of the
grants, Government should make every effort to ensure that local
people will benefit from the investment in their area.
Wherever possible, we will continue to encourage
employers to recruit locally. Advice and jobsearch help provided
by the Employment Service has a strong local focus; and so will
Action Teams.
7. We welcome the Government's recognition that
co-ordination of policy should be improved. We recommend that
the Government should develop and bring forward specific proposals
aimed at streamlining the funding and administration of regeneration
and employment assistance initiatives and achieving greater synergy
between these policy areas.
The Social Exclusion Unit launched a major initiative
aimed at neighbourhood renewal. The Policy Action Team on Jobs
was one element of this initiative. The report Jobs for All—National
Strategy for Neighbourhood Renewal was published in December
1999 by DfEE.
8. In our view there is scope for greater devolution
in employment assistance and that this would allow for better
co-ordination between demand-side and supply-side initiatives.
We recommend that the Government should examine how this could
best be achieved.
As well as Action Teams which is mentioned below,
there are also other policies aimed at favouring employment in
certain areas; Regional Selective Assistance and the Single Regeneration
Budget for example. As well as this, there are recent innovations
such as the New Deal for Communities.
The Employment Service is working to increase its
local intelligence so that it is aware of large scale job creation
initiatives such as those associated with inward investment projects.
Local responses to large scale redundancies are provided through
the Regional Rapid Response Units. One of the most recent and
high profile projects is the Task Force associated with the sale
by BMW of the Rover plant at Longbridge, Birmingham.
Certain employment policies are delivered at a local
level. Employment Zones and Action Teams are good examples.
The fifteen Employment Zones have a high level of
discretion in achieving their objective of getting as many long
term unemployed people as possible into sustainable employment.
In reaching local solutions the contractors are not bound by National
Programme rules and conditions. The funding system largely focuses
on outputs (sustainable jobs).
Action Teams will focus on areas with low employment
rates, high unemployment rates and those with disadvantaged ethnic
minority groups. The Teams will work flexibly with disadvantaged
jobless people and employers. They will help overcome the barriers
preventing jobless people taking nearby vacancies. Each Team will
decide how best this might be achieved in the light of local circumstances.
There are also other initiatives such as the cities
network which is a forum for District Managers responsible for
large city Jobcentres. They meet regularly to discuss the particular
problems facing disadvantaged jobseekers in their areas. The forum
provides the opportunity to ensure good practice and innovative
ideas.
In addition, there is the New Deal Innovation Fund
which provides venture capital to test ideas and activities. Of
the £9.5 million available for the next three years £5
million is ringfenced for projects in inner city areas. The purpose
of the inner city Innovation Fund is to support intermediary organisations
in developing demand-led, employer focused strategies that will
increase the placement, retention and progression of unemployed
people in work.
Enhanced role for the Employment Service
9. We welcome the enhanced role for the ES outlined
by the Minister. In our view, in order for the ES to be effective
in this role, there will have to be greater decentralisation within
the organisation so that it can respond to local needs. We recommend
that the Government explore ways in which greater decentralisation
within the organisation can be achieved.
The Government believes that an important strength
of the Employment Service as a tool of labour market policy is
its national focus and clear central leadership. This gives confidence
that national policies to reduce unemployment such as the Jobseeker's
Allowance will be delivered consistently across the country. It
also enable meaningful comparisons to be made between different
units of delivery in programmes such as the New Deal, and subsequent
action to be taken to raise overall performance. The Government
would not want to weaken what it sees as a successful model of
delivery.
However, it recognises that in certain areas local
discretion can also produce improved performance and stimulate
innovation. In recent years the Employment Service has encouraged
its local managers to get far more involved in local initiatives,
such as the Dearne Valley partnership mentioned by the Committee.
Such local initiatives might take advantage of the
mass of labour market information that ES collects whilst delivering
its services. In the future the ambition is to use this in a more
systematic and co-ordinated fashion.
