WEDNESDAY 17 MAY 2000
_________
Members present:
Mr Derek Foster, in the Chair
Mr Graham Brady
Judy Mallaber
Mr Patrick Nicholls
Mr Ian Pearson
Mr Stephen Twigg
_________
RT HON TESSA JOWELL, a Member of the House, Minister for Employment,
Welfare-to-Work and Equal Opportunities, MR JEREMY MOORE, Divisional
Manager, Structural Unemployment Policy Division, MR MATTHEW
NICHOLAS, Head of Division, Jobseeker Mainstream Services Division,
Department for Education and Employment, examined.
Chairman
1. Minister, you are very welcome. Thank you very much indeed for
coming to see us so soon after your last visit. I think one of our problems
was that really we did not have the time to go into how the New Deal would be
developing because there were so many other questions which we wanted to ask
you; but now is a very opportune time, and I think you indicated yourself that
it would be opportune for us to review the flagship programme, which is
spending a lot of money, and you and all of us want to ensure that it is being
well spent and best spent. So can I begin by asking you about the unallocated
portion of the windfall tax, which now, we gather, from Treasury figures, has
reached œ900 million, and can you tell us something about the proposals that
you might have put forward to the Treasury on how this might be spent?
Forgive me, you do not mind me starting before the officials get here?
(Tessa Jowell) I was going to begin by saying I am supposed to be
accompanied by two officials, who are not here, and I know that they left the
Department, and I assume are walking over. I am happy to start, and I hope
you will not think it a discourtesy if they arrive when they arrive.
2. Not at all.
(Tessa Jowell) They are probably caught in the security, with the
pensioners' lobby, and so forth; so they will certainly be on their way and
will join us when they can.
3. Thank you very much indeed.
(Tessa Jowell) If I can just begin then with your question on committed
expenditure and what else we would like to do, because, yes, we certainly do
have proposals which are currently being considered by the Treasury, as part
of the spending review, to strengthen both the New Deal for Young People and
also the New Deal for People Over 25. If I can just begin with the New Deal
for Young People and set out for you the position as it now is, in terms of
expected expenditure as against the anticipated planned expenditure at the
beginning of the Parliament, and obviously you will be aware that the money
which was allocated was allocated for the Parliament. It was also made clear,
at the beginning of the Parliament, that there was an expectation that the
estimates set at that time would be revised as necessary as the programme
rolled out, and, now, two years into the programme, almost to the day, we now
expect to spend just under œ1.5 billion of the windfall tax before March 2002.
Now that is a lower figure than the figure that we anticipated at the
beginning of the Parliament, and it might help the Committee if I just set out
broadly the reasons as to why that is the case, because I think it might help
with your subsequent questions. First of all, unemployment has turned out to
be lower than expected. Secondly, the planning assumptions, in relation to
the New Deal, estimated that about 40 per cent of young people would leave
from the first Gateway period, at the end of the first four months; in fact,
that estimate has proved to be an underestimate and about 60 per cent of young
people leave the New Deal at that stage. The third effect is that the
options, which are undertaken by about 40 per cent of young New Dealers, have
also turned out to be slightly cheaper than we expected. So it is the
combination of these factors that have led to a revising down of the estimates
for the New Deal, and get us to our present estimate of about œ1.5 billion,
and that includes the money that was allocated as a result of the Chancellor's
recent Budget.
4. Thank you, that is very helpful. Welcome to your officials.
(Tessa Jowell) Shall I now introduce my colleagues to you?
5. Yes, please do.
(Tessa Jowell) On my left is Matthew Nicholas, from the Employment
Service, who is Head of the Jobseekers Division, and on my right is Jeremy
Moore, who is responsible within the Department for New Deal and Welfare-to-
Work policy.
6. I sought the Minister's permission to start without you, can I
say to her civil servants, colleagues, and she thought that you might have
been caught up in the lobby outside, something like that. So you are very
welcome, and thank you for joining the Minister. That initial clarification,
Minister, about the money, is particularly helpful. Can I then go on to say
that one of the things that I most welcomed, instituted, I think, by your
predecessor, the commitment to continuous improvement, it has been a hallmark
of the New Deal for Young People, and the scheme has undergone already many
changes in the two years since it began; are you able to tell us how it will
continue to change over the next two years?
(Tessa Jowell) Let me do that, and perhaps also indicate to you how the
New Deal for Young People has developed in the two years since it was
established. I think the most significant change has been in the
intensification of the Gateway period, which is the first stage, and the most
recent Budget announcement saw further investment in the further strengthening
of the support, advice and help that young people get during that stage. And
I think, at this point, that is the most significant, and you will understand
that is important in the context of the 60 per cent figure that I gave you at
the beginning. Now we have intensified the Gateway, and the early pilots that
we did, that preceded the extra investment in Gateway intensification,
indicated that more support leads to, more rapidly, young people moving from
the Gateway and into work. But I think that the intensification of the
Gateway reflects two other developments in the New Deal since we began. The
first is the importance of engaging with employers, and, if you like, I was
going to say training but developing the young people on the New Deal in a way
and developing their skills and attributes in a way that will make them
acceptable to employers. And certainly in the early stages there was quite
a lot of feedback that young people were arriving at interviews, or even
taking jobs, who were not regarded by the employers as being job-ready; so we
have worked very closely with employers in introducing an important new
innovation, as part of the Gateway intensification, which is a mandatory, two-
week, what we call, and what is now in modern labour market speak described
as, "soft skills" course, which is about teaching young people how to behave
when they are at work. It covers things like the importance of time-keeping,
the importance of turning up, looking clean, tidy and collected and ready for
work, knowing how to act as a member of a team, knowing how to behave when
somebody asks you to do something; and all these are critical skills that
young people learn, in order not just that they get their first job but that
the New Deal meets its objective of making them employable, giving them the
capacity to move from one job to a better job and to continue to progress.
There is a second element of New Deal Gateway intensification, which is
rigorous screening for basic skills. We expected that about 50 per cent of
young people coming onto the New Deal, this was when the New Deal was being
planned, would fail to reach NVQ Level 2; in fact, the figure is nearer 75 per
cent. So we had to invest much more heavily than expected in getting young
people up to an educational level that will not make them not just employable,
again, in the first job but will make them employable in subsequent jobs after
that. And you will remember we went into this, I think, quite a lot when I
last appeared before you; which is why we have placed enormous emphasis on the
importance of young people acquiring basic skills, and why basic skills
screening is now a standard part of the Gateway, so that where young people
do not have the essential skills in literacy and numeracy they can be given
that help as part of the New Deal, in order that we meet our declared
objective, which I set out to you last time, that no young person will leave
the New Deal without the basic skills in literacy and numeracy that will
enable them to remain employable. So those are two very important parts of
intensification. There is a second stage, which is about improving the number
of young people who move into work from the options, remembering again that
these are the most disadvantaged young people, and they are more disadvantaged
young people than we expected them to be when the New Deal was designed; and
so that is a second area of further investment that you may want to talk to
me about in a little while. A third area, which has not been funded from the
Budget but which we are in discussion with the Treasury about in the context
of the spending review, is strengthening the period which is at the moment
called Follow Through, which follows after a young person has been through the
Gateway and an option and then moves into the stage after that. At the
moment, the level of contact between the young person and a personal adviser,
the degree of job focus in that stage, is not, we believe, sufficient to get
some of the most disadvantaged young people into work, and we are seeking, we
hope, further support in order to be able to strengthen that part of the New
Deal. So at each stage the intention is to increase the level of contact
between the young person and the Employment Service, their personal adviser,
increase the scrutiny of the particular help and support they need in order
to make them employable, removing what are the personal obstacles that exist
for them to being able to get the jobs that are available now all over the
country.
7. Patrick wants to come in, but before he does so can I just
explore this Gateway intensification. The 60 per cent figure was quite
surprising but welcome, very welcome indeed; are you able to say, with the
additional investment that you are going to make in intensifying the Gateway
period, have you got a percentage figure now in mind, a planning figure, that
you can go beyond the 60 per cent?
(Tessa Jowell) We would certainly hope so, and, I think, again, it is
important to stress, it is not just about numbers into jobs, but one of the
further ways in which I think the emphasis of the New Deal is shifting is
ensuring that young people get into work and they stay in jobs. We have a
Core Performance Measure, in relation to retention, on which, as the New Deal
develops, we intend to place progressively greater emphasis. I hope that it
would be possible for us to increase that 60 per cent figure. And certainly
the indications were, from the piloting of the intensification of the Gateway,
that the inter-job rate, from memory, increased by about 6 per cent in the
pilot areas.
8. Have you got a sort of greater breakdown of that 60 per cent
figure, does it vary greatly by Units of Delivery, or by regions? I do not
want the figure now, necessarily; if you have got it, obviously, it will be
good, but you will perhaps write to us if you have not got it to hand?
(Tessa Jowell) Yes, I would be delighted to do that. And, as we proceed
with this session, I was going to say that the latest data in relation to the
Core Performance Measures, where we are tracking the achievement of young
people in the first year of the New Deal, with a group of young people who
joined it in equivalent time a year later, in order to see whether we are
securing improvements in performance, that data will be completed in June and
will be available in September, and I think that will provide an answer to a
number of your questions and our questions, and we would be delighted to give
you that. The judgement we have to make, all the time, here, is, and I would
just like to make this point before we leave the point about Gateway
intensification, I think we are convinced that we need to increase the amount
of contact between the young person and their personal adviser, but there is
a judgement to be made about dead weight. This is expensive investment, when
it is applied across the country to every young person who is on the New Deal;
we want to make sure that we pitch the intensity of contact at the right level
to maximise both the speed with which young people move through the New Deal
but also the likelihood of their staying in work at the end of it.
9. Do you think that the figure being rather higher than we all
expected is anything to do with the labour market being rather more buoyant
than most of us expected, or do you think this is another factor, or another
range of factors?
(Tessa Jowell) No, I certainly think that a buoyant labour market is a
very important contributor, and, of course, what we are trying to do, through
the New Deal, is to give these previously disadvantaged young people a degree
of immunity and resilience in the event of a turn-down in the labour market;
and the evidence is that the kind of programme that we have put in place does,
indeed, provide that kind of resilience.
Chairman: Thank you.
Mr Nicholls
10. Minister, I think it would be common ground between us that we
all want this programme to succeed, and I think it would also be common ground
between us it is a very expensive scheme, and I think you would then,
therefore, agree with me that one has got to see what the outcome is, one has
got to try to make sure that the outcomes do not actually cost too much; in
other words, we all want value for money, and I think we can both agree with
that. The figures, as I understand them, are that it has cost the taxpayer
œ24,228 for every job found under the New Deal, whereas, under the most
expensive training programme under the last Government, which I think was the
Training for Work programme, it cost something like œ4,617 per job. Now I
accept that, if you are one of the people who has got a job as a result of the
scheme, that may well seem like money well spending, but it does seem to me
that œ24,000, on the one hand, as opposed to œ4,000, on the other, is really
a very expensive outcome indeed, and I just wonder if you would like to
comment on that?
(Tessa Jowell) Can I say that we are determined that the New Deal
provides value for money, value for money for the taxpayer and opportunity for
young people. The cost of a young person into a job on the New Deal is just
under œ4,000, it is likely to rise slightly, as a result of the
intensification of the Gateway, but it is certainly not œ24,000, the figure
is œ4,000. We attach great importance to evaluation of the New Deal, as a way
of ensuring that value for money is clearly what we get, and that we are doing
the right things guided by the evidence. And the recent report published by
the National Institute for Economic and Social Research, which tracked New
Dealers in the first year of the New Deal, very clearly concluded that the New
Deal was close to being self-financing, both on the grounds of the extra
economic activity that young people would undertake, the fall in youth
unemployment, the reduction in benefits, so the figure of young people into
a job is just under œ4,000. The cost per young person on the New Deal is
about œ2,000, but we estimate, at a conservative estimate, that a bit over
50 per cent of young people, the young people on the New Deal, go into jobs,
which is where we get the œ2,000 per individual figure becoming œ4,000 as the
cost into job.
11. Well, clearly, we are not agreeing on that, Minister. As I say,
my understanding is quite clear, that the cost is œ24,228, and, for the time
being, we may have to agree to differ on that.
(Tessa Jowell) Can I perhaps just say that if you would like to supply
me with the source of those figures then I would be very happy to write to the
Committee and provide an analysis and explanation of the independent
assessment that has led us to our position.
Chairman: That is helpful; thank you.
Mr Nicholls
12. Yes. Let us go straight then to the latest Government figures
as regards outcome; again, it is my understanding that the latest Government
figures for the New Deal show that 58 per cent of those who started on the New
Deal have ended up back on benefits. Now, even accepting that you are dealing
with the difficult end of the labour market, if I can put it like that, 58 per
cent going back onto benefits sounds more like a Welfare to Welfare scheme
rather than a Welfare to Work scheme; so perhaps you could talk to us about
that for a moment or two, 58 per cent going back into benefits?
(Tessa Jowell) First of all, can I preface what I say by making it clear
that I am using the Government's Statistical Service figures, so these are
figures which are published and are part of the statistics that we publish
every month. In fact, the broad breakdown is that 60 per cent of young people
go into work from the Gateway, and about 75 per cent, three-quarters of those
young people, are still in work after 13 weeks, so they are in what is
objectively defined as 'sustained employment'. Of the remainder, about 40 per
cent go into one of the four options, and, again, in percentage terms, that
divides 40 per cent into Full-Time Education and Training, 20 per cent into
Subsidised Employment and 20 per cent into each of the two Work Experience
options, the Environmental Task Force and the Voluntary Sector option. We
then have, from that, about 28 per cent of those who go into what is called
Follow Through, and we know that, in terms of numbers, since the New Deal
started, about 20,700 young people have left the New Deal from Follow Through
and continued to claim Jobseeker's Allowance. So that is the population of
young people, from a total of those who started the New Deal of nearly
437,000, who after six months are then eligible to go back onto the New Deal.