The degree of discretion at local level will also
need to be considered carefully when the new working age agency
is introduced. This agency will combine parts of the Benefits
Agency that deal with people of working age and the Employment
Service.
Which groups are most affected?
10. The Minister for Employment stated that the
Government must "aspire to saying that nobody will leave
the New Deal for Young People illiterate or innumerate".
We welcome this commitment and we urge the Government to bring
forward detailed proposals as early as possible on how this could
be achieved.
We have already moved beyond the stage of developing
proposals. For the first time ever, unemployed people are being
systematically screened for Basic Skill levels on entry to New
Deal using the Client Progress Kit; and where appropriate, people
are referred for a more in-depth assessment of their needs. In
addition, more than 1,000 New Deal Personal Advisors are undertaking
further training with the Basic Skills Agency to raise their awareness
of basic skills issues and help them support learners.
New Deal provides the most comprehensive choice of
learning ever for unemployed young people with opportunities available
through the Gateway and every single one of the Options, making
learning and working a reality.
11. We recommend that the Government should actively
encourage organisations from ethnic minority communities to develop
bids for the Intermediaries Fund.
The Government is in contact with a range of organisations
who are supporting us in engaging people from ethnic minority
backgrounds in the New Deal. We have worked with the Black Training
and Enterprise Group who have developed a self assessment pack
called "Closing the Gap". The pack helps New Deal partnerships
in the work they are doing to engage ethnic minority jobseekers
and businesses in New Deal. In addition, the Employment Service,
the Minority Ethnic Advisory Group and the Black Training and
Enterprise Group are working closely with partnerships to explore
the reasons for differences in employment outcomes between ethnic
minority jobseekers and white jobseekers.
We plan to build upon these developments through
the Innovation Fund. The aim of the Fund is to test ideas and
activities which will increase performance outcomes and extend
our knowledge of what works in helping people to move from welfare
to the workplace. The main focus of the innovation fund over the
next three years will be to test out approaches to develop intermediary
organisations, particularly in inner cities and with disadvantaged
groups. The guidance issued to bidding organisations notes that
special attention should be given to serving participants from
ethnic minority backgrounds. There is potentially a strong role
for voluntary and community groups in becoming or developing as
intermediary organisations.
Attitudinal barriers: unemployed people
12. We agree with the Policy Action Team conclusion
that job tasters should be used more widely. These may not always
lead immediately to an employment outcome, but they will help
to supplement the work of Personal Advisers in providing people
with a knowledge of new forms of employment.
Job tasters or work trials are already one of the
menu of options available to the Employment Service in the New
Deal for Young People and elsewhere. However, it is not always
possible to get enough employers to engage with this initiative.
Many wish to engage people directly without trying a job taster.
The Government will continue to try to promote this form of active
labour market policy where possible.
13. The attainment of communication skills should
be a theme which runs right through the New Deal. We recommend
that New Deal participants should be given the opportunity to
develop these skills in both the Gateway and as an intrinsic part
of their work-based and training options.
The importance of communication and other 'soft'
skills is one of the major lessons coming out of the New Deal
evaluation. In response to this there has been a shift in emphasis
with greater provision of soft skills during all stages of the
New Deal. This was one of the key points of the 10 point continuous
improvement plan introduced in January this year.
The Employment Service is introducing a more intensive
New Deal Gateway which offers additional help and support in the
early stages of the programme. This includes a mandatory 2 week
course in the second month of the Gateway to develop the soft
skills of communication, time-keeping, self-presentation and teamwork
which employers have told us they require from the people that
they take on. This 'Gateway to Work' course will be available
everywhere from July.
Attitudinal barriers: employers
14. We urge the Government, when it develops and
publishes the details of the Action Teams proposal, to ensure
that there are specific targets for helping the most disadvantaged
people and that the emphasis will be on placing people into high-quality
jobs. The Government should also set out how the Action Teams
will work with existing local intermediaries.