But there is a problem about the data here. We can give outcome figures for
the young people whom we can track and we know where they have gone; what we
cannot do is track all the young people on the New Deal, because some of them
will leave, they will come off benefit and they will then go into work. But
what appears to be the case is that, at each stage, the proportion of those
who go into what are described as 'unknown destinations', about 57 per cent,
on our latest survey, are likely to have gone into jobs, but we do not know
that they have gone into jobs.
13. Can we just be clear about this for a moment, because, obviously,
the end result that everybody wants is for somebody who was previously
unemployed, and possibly even unemployable, to go into a job; it is certainly
my understanding, from what the Government figures show, that 58 per cent of
those who start actually go back onto benefits. Now if that is not a correct
analysis of Government figures then let us have it stated specifically; but
it is my understanding that 58 per cent, knocking on 60 per cent, go back onto
benefits, and it is certainly not your intention that that should happen, but
I do need to know whether that is actually the outcome?
(Tessa Jowell) I am afraid, I simply have to dispute the figure; it is
simply not the case that 58 per cent of those who leave the New Deal go back
onto benefit. Of those who leave from the Gateway, 75 per cent are still in
work after 13 weeks; of those who leave from options, the figure varies
between 60 per cent and 40 per cent go into jobs, the figure falls a bit if
you include the Follow Through period, where the passage of young people into
jobs is lower. But the figure of 58 per cent leaving the New Deal and going
back onto benefit simply does not tally with any of the published figures;
but, again, if the Committee wants to engage in correspondence about that then
I am happy to give you a detailed analysis of the outcome figures.
Chairman: Thank you for the offer.
Mr Brady
14. I was just a little concerned, Minister, about the figure that
you quoted of less than œ4,000 per job created, because my understanding, from
the Government's own figures, is that something like œ1.5 billion has been
spent on the New Deal for the Young Unemployed, to date.
(Tessa Jowell) Yes, but that will be spent by the end of the Parliament.
15. Will be spent by the end of the Parliament; the figure to date
would be?
(Tessa Jowell) The figure to date, if you include the money that has now
been committed in the Budget, is a bit over œ1.4 billion, but not all of that
has yet been spent; the figure to date, I think, is œ800 million.
Mr Brady: So œ800 million has been spent to date. The Prime Minister
told the House of Commons a month or so ago that 200,000 people have been
delivered into unsubsidised jobs, and yet we understand that 40 per cent of
the New Deal jobs last for less than 13 weeks, and that does not add up to the
figure that you suggested.
Chairman: I just wonder; the 60 per cent figure was really quite
surprising to me, that 60 per cent actually are going into jobs from the
Gateway. Now, as I understand it, the other figure applies to the options,
if I may just address Graham, and this is perhaps where the cross purposes is
coming in. I do not know whether perhaps the Minister or officials can
clarify this particular point - - -
Mr Brady: I think it would be helpful to have some clarification.
Chairman
16. Either now, or by - - -
(Tessa Jowell) Can I just be clear what the figure at issue is?
Mr Brady: The figure at issue is your figure which you are suggesting
is the cost per job created, because it does not seem to add up, given that
if there have been 200,000 jobs created to date and yet - - -
Mr Twigg: They are not being created, they are not creating jobs.
Mr Brady
17. The point is, we were talking about a figure per job created, and
whether or not it is a job-creation scheme there is a cost per job created.
(Tessa Jowell) Can I just be clear about terms, Stephen; let me just be
clear about this. The New Deal is not a job-creation programme, the New Deal
is a training and employability programme, so the money that is spent is money
which is spent on training, personal support, jobs search and the Follow
Through help that young people need in order to get them into jobs. They go
into jobs which are there because we have a buoyant labour market, because we
have a stable, macroeconomic set of circumstances, which means that business
has the confidence to invest and create new jobs, which is why we have 900,000
more people in work than when we were elected.
18. Then why do 40 per cent of them last for less than three months;
why do 40 per cent of the jobs last for less than three months?
(Tessa Jowell) No; three-quarters of the jobs last for more than three
months. Well, that is very simple, because you are talking about young people
for whom, many of them, it will be their first job; they decide to move from
one job to another job. About 58 per cent of those who move within the
13-week period, the 25 per cent who are not in the job they left for, after
13 weeks, about 58 per cent of those have gone onto another job. That is what
you would expect from a dynamic labour market.
19. But all of the evidence suggests, Minister, that about 40 per
cent of the people involved in the scheme would have found work without the
scheme anyway during the time period?
(Tessa Jowell) Where is this 40 per cent figure coming from?
20. This is the evidence which is generally the case found across
schemes of this sort where they have been tried in the world, the evidence
that we have taken when we looked at the New Deal before. So if 40 per cent
would have found jobs without the New Deal, 40 per cent of those who find jobs
with the New Deal the job lasts less than three months, that is a very small
percentage who are getting long-term, subsidised jobs out of it; it is the
same jobs?
(Tessa Jowell) With great respect, this is using figures with a pretty
bold sleight-of-hand. The fact is - the fact is - that the independent
research commissioned from the National Institute of Economic and Social
Research has made absolutely clear that the New Deal has been instrumental in
taking 30,000, at the time of the survey, let me be clear about this, at the
time of the survey, which was between April 1998 and April 1999, the end point
of which, I think, there were about 110,000 young people come off benefit and
into work, the NIESR research estimated that about 30,000 of those were pure
New Deal effect, and that the New Deal was responsible for a 40 per cent
reduction in the rate of long-term youth unemployment, which since the
election has fallen by 60 per cent. So we are not claiming that all the
reduction in youth unemployment is due to the New Deal, but independent
research has confirmed that a substantial part of the reduction in long-term
youth unemployment is due to the New Deal.
21. But youth unemployment has fallen more slowly, Minister, since
the New Deal was introduced than it was falling before the New Deal was
introduced under this Government, it is falling more slowly since May 1997
than it was falling before May 1997. It is very difficult to find objective
evidence which could clearly suggest that the New Deal is having a decisive
effect in changing the levels of youth unemployment?
(Tessa Jowell) No. Again, as a matter of fact, youth unemployment since
May 1997 has fallen by 60 per cent, and it is important, here, I think, to
distinguish long-term youth unemployment from youth unemployment generally,
and when looking at the New Deal to draw a very clear distinction between the
stock, the number of long-term unemployed people that were receiving benefit
at the time that the New Deal was established, and the flow of young people
into eligibility for the New Deal at six months, which is running at the
moment at about 15,000 a month.
Mr Brady: I would like to come back to this, Chairman.
Chairman: Yes, by all means. I am going to have to move on, because we
have got a long agenda here and these are all very interesting and very
important questions which are being raised; but can we move on to Ian.
Mr Pearson
22. Thank you, Chairman. Minister, can I say, first of all, that in
a former existence, in all probability, I would be bidding to do some of the
evaluation work on the New Deal, and my judgement certainly is that the New
Deal for Young People actually is producing significantly better results than
programmes like Training for Work, Employment Training and some of the other
programmes that have been run. And I think that, collectively, in economic
development terms, a great deal has been learned over the years and put into
the New Deal. My question is more of a political one. With the honourable
exception of your Department, the track record of Government Departments
offering jobs to New Deal clients is pretty poor, to say the least, and it is
not really any better in Government Agencies or local authorities. If we are
not going to be enthusiastic about the New Deal, why should we expect private
sector employers to be, and what are we doing to increase participation of
public sector employers in the New Deal?
(Tessa Jowell) Let me take the question of the Civil Service involvement
in the New Deal and the public sector more generally as two separate points.
Yes, we do want to increase, across the Civil Service, the participation of
young people in the New Deal, or Departments in taking on young people who are
on the New Deal. I started rather with your view, that somehow not enough was
being done, and the Employment Service is a bold exception, but if you look
across Departments the figure is disappointing; having said that, there is a
lot more that every Department can do. But we would expect about 2 per cent
of employees across the Civil Service to come from the New Deal, in order to
meet sort of parity, if you like, with the world outside; in fact, the figure
at the moment is about 1.2 per cent, but that is not spread consistently
across all Departments. And recently Mo Mowlem and I wrote to all members of
the Cabinet, looking at their individual performance and urging them to do
better, and we had some very useful feedback, which, in the cases of some
Departments, identified the difficulty that they had had, either in getting
young people who were suitable or providing them with appropriate support once
they had actually started. So there is a will across the Civil Service to do
more, and I hope that in the months ahead we will begin to see results, and
perhaps when I come in front of you next time I will be able to tell you about
the further progress which has been achieved. But we are very much on the
case for this, as is Mo Mowlem, and very much keeping all the Departments in
our sights, and urging them to consider young people on the New Deal as
potential recruits to some of their more junior vacancies. Shall I turn to
the public sector generally, or would you like to come back on that?
23. Just specifically on that, have you considered encouraging other
Departments to set targets for the number of New Dealers that they recruit;
and do you want to get to 2 per cent, is that a target that you think is
reasonable for them to achieve, and over what timescale?
(Tessa Jowell) There is a balance to be struck here. We want New Dealers
in the Civil Service to get jobs on the basis that New Dealers would wherever
they were getting jobs, and not to do anything which suggests that there is
special treatment extended to New Dealers; so I think that is why I would be
reluctant set a target. What I would rather do is keep the performance of
Departments under review and look at those that are not taking what appears
to be their fair share and understand the reasons why; and I think that the
latest correspondence that we had with Departments was very helpful in
beginning to identify some of the obstacles that one or two Departments felt,
and I think that, in direct discussion with the Job Centres concerned, we have
begun to tackle some of those problems. So I would prefer not to set a
target, I would like to keep it under review. Shall I turn to the public
sector more generally?
Chairman: Yes, please.
Mr Pearson
24. Yes, that would be helpful.
(Tessa Jowell) Because, again, also, there are great public opportunities
for New Dealers in the public sector. Under the auspices of the New Deal Task
Force, Sir John Harman led a small task force, looking specifically at
increasing the participation of the public sector, and particularly local
authorities, in the recruitment of New Dealers, and they produced, I think,
some very useful recommendations; the report has now gone to every local
authority. And recently we distributed a joint Employment Service/Local
Government Association leaflet on how to use the New Deal and the benefits
that the New Deal can bring to the delivery of local authority services. So,
again, I think that we have got, in Sir John's report, some practical
recommendations which rely very heavily on leadership and selling the message
throughout the organisation, some very valuable recommendations that currently
we are in the process of implementing.
Judy Mallaber
25. Before raising the question, could I just comment that if there
are going to be future questions on statistics I would find the exchanges
easier to follow if we could have some understanding of the basis of the
statistics in the questions as well, because I have found questions up to now
quite hard to understand, so I appeal to my colleagues to let me know that.
The particular question relates to the various option providers. Very
recently, Minister, you said that you would be bringing forward proposals to
be able to show which option providers are helping young people and which are
failing them. Are you in a position to say how many option providers you are
contracting with, and how you are measuring, or intend to measure, their
performance, and also what proportion of those option providers have not had
their contracts renewed to date as a result of poor performance?
(Tessa Jowell) We are about to embark on a new round of contracting with
providers, and, as I am sure you understand, there is a huge range of
providers as a reflection of the very wide range of support that is provided
to young people on the New Deal; the estimate is that we are in the process,
or will be shortly in the process, of renegotiating something like 2,500
contracts. Now, in relation to the performance of providers, at one level the
fact that nearly 200,000 young people have left benefit and are now in work
is a tribute to the contribution that providers have made to that. We are
developing the kind of performance tables that you suggest, and those will be
available in June, the work is under way on those at the moment, and is under
way as part of the new contracting round which is about to begin. So the
short answer to your question is that work is in progress, and I would think
that round about September we would be in a position to give you a fuller
analysis of successful and less successful and failing providers.
26. And will that also include some analysis of why certain ones were
successful and others less so?
(Tessa Jowell) Yes; that is a very important part of tracking the
performance across the Units of Delivery. As you know, there are 144 Units
of Delivery that cover the country, and they commission the help, support,
from a range of local providers, and obviously it is the accumulated impact
of that help that determines how successful the Units of Delivery are in
meeting the targets that we set them. So, yes, analysis will be very
important indeed. The analysis will be very important, but so, too, will be
recognising the limits of the data that we can make available, for the reasons
that I outlined in response to Patrick Nicholls' question.
27. Thank you. Can I ask you about one particular part of the option
providers and the Environmental Task Force. As you have said previously,
fewer people enter employment from that option than from any of the other
options, and when you and I were at a meeting at which we met a number of
environmental organisations, that were either those that were the most greatly
involved with it and those that had not been involved at all, there was quite
a variety of comments that were made of very different attitudes of young
people to those options. What proposals have you got to improve the
performance of that option? And, very specifically, if I ask this now; as a
Committee, we have looked quite frequently at Intermediate Labour Market
schemes, and that has been one possible option in relation to transforming the
Environmental Task Force option, to provide a wage on that option, rather than
it being seen as potentially the fourth and least interesting one of the
options?