On 14 June, the Government announced the launch of
three pathfinder Action Teams for Jobs, in Thanet, East Ayrshire
and Hartlepool. They will start their work on 26 June and focus
on the hardest to help, with close employer links and new solutions
to overcome barriers to work, such as poor transport. The teams,
led by the Employment Service but with members from the private
and voluntary sectors, will each have £1.5 million to invest
over the next year.
We will expect Action Teams to work with existing
organisations to make the best use of their resources. Each Team
will be required to produce a delivery plan outlining the disadvantaged
groups upon which they will concentrate their help and the organisations
they will be working with. If local intermediaries exist Teams
should work with them. The Teams will have to demonstrate that
they have made a clear and measurable improvement in the labour
market prospects of the disadvantaged clients that they work with.
Transport
15. We welcome the Minister's commitment to engaging
at the national level with the DETR on transport issues and the
prospect of an enhanced role in this area for the Employment Service.
It is important that the Transport Plans being developed by local
authorities should be effective in improving people's access to
work. We recommend that the Department of the Environment, Transport
and the Regions and the Department for Education and Employment
should work jointly with local authorities to develop "access
to jobs" targets for inclusion in the full five-year transport
plans which will come into effect in 2001.
We agree with the committee that access to and cost
of transport can provide major barriers to some people taking
up work. Therefore, as well as the existing plans and policies
it will continue to be a major plank of our policy development
with DfEE and DETR working in tandem.
The Employment Service has a mobility strategy; and
a key element involves ES working in close partnership with Local
Authorities, Rural Development Agencies, local County Councils
as well as employers and transport providers to identify solutions
to overcome transport and other mobility related issues representing
barriers for jobseekers. Areas covered include:
- developing local transport solutions to accommodate
shift working patterns;
- creating better access to employer premises sited
on the periphery of towns and cities;
- developing better public transport in poorly
served areas;
- revising local transport timetables and enhancing
coverage;
- providing reduced rail and bus fares; and
- improving links between different modes of transport.
Action Teams will work closely with others in their
locality to develop transport links where the lack of reliable
and affordable transport is a barrier to work for jobless people.
This will include working with local operators to try and ensure
that local transport caters for shift and part-time workers as
well as those working normal office hours. Teams will also have
the flexibility to help individuals with their transport costs
to ease the transition to work.
We recognise that poor public transport reinforces
social exclusion, which can blight lives in urban, as well as
rural areas. A recent report by the Audit Commission (A Life's
Work: local authorities, economic development and economic regeneration,
Audit Commission, September 1999) found that 52% of job seekers
identified lack of transport as a key barrier to employment.
Reducing social exclusion by improving access to
jobs and services is one of the key aims of this Government. This
will be reflected in the 10 year plan to modernise our transport
system, which will be published this summer, as well as in the
forthcoming urban and rural white papers.
Local authorities are currently preparing full local
transport plans (LTPs), for submission at the end of July. These
plans will run for five years and cover all forms of transport.
The guidance to local authorities (published in March 2000) makes
clear that plans need to be co-ordinated with policies on health,
education, planning and social exclusion. We will be looking for
strategies that, amongst other things, promote better access between
job seekers and employers.
The links in the past have been relatively weak between
local transport and social exclusion policies, and they are still
evolving. We will be watching this area closely, to make sure
that Government policies and strategies are working to reduce
social exclusion and improving access to jobs and services, either
through offering improved services or through reducing the need
to travel.
16. The cost of public transport can present insurmountable
barriers to mobility and employment. We recommend that, in areas
displaying the lowest levels of employment, the Government should
pilot a scheme in which the travel to work costs of those leaving
long-term unemployment would be subsidised for a period of six
months.