(Tessa Jowell) The first point, I think, is to say that, where we know
the destination that a young person goes to, about 42 per cent of those on the
Environmental Task Force go into work. Of course, we want to improve
performance, we want to improve performance all the time, and I think it is
important to recognise that improving performance is, in part, recognising the
progressive levels of disadvantage among the young people coming onto the New
Deal, but it is also about getting providers to raise their game in response
to that. And, in fact, yesterday, the Secretary of State and I met Groundwork
precisely to discuss how we could strengthen the Environmental Task Force
option, and particularly how we might build on their development of
Intermediate Labour Markets, which have seen quite a substantial increase in
the proportion of young people going into work, going into jobs, as a result
of the period in their Intermediate Labour Market. And these have been very
important, from their account, in some of the regeneration of the coalfield
areas, where there has been a lack of demand, there has been a lack of demand
for jobs, and the Intermediate Labour Market has provided the opportunity of
work for people in those circumstances. In addition to that, we are also
changing the way in which payments are made in the Environmental Task Force
option to providers, in order to reward job outcomes with a larger share of
the money allocated, so that new candidates, and we will be setting this in
the new contracting round, will have 20 per cent of their money withheld
against job outcomes for the young people concerned. But we are also looking
at the possibility of giving young people experience both of the voluntary
sector and the Environmental Task Force, the opportunity for more work
experience, as part of the Environmental Task Force. So, that meeting that
you and I attended was the beginning of what has been quite a long process,
in discussion with providers and those in the Employment Service, of looking
at how we can make the Environmental Task Force more work-focused and improve
its performance in getting young people into jobs.
Chairman
28. Can I just pursue that one a little bit further. We were really
impressed on some of our visits by the Intermediate Labour schemes, and the
attractiveness of them was because they all had a proper wage and they looked
very much more like a proper job than the Environmental Task Force options in
some availabilities and also the organisation. Have you considered doing more
of that, so that those options are more attractive to young people?
(Tessa Jowell) We have allocated some money to what we have called an
Innovation Fund, which I think now has about œ9.5 million in it, and part of
that money is being spent on developing Intermediate Labour Markets, for
precisely this purpose, looking at how we can improve the outcomes for young
people into work, and there are some very successful examples of where this
works, and, clearly, we are very keen to build on that, and perhaps to give
greater flexibility in the light of the local labour market. So, yes, we are
in favour of that kind of diversity, we are in favour of developing different
models of Intermediate Labour Markets; but I think the only cautionary note
I would sound there is that we are very, very concerned to ensure that an
Intermediate Labour Market does not become tantamount to a job-creation
programme on which a young person would spend some time without then being
helped to get into a sustainable job at the end of that time.
29. The evidence that we received from Intermediate Labour Market
options were that their 'placement into job' rates, particularly the most
disadvantaged people, were really pretty attractive, frankly; and I know the
Department have had this reluctance, that there may be evidence that
Intermediate Labour Market options were retaining people too long in options
rather than placing them into jobs, but that has not been our experience, if
I may say so.
(Tessa Jowell) Can I give you an assurance on that, that there is
absolutely no reluctance to develop Intermediate Labour Markets. But the
question has to be asked, that if 50 per cent of people who have been on
Intermediate Labour Market then move into work, what happens to the 50 per
cent who do not, and what is necessary in order to improve the performance and
make them more work-focused and to avoid what, for the best reasons in the
world, is sometimes the temptation to become tantamount to a small employing
organisation. So what we are concerned to do is to develop models which are
robust and do provide the value added that Intermediate Labour Markets at
their very best can deliver for disadvantaged people.
Chairman: Thank you.
Mr Pearson
30. I just wanted to focus a little bit on the Full-Time Education
and Training option, and to ask you a question, to start with, about high
drop-out rates; they do seem to be pretty high at the moment. What is the
Department saying about why these rates are so high, and how are you
addressing the issue to try to improve the number of people actually staying
on and getting qualifications?
(Tessa Jowell) The first thing to say on this is that the reason that a
lot of young people drop out of their training courses is because they go into
work, and the best evidence that we have, and, I will tell you, we are as keen
as no doubt you are to track young people as far as we can, in order to
identify, to be able to put outcomes against maximum numbers; but the
important thing to remember about the New Deal, and it goes back to where we
started, is that it is an employment programme, it is a programme about
getting young people trained and into work. There is a dilemma in that, and
the dilemma is this, that some of the young people, as I have already
indicated, who come onto the New Deal are young people who are functionally
illiterate and innumerate, and so their long-term employability - their long-
term employability - is likely to be less than if they became literate and
numerate to the level that we specify, NVQ Level 2. But the New Deal is a
programme about getting you into work, and at every stage, whether it be
Gateway, option, Follow Through, the message from the personal adviser and all
the support that is provided is about getting into work. So I think it is
important to be clear that it is not that they drop out of their full-time
training course, some may drop out, go off benefit and, effectively,
disappear, but a greater number leave because they then go into work. And,
again, the indications are that, when we look at the numbers, what actually
happens to young people about whom we know the destinations, and these are GSS
figures from February of this year, 58 per cent leave F-TET and go into jobs,
18 per cent go onto other benefits, 24 per cent go to other known
destinations, which is a very long list, that ranges from pregnancy to prison,
- - -
31. It is probably not helpful, lumping the two together, I think.
(Tessa Jowell) With many intervening options; but it is a big umbrella,
that. And about 44 per cent go to destinations which are unknown. And all
the survey evidence that we have done, and precisely in order to update our
information on this point we are undertaking further surveying of young people
who are on Full-Time Education and Training in order to make sure the figure
is still valid, but all the evidence is that about 57 per cent, at least
57 per cent, of those who go into unknown destinations, in fact, have gone
into work. It is difficult, I understand the difficulty that the Committee
has in getting to grips with all these figures, but the important thing, that
perhaps picks up on Judy Mallaber's point, is that, the figures that I am
drawing this evidence from, Government Statistical Service figures, they are
published figures, and, I hope, in that sense, can give us a consistent basis
for our discussion.
32. I am just trying to get behind some of the figures. There is at
least some anecdotal evidence that people on the option actually feel as if
they are being forced into jobs earlier, whereas they all prefer to stay on,
get a qualification and maybe get a better quality job later on. Have you
picked up some of that, as part of your survey evidence?
(Tessa Jowell) We will have a second stage in the qualitative tracking
research that is being done with young people, which will be published in the
autumn, and that will give us a better flavour for precisely that kind of
issue. But that is a matter really for negotiation between the young person
and their personal adviser, and if it is clear that, by finishing, completing,
a vocational course, and the courses that young people undertake on F-TET are
overwhelmingly vocational courses, their employability would be improved then,
of course, they should be allowed to continue. But the key thing is that it
does not become an excuse for not getting a job.