As part of the Mobility Strategy, ES in partnership
with national train companies help jobseekers overcome financial
barriers that travel costs can present by offering New Deal clients
fifty per cent reductions on rail fares. ES also works in each
region with local bus transport companies to offer up to 80 per
cent savings on bus fares. Solutions to transport problems will
also play a major part in the work of the Action Teams.
As well as the existing range of measures which include
the Travel To Interview Scheme, there are a number of policies
aimed at easing the transition into work. There are also two regions
in the country where greater flexibilities in the Travel to Interview
Scheme are being piloted.
Once again, the new working age agency will also
need to consider how it deals with these employment barriers.
The benefit trap
17. We recommend that people who have been unemployed
for one year or more should continue to receive their existing
entitlement to income support or Jobseeker's Allowance for two
weeks after they enter employment.
We agree that the financial risks of leaving benefits
for work are a significant barrier to taking up work for many
people. In a recent study, anxiety about the transition was cited
by half of all jobseekers as a concern about starting work. This
is particularly true for those who have been living on benefit
for some time, are comfortable with the guaranteed regular payments,
but have little or no savings to fall back on when the benefit
stream is interrupted. And this barrier does not only affect people
receiving benefits for the unemployed.
That is why we are introducing a £100 Job Grant
for people moving into full-time work after a year or more in
receipt of Jobseekers Allowance, Income Support, Incapacity Benefit
or Severe Disablement Allowance. This simple and broadly based
scheme will provide cash at the point of transition to help people
to bridge the gap between benefits and work.
Lone Parents on Income Support will not receive the
Job Grant but will continue instead to receive the two week run-on
of IS. Since October 1999 lone parents who start work of at least
16 hours a week and five weeks' duration after at least six months
on IS or JSA(IB), keep their benefit for two extra weeks. This
lone parent benefit run-on helps to remove a barrier to work by
giving financial security during the transition period. This has
helped over 25,000 lone parents in the first six months alone.
In conjunction with the lone parent run-on, we would
expect the Job Grant, which will be introduced in April 2001,
to have a significant impact in breaking down the barriers to
work. We will undertake a programme of evaluation to determine
the extent to which the Job Grant scheme has met its objectives,
and will consider whether any further action is needed when the
results of that evaluation are known.
18. We agree with the Policy Action Team on Jobs
and recommend that the Government should introduce a scheme, initially
for those who have been unemployed for two years and over, which
guarantees that if a job collapses within 12 weeks of a person
taking up employment all relevant benefits will be reactivated
at the pre-existing level until a new assessment can be made.
We recognise that anxieties about the effect on benefit
entitlement can deter people from taking a short-term temporary
job when an offer of work arises. These concerns may also arise
for people whose job does not last for as long as expected.
To remove the perceived risks for people taking up
short-term temporary work, from April 2002 we are introducing
a mechanism which will streamline the process for re-claiming
benefit for people on Jobseeker's Allowance and Income Support
returning to benefit after taking up full-time, temporary employment
for periods of up to 12 weeks. Although entitlement to the benefit
would still cease for the duration of the period of work, this
measure will streamline and speed up the reinstatement of benefit
should a person become entitled to JSA/IS again when the work
ceases.
Automatic re-activation of benefits at pre-existing
levels, whatever the circumstances, is a matter which needs very
careful consideration, not least because of the significant security
issues involved. The amount of benefit payable to a person claiming
benefit again after a period of work will, of course, be dependent
upon the individual's circumstances at the time of the claim.
It would not be reasonable to "guarantee", in advance
of any claim being made, levels of benefit which may not be appropriate
to a person's circumstances.
The package of existing and new measures we are introducing
is designed to alleviate the disincentives around the points of
transition into (and out of) work and to encourage the take-up
of temporary work as a route into full-time employment.
19. We welcome the commitment to make payments
under the Housing Benefit Extended Payments scheme as near-automatic
as possible. We also welcome the Government's commitment to provide
a four week Income Support for Mortgage Interest run-on for those
entering work.