33. So what you are saying the Government policy message is is that
nobody should be forced to come off their full-time education and training
course and that that should be sacrosanct; if they want to stay on, it - - -
(Tessa Jowell) You would not expect a Minister to come to a Select
Committee and offer an unqualified injunction like that. The message is that
the New Deal is about getting young people into work and providing them with
the help, advice, training that they need in order to get into work.
34. Okay; so are personal advisers pressurising people on the full-
time option to get jobs early, rather than qualify?
(Tessa Jowell) I would be very happy to receive any evidence that that
is the case and to look at the individual circumstances; but, certainly, I
have not been informed of any robust and consistent evidence that that is the
case.
Mr Pearson: Thank you; that is helpful.
Mr Brady
35. If those 57 per cent go into jobs, what proportion of those
57 per cent go into jobs that last more than 13 weeks?
(Tessa Jowell) This is based on survey evidence, in order to find out
what happens to people who go to destinations and we do not know what they
are; and, as I say, the survey evidence is that 57 per cent of them go into
jobs. I do not think that at this stage we have refined that survey evidence
to say what proportion of them are in what would be described as sustained
jobs.
36. So they might be very short-term jobs?
(Tessa Jowell) Lots of jobs in our labour market now are very short-term
jobs, and for many of these young people getting a short-term job is a very
good thing for them, because it means that they start being in work, they stop
being on benefit. But, certainly, when we complete the further survey of
unknown destinations we may be able to shed further light on the duration of
the jobs of people in unknown destinations.
Mr Twigg
37. Minister, can I take us back to something which you touched on
earlier, and which we also discussed when you were last before the Committee,
which is the experience of the most disadvantaged groups with the New Deal
programme and the impact that it has had on their employability. A recent
survey suggested that people from groups such as ex-offenders, the completely
unqualified, drug and alcohol users, had found that the New Deal had increased
their employability far less than was the case for the average. I know you
touched on this earlier on; could you just perhaps give your view as to why
the New Deal has not been more effective in assisting those most disadvantaged
groups?
(Tessa Jowell) I think the report that you are referring to is the New
Deal Task Force report, the group that was chaired by Victor (Adebuwani ?).
38. Yes.
(Tessa Jowell) And it did not say that the New Deal is not helping the
most disadvantaged; the point it made was a slightly different point, which
is that the most disadvantaged clearly need most help from the New Deal, and
I think that it is important to make that distinction.
39. I certainly was not suggesting they were not being helped, but
that their employability was not being enhanced to the same degree as other
people on the New Deal, which I think is what the report said?
(Tessa Jowell) Again, I am not quite sure that that was exactly the point
that it was making. But let me just say that one of the ways, as you know,
that we recognise the particular problems of people like ex-offenders is to
provide early entry to the New Deal, so young people do not have to wait for
six months before they qualify, and I think that the New Deal is becoming
better at focusing very particularly on the kind of help that those young
people need. And I have had a number of meetings with Victor (Adebuwani ?),
who has very much led the Task Force's work on this, because I think that
tackling the kinds of issues that, for instance, the people that Centrepoint
are working with, the sorts of issues that those people are facing, will
become increasingly important for the New Deal, as the stock of long-term
unemployed young people is virtually exhausted and we are dealing with a flow
of increasingly disadvantaged young people onto the New Deal. And we have had
quite a lot of discussion about how we can best help these young people; it
is something that we hope to address in the context of the spending review.
And it might help if I just say that part of the discussion that I have had
with Victor is about the young people who face these severe disadvantages who
are eligible for the New Deal, in other words, they are receiving Jobseeker's
Allowance, they are available for work and actively seeking work, and I think
that, Centrepoint, for instance, about 65 per cent of the residents fall into
that category. But then, of course, there is another population of young
people, who are potentially eligible and potential beneficiaries of the New
Deal, who do not meet the labour market requirements for the New Deal, and I
am very concerned that we do more for them; and some of them are younger, they
are 16-18 year olds, they are the 160,000 young people who are not in work,
they are not in training, they are not at school. And if we do not do
something to help them and to begin to address their lack of basic skills,
their lack of social skills, then these are young people who are going to bump
around the edge of our society for the rest of their lives. So we are looking
at that in the context of the spending review and looking at what extra help
we offer, what kind of programme we might develop, that is almost like a
pre-New Deal programme for some of the really most disadvantaged young people,
who simply would not make it in the New Deal as it is currently constructed.
Because, the New Deal as it presently stands, in order to get to the starting-
point, you have to be able to get to the Job Centre, you have to be able to
keep your regular appointments with your personal adviser, you have to
undertake a basic skills course, if necessary, you have to turn up every
morning for two weeks to do your soft skills course, and so forth, the demands
are intentionally quite intense. So that is how we are looking at this for
the future, while, at the same time, through what is called the Client
Progress Grid, improving the tracking of young people through the Gateway
period, and, very particularly, undertaking a very rigorous assessment of
their needs right at the beginning of the Gateway, so that the programme of
help they are offered is the programme of help that they most need and that
they are most likely to benefit from.
40. I think what you have said about the 16-18s is very interesting.
I do not know how much you can go into further detail today, but does this
interface at all with the proposals for the new services for young people and
connections, or is this something which is separate from that?
(Tessa Jowell) Yes; the important thing will be that all these services
connect, but we have got to pull these young people back into the mainstream
and find them where they are and try to put in place the kind of support which
is going to repair them enough so that they can begin to stand a chance of
benefiting from the New Deal.
41. Moving on to something that is connected to what we have just
been talking about, you yourself, earlier on, referred to what you said at the
previous Committee meeting, and I quote: "we have to aspire to saying that
nobody will leave the New Deal for Young People illiterate or innumerate, and
that is a very bold ambition." And you have said a little bit already about
the numbers of the young people who are not even at NVQ Level 2. Can you tell
us a little more about the progress that has been made in delivering on what
you said to us in January, when you attended, and how far you see the New Deal
as the ideal vehicle for delivering these goals on numeracy and literacy and
how far it must be achieved through other work of the Department, or indeed
of other Departments?
(Tessa Jowell) If I can just start by telling you what has been put in
place, and what has been put in place is really a programme that, for the
first time ever, systematically screens young unemployed people in terms of
their level of basic skills; so that, as I have said, when a young person
joins the New Deal they are automatically screened in order to assess their
basic skills, unless they come along with evidence like a GCSE certificate,
for instance, which shows that they have got English and Maths to NVQ Level 2.