As part of the Government's commitment to support
Sustainable Home-Ownership, and to encourage people back into
employment, we are introducing a Mortgage Interest Run On (MIRO)
from April 2001. This is targeted primarily at those claimants
entering into the job market. The extension of Mortgage Interest
Run On for the first four week period of a claimant entering into
employment aims to provide support and an incentive for home owners
that will help to maintain a reasonable level of support during
a period of financial reassessment.
In addition, from April 2001 we are reforming the
Housing Benefit and Council Tax Benefit Extended Payment schemes
to make access more automatic. This will ensure that most long-term
unemployed people can receive their full HB/CTB entitlement for
the first four weeks of work. The existing "Fast Track"
scheme also provides subsidy incentives to local authorities to
help ensure that any in-work claim for HB/CTB follows on from
the end of the Extended Payment period.
20. We recommend that the Government should undertake
and publish an analysis of the cost of our proposals for removing
benefit traps.
We have already announced a number of new measures
which are designed to smooth the transition from benefits to work
and to remove the anxieties, real or perceived, which people thinking
about taking up work may experience. We believe that the measures
already announced will address the concerns raised by people facing
barriers to work. We need to allow the changes to bed-in properly
so that we can assess their effectiveness in breaking down those
barriers before we consider introducing further new measures.
Measuring unemployment
21. We recommend that the ONS should investigate
the possibility of establishing a composite measure of unemployment
for use in small areas.
As mentioned above, employment rates provide not
only a useful measure of employment but also its inverse; the
proportion without work—both ILO unemployment and the economically
inactive. Employment rates also have the advantage of being available
for smaller areas than ILO unemployment rates because they are
larger in scale.
The ONS is already investigating ways in which estimates
of unemployment can be improved for small areas using LFS data
together with claimant count and other information.
22. There seems to be a general consensus that
TTWAs do not provide useful information on the state of labour
markets and that it might actually obscure important trends. We
recommend that the ONS should establish whether there is any value
in continuing to publish workforce claimant unemployment rates
for Travel To Work Areas.
It is true that Travel to Work Areas have become
larger over time as commuting has grown. However, for some users
and for certain purposes the Government does believe that Travel
To Work Areas are a useful concept. ONS carried out a full consultation
in 1996 before updating the TTWAs. Feedback from economic users
indicated that they were still useful. Also, they are not the
only local statistics available. ONS provides a range of local
labour market statistics.
23. Workforce claimant unemployment rates are
used, with other indicators, to determine which areas will receive
Assisted Area status and benefit from the European Structural
Funds. Given that policy decisions are founded on claimant unemployment
data, we recommend that the ONS undertake a review to establish
whether data should be presented in a workforce or residency-based
form.
ONS are reviewing the calculation of unemployment
rates for small areas. They will carry out a wide ranging consultation.
Publication of new measures will be in response to a clear user
demand.
The Government believes that there are advantages
in having comparable local information to national workforce claimant
unemployment rates particularly since it gives some idea of the
amount of employment in the area rather than the amount of an
area's residents who are employed.
ONS recognise that different users have different
needs for labour market statistics. Therefore, it may be that
information is provided so that users can carry out analyses which
address particular issues. For example, a comparison of claimant
unemployment as a proportion of the local workforce and claimant
unemployment as a proportion of the resident population would
give some information about the potential for getting local claimant
unemployed people into local jobs.
Regional venture capital funds
24. We welcome the Government's objective of expanding
the venture capital provision available for small enterprises.
Noted.
Investment incentives
25. We recommend that the Government should develop,
in co-operation with the Regional Development Agencies, innovative
area-specific tax structures aimed at attracting job-creating
investment into low employment areas.
The Government is currently considering the role
that fiscal incentives might play in a number of circumstances.