The second thing is, this is, as you will understand, a very sensitive area
for a lot of young people, and even more so for adults, many adults live their
lives on the basis that they have to conceal the fact that they cannot read
and write properly, and become very adept at concealing that. And so what we
have also done, since I last appeared before you, is to put in train special
training of a thousand personal advisers, with the Basic Skills Agency, in the
identification of gaps in basic skills, in order that they approach this, with
young people, with the degree of sensitivity that means that young people are
likely to want to co-operate with the programme, recognise that they need more
help and then accept the help which is on offer to them. So I think that that
is a very important step forward, and what was previously a rather random
process is now a systematic and automatic part of the Gateway. And, against
this, it is worth just saying that 41 per cent of the young New Dealers on the
Gateway, 41 per cent, had left full-time education by the time they were 16,
22 per cent had reported, themselves, basic skill problems. And, as I told
you last time, I think that the most shocking figure, in terms of capturing
this lack of literacy, is that an estimated 40 per cent of young people on the
New Deal Gateway cannot read the basic instructions on a medicine bottle; it
is equivalent to not being able to use a telephone directory, look up
information in the Yellow Pages, take down a telephone number. And so, if you
look at the kinds of jobs that are available in the modern labour market, you
can see how many jobs those young people are excluded from, and therefore why
we place such enormous emphasis on the importance of basic skill acquisition.
It is about employability, but it is also about tackling the persistent risk
of social exclusion that comes with illiteracy.
42. Do you have an estimate of what the total cost could be of
achieving the goal that you have set?
(Tessa Jowell) The additional investment in the Gateway is, I will give
you the figures - I will come back in a minute, and I will give you the
figures for the Gateway. But when I referred to the costs, the cost per
person for the New Deal, and indicated that the costs were likely to rise, the
intensification of the Gateway is likely to increase the cost, I think, by
about œ400 a person, a substantial element of which will be help with basic
skills. If I can just add to this point, I think that we are also likely to
see the proportion of young people who go on to Full-Time Training and
Education basic skills courses also increase.
Judy Mallaber
43. Can I ask, because this is important, how much we know about how
easy it is to get those people to go in for basic skills training, because,
certainly, previously, we have had evidence of people not turning up to all
kinds of providers, not just on literacy and numeracy and Gateway, because
maybe they find it hard to turn up, or it is too intimidating, and what
success are we having in getting people there and getting them engaged in
those courses?
(Tessa Jowell) Let me ask Matthew Nicholas to deal with that question,
because these are daily transactions in Job Centres and he can share a bit of
that experience with you.
(Mr Nicholas) I think we are seeing exactly the same position as we have
seen with young people's attendance at some other providers; because it is
such a sensitive issue and they are reluctant to face up, often, to the need
for literacy and numeracy, and because it reminds them of going back to
school, at some stage, it is quite difficult negotiating with them to turn up.
So it is a very difficult and sensitive area, and that is why we are training
our advisers with the Basic Skills Agency; so it is not one of the easier
areas. I do not have any statistics to show what proportion of people are not
turning up. It requires much more sensitive handling, I think, than almost
any of the other referrals to Full-Time Training and Education.
(Tessa Jowell) I would just add to that, that, because we have moved,
with the intensification of the Gateway, from what had been a rather more
random process of basic skills screening to one which is systematic, this is,
again, an area, I think, that is a question that will be easier to answer at
the beginning of next year, as compared with now, when we have had six months'
experience of running the intensive Gateway. But it is a very good example
of an area in which we would look for further improvement; if we found that
young people were not turning up for their basic skills courses, we would want
to put in place further help, further measures, in order to increase the
likelihood of their turning up. And one of the areas in which, increasingly,
we do want to build feedback, given that we have now got nearly 200,000 young
people who have had experience of finding work, helped by the New Deal, is to
build young people's experience much more directly in the design and
development of the New Deal.
Chairman: Can we just touch on ethnic minorities.
Mr Twigg
44. Another area which has been much commented on, and which I know
you yourself commented on recently, is the poor experience of many black
Caribbean clients with the New Deal. Could you tell us just something about
your assessment of the different experience of non-white ethnic minorities,
in particular black Caribbean young people, and what is going to be done to
improve that?
(Tessa Jowell) I am happy to provide the Committee with the latest
figures both for ethnic minority participation in New Deal and the rates of
movement from the New Deal into jobs. Stephen is absolutely right that there
is not a single consistent pattern across all ethnic minorities; the
experience of young Chinese New Dealers, Indian New Dealers, is much closer
to the experience of white New Dealers than is the experience of black
Caribbean young men. But there are some optimistic signs; let me just give
you the optimistic sign, before I move back to the general points of strategy.
If you look at the Units of Delivery, where there have been very high levels
of improvement, one, covering part of my own constituency, in Southwark, has
shown a substantial improvement over the last year, and that is a Unit of
Delivery which covers a very large number of, typically, New Dealers in
Southwark and New Dealers in Lambeth are young Caribbean men; and so we are
beginning to make progress. One of the things that we are doing, which I
think the Committee might be interested in, and this takes us back to the
discussion about intermediate organisations, is working with what was an
American-based organisation, called Wildcat, who have been quite successful
in the development of what is called a Welfare to Wall Street programme, and
they are working with us in beginning to open up opportunities for young
people from Tower Hamlets, from the Boroughs south of the river, open up
opportunities in the financial services sector. There is no reason, but at
the moment it does not happen that young black men from Lambeth and Southwark
get jobs in the Bank of England, or Morgan Grenfell, or any of the other large
City financial institutions; they are facing skill shortages and difficulties
in recruitment. And what we are looking to do is to put together, with
Wildcat, a sort of Intermediate Labour Market which will be demand-led, very
much focused on the requirements of employers, that will look to provide young
people with the training that these institutions are looking for in their new
recruits; and I think that is one way, one very practical way, in which we can
move things forward. There is also some very good work, looking at what more
can be done for young Caribbean men, being done by the Employers' Coalition,
that covers London, which is under the very energetic leadership of the Chief
Executive of Coca-Cola, Chris Banks. And I recently had a presentation of the
obstacles to employment for young men in Southwark, and, as I say, it is a
combination of lack of basic skills, lack of confidence and lack of
aspiration, and much less than you would expect evidence of employer
discrimination. Which is why, I think, we have seen the improvement in the
performance of the Unit of Delivery, and also why the Wildcat that I have
described briefly to you may well be a very productive way of addressing the
particular labour market problems that ethnic minorities face.
45. Do you think this process itself has helped to challenge employer
discrimination?
(Tessa Jowell) I think that it has. The survey that the Employers'
Coalition did, which has not yet been published so I had better be careful
what I say about it, was a survey of young people themselves, and what it
indicated was that young people themselves did not believe that employer
discrimination was an obstacle; now that is slightly different, be clear about
that, from saying that it is not an obstacle. But I think that it will help
us tease out what is a very complex area. When we announced the last set of
New Deal figures, I did so in Sparkbrook, in Birmingham, where, again, the
experience is slightly different, the ethnic population is quite different,
overwhelmingly young Asian men, and I was very impressed there by the extent
to which the local Unit of Delivery had put in place some very imaginative
provider facilities that very directly met the aspirations and ambitions of
the young men that I had the chance to talk to. But, just to deal more
generally with your point, we have set parity of outcome for young people from
ethnic minorities, regardless of ethnic origin, and white New Dealers, as one
of our Core Performance Measures, and, although we have eight Core Performance
Measures altogether, there are two we attach greatest importance to, at the
moment, one is the improvement in the rate of young people into work, the
second is achieving parity of outcome for young people. The one which is now
increasingly important is the Core Performance Measure in relation to
retention, and we are doing some piloting of the impact of that Core
Performance Measure with the Employment Service at the moment.