The Social Investment Taskforce, due to report to the Chancellor
in the Autumn, is looking at how to unlock bigger flows of private
investment in low employment areas. The DETR has commissioned
a consultancy team lead by Segal Quince Wicksteed to investigate
whether there is a role for fiscal incentives in bringing about
the economic regeneration of former coalfield areas. And the Government
is also considering whether there is a wider role for fiscal incentives
in achieving our broader aim for an urban renaissance. In general,
much of the tax system is UK-wide and not readily suited to incentives
targeted at geographical areas.
Local labour clauses
26. Local authorities have an important role to
play in facilitating and supporting regeneration and job creation
in their areas, not only through strategy documents but also in
their capacity as major employers in deprived areas and through
their role in contracting with third parties for a range of works
and services. In the absence of a substantial overhaul of the
legislation, we recommend that the Government should issue guidance
to local authorities encouraging them to incorporate local labour
clauses in contracts and setting out how this might most effectively
be achieved.
The Government recognises that local authorities
as part of their wider economic development and regeneration activities
may wish to consider employment needs within the local economy.
It is for local authorities to judge how far the needs of local
employment should be promoted in their area working within existing
UK and EU legislation.
Local authorities' scope to use local labour clauses
is limited by the Local Government Act 1988 as well as by the
EC Treaty and the European Directives for Public Procurement.
EC Procurement Directives, which are implemented in the UK by
various Public Procurement Regulations, prohibit discrimination
on the grounds of nationality. To bring local labour considerations
into the contracting process may well conflict with these wider
requirements. In addition to requiring contracts to be awarded
on the basis of non-discrimination, transparency and competitive
procurement principles, the EC Directives/UK Regulations set out
detailed procedures and criteria for the selection of tenderers
and the award of contracts. The selection criteria relate to the
financial standing, technical capacity and personal standing of
the companies involved and the award criteria cover what is necessary
to deliver value for money in performing the contract.
The Government has recently consulted on proposals
to modify the list of factors, set out in the Local Government
Act 1988, that can be taken into account in inviting tenders and
awarding contracts. However, any modification will need to be
consistent with European legislation and with the principle of
best value.
How can new jobs be created?
27. Although we recognise that spending on infrastructure
is essential as part of the process of regenerating deprived areas,
we reject the notion that demand-side policies on their own will
be sufficient to provide employment opportunities for the long-term
unemployed.
The Government agrees with this assessment. That
is why there are a range of both supply side and demand side measures
in existence and further development is planned.
The role of intermediate labour markets
28. We recommend that the Government should explore
ways in which it can support the growth and effectiveness of ILMs.
The Government believes that Intermediate Labour
Markets are an important way of increasing employability and helping
people get into and keep jobs in the open labour market.
However, the Government sees an intermediate labour
market as a means to an end rather than an end in itself.
29. In our view there is much greater scope for
the use of ILMs in both the New Deal and the enhanced New Deal
for 25 plus. We recommend that all participants in the New Deal
options, other than the Full-time Education and Training option,
should receive a wage.
Intermediate Labour Markets are already a feature
of New Deal and can be successful where they are tailored to meet
the needs of local employers. However, we need to be careful that
they prepare young people for the labour market and do not distance
them from it.
It is already possible to receive a wage within all
the Options (other than full-time education and training). It
must be borne in mind that these are work experience and learning
opportunities which are intended to prepare people for waged employment.
30. We recommend that the Government should examine
ways of increasing the flexibility in the New Deal, including
providing the opportunity, for some clients, to move through more
than one option and to remain in work-related New Deal options
for more than six months.
The New Deal Options were each designed to provide
a flexible mix of learning and work experience. However, should
a young person find that an Option is not successful, they will
be seen by a Personal Adviser who will agree next steps, including
a second Option if appropriate.
We are committed to a programme of continuous improvement
for the New Deal. This means we keep all aspects of New Deal Design
under continual review. We have already:
- realigned earliest entry to all options to two
months so that young people complete Intensive Gateway provision
prior to option entry, thereby enabling them to acquire the "soft
skills" necessary to participate effectively (e.g. motivation,
time-keeping and group working);
- focused the options on work-based training and
job search; and
- encouraged employers to play a direct role in
developing provision so that content is tailored to the needs
of the local labour market and learning is consistent with employer
expectations of job entrants.
We do not believe that the case for longer work related
options has yet been established. At the same time, we recognise
that the more disadvantaged young people require well tailored
programme provision and we are keen to develop New Deal to increase
its effectiveness in delivering that. With all development in
New Deal design, we believe it essential to ensure that time spent
on Options does not distance the young person from the labour
market.
New employment opportunities in the public
sector
31. We recommend that the Government should explore
ways to engage the public sector in providing jobs in the provision
of local services, for those people who have been unemployed for
two years, within demand-deficient labour markets.
The Government believes that local residents in areas
of labour market disadvantage and groups with relatively poor
employment records can take up, and be effective in, public sector
jobs. It is important to tap into these currently unused resources.
However, such work should be aimed as providing quality public
services not as a method of providing alternative work. Otherwise
the participants are likely to be considered as second class with
potentially undesirable consequences for how long the jobs will
last.
Job guarantee
32. We recommend that the Government should pilot
a job guarantee scheme, in areas displaying the lowest levels
of employment, for those who have been unable to secure employment
in the open labour market after leaving the New Deal.
The New Deals for young people and, increasingly,
the New Deal for the long-term unemployed aim to bring to an end
long periods on benefit. They, therefore, have the same objective
as the Job Guarantee. We will keep under review whether there
are elements of the Job Guarantee model which could have wider
application in the New Deal.
Employment Zones
33. 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.
The Government plans to publish the evaluation reports
carried out on the prototype Employment Zones. The first brings
together the case studies carried out across all the prototype
zones. The second report is a survey of participants and leavers.
The reports are currently in draft and it is intended that they
will be published by the end of August. Early work by the evaluators
was, where possible and appropriate, taken into account in the
development of the policy for the fully-fledged Employment Zones.
34. 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.
Employment Zones and ONE are two different approaches
and for evaluation to be effective we need to be able to separate
the effects of the Zones from other areas in which the New Deal
pilots and other welfare to work initiatives operate. However,
there is employment assistance available to people in the ONE
pilot areas. Also, for unemployed claimants Jobseeker's Allowance
remains in place; and the New Deals for Young People and the long
term unemployed for those who are eligible.
35. We recommend that the Government should re-negotiate
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.
The contractors for the new Employment Zones were
chosen through a competitive tendering exercise. The funding model,
which is largely output related, was included in the bidding guidance
for the tendering exercise. The contracts have been signed in
the last two months. The contract term runs from April 2000 to
March 2002. The current contract terms provide for outcome payments
at the stage the client obtains work and also at the 13 week stage
if the client remains in employment. As the contractors are unlikely
to agree, unless they get substantial compensation, to changes
which introduced more onerous conditions it would be inappropriate
to alter the contracts now.
36. We strongly recommend that the Government
should publish an evaluation of the effectiveness of private sector
providers in the delivery of the New Deal.
The evaluation of New Deal was designed to take account
of all forms of delivery. The different delivery models, including
the private sector led variants, are reflected in all elements
of the evaluation programme. So, for example, private sector areas
were selected as part of the sample for both the Pathfinder and
national case studies on delivery and impact; the sample for qualitative
research with individual participants includes private sector
areas; and in the quantitative survey of individual participants
we will be looking at individual outcomes by type of New Deal
delivery, including whether it is private sector led.
In addition, we have recently carried out a separate
piece of work to look at individual private sector led areas.
An independent research organisation carried out a case study
in each of the ten private sector led units of delivery. This
involved interviews with key players about how the New Deal is
being delivered. A report on this research will be published around
the middle of July.
Finally, information on private sector provision
is already published in the form of the Core Performance Measures.
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