Chairman
46. Minister, you might be interested that we hope to see the work
of Wildcat when we go to the States in mid July. So we will come back and
report for you on that.
(Tessa Jowell) We are working with them, both in relation to the
financial services sector and also IT, so I think that it will be interesting
to hear your reactions to the work they do.
Mr Brady
47. I am afraid I am going to return to statistics, but I will be
careful to name my sources, for the benefit of Judy Mallaber; first of all,
the green budget produced by the Institute of Fiscal Studies, which put it
really quite succinctly, where it said: "A clear trend of increasing
employment and falling unemployment for 18-24 year olds has been in place
since 1994, long before the introduction of the New Deal." And the figures
that lie behind it, which are sourced from the Office for National Statistics,
the NOMIS database, show that from May 1993 to May 1997 there was an outflow,
so I am not confusing stock and flow, I want to be very clear about that, I
am talking about flow, there was an outflow of long-term youth unemployment
of 4,916 a month, on average; from May 1997 to April 1998 the flow was 4,079
a month; and from April 1998 to the present day the average flow has been
2,771 a month. So that does lead to the conclusion that long-term youth
unemployment was falling more rapidly before May 1997 than since, but, perhaps
more disturbingly, from the point of view of the Government and its New Deal
scheme, that it has been falling less quickly since April 1998 when the New
Deal was put in place, than it was before April 1998 when the New Deal was put
in place. Why?
(Tessa Jowell) First of all, the New Deal for Young People was piloted
for the first year of the Government; it became a national programme and
picked up as a national programme over the subsequent two years. Chairman,
let me say that I think it would be an extremely good idea if we were able to
reach a definitive conclusion about these figures. I have not seen the IFS
study, and, frankly, I do not think it is reasonable to comment on an aspect
of the study which is quoted - - -
48. Minister, I am using Office for National Statistics figures; that
is what I would like you to reply to?
(Tessa Jowell) Yes; on the ONS figures, the independent research, and you
do not have to take my word for it, the independent research that the
Government commissioned, or the DfEE commissioned, in order to evaluate the
New Deal, showed conclusively that in the first year of the New Deal's
operation long-term unemployment among young people fell by 40 per cent, as
a result of the New Deal. The figure now is close to 60 per cent; not all of
that is directly attributable to the New Deal, but the conclusions that I hope
the Committee will rely on is the independent analysis that has been conducted
by NIESR. We have asked them to update their assessment of the macroeconomic
effect, and we hope that those figures will be available to us in the autumn.
But it is beyond dispute - it is beyond dispute - that long-term unemployment
among young people has fallen by 60 per cent since May 1997, and that on the
independent assessment of the NIESR 40 per cent of that reduction is a New
Deal effect.
49. So the figures we have given you, Minister, are just plain wrong?
(Tessa Jowell) I would like to look at the figures, I would like to look
at the date, and all the rest of it. I am giving you, as objectively as I
can, the assessment of the impact of the New Deal on unemployment among young
people since May 1997, and I think I have done that.
Mr Brady: I think that means you say the figures are wrong, Minister.
Chairman
50. I think we might be able to help the Minister here, because we
have decided, earlier on this afternoon, that we are going to go into a very
thorough-going examination and evaluation of the New Deal two years on; we
have done several preliminary investigations, as you know, as it has
developed, but, as a Committee, we will be going into the evaluations that
both you and other organisations have done, Minister.
(Tessa Jowell) Yes; and can I just be quite clear, because I was not
clear whether Graham Brady was drawing distinction between all unemployment
among young people or long-term unemployment. The figures that I am quoting
are for long-term unemployment, which is defined at six months.
Mr Brady: The figures that I am quoting are for long-term youth
unemployment.
Mr Twigg: It must have been very high in 1993 then.
Mr Brady: It was, but it came down very rapidly after.
Chairman: Extremely high. We look forward then to the clarification of
all of these issues with baited breath, I think. Judy: personal advisers.
Judy Mallaber
51. Throughout, we have all said that personal advisers are a pivotal
part of the success of New Deal; do you think that the fact that there have
been increasing caseloads on the New Deal for Young People has compromised the
effectiveness of personal advisers? And maybe you could comment on, when we
took evidence from the Permanent Secretary the other day we had, it must have
been, was it, the DfEE Estimates, or Annual Report, which, within it, said
that the levels of sickness in the Employment Service were higher than for
DfEE in total, and I just wondered if you would like to comment on the
effectiveness of personal advisers and the pressure that is on them in terms
of their heavy workload?
(Tessa Jowell) First of all, the qualitative study, which is tracking
6,000 young New Dealers, shows overwhelmingly, as your question suggests, that
what young people value most about the New Deal is the relationship that they
have with their personal adviser, and that, indeed, the personal advisers
themselves feel a great sense of increased job satisfaction as a result of the
personal contact they can have. Now, in terms of caseloads, the caseload of
personal advisers varies from anything between 40 to 90, so there is clearly
a range there, and the intensity of contact that young people have with their
personal adviser will be determined very much by the personal adviser's
assessment of their needs. The qualification level for personal advisers is
set at NVQ Level 3, and already about 75 per cent of personal advisers are
qualified at that level. And what we are also putting in place, and I have
discussed with the Head of the Employment Service, is an opportunity for
career progression as a personal adviser, so that the most highly trained and
experienced personal advisers will work with the most disadvantaged, most
demanding young people. So, in broad terms, the personal adviser, as a sort
of new innovation, with the New Deal, has proved to be very successful, both
for the young person and also in terms of the job satisfaction of personal
advisers themselves. To turn to, two issues, one in relation to turnover and
the second in relation to sickness; to take turnover first. The picture is
highly variable in different parts of the country. I think that, from memory,
turnover rates in the north of England are the lowest, in some Job Centres at
about 4 per cent, whereas in the London area they can run as high as 25,
27 per cent; and, obviously, if you have turnover running at that sort of
level, it does create a sort of disruption in the quality of service that you
can provide. So we are keen and it is one of the measures that I explore very
carefully every time we do the performance review with the Employment Service,
is what steps are being taken to reduce turnover, and we certainly think that,
by increasing opportunities for career progression for personal advisers, that
is one practical step that we are taking. Again, on sickness rates, I would
be happy to confirm this in a subsequent letter to you, but my recollection,
from the latest survey of Employment Service staff, is that sickness rates
are, in fact, beginning to come down; and, you are right, they are an
important indicator. And, I suppose, and I know my DfEE colleagues will not
take offence at this, I think that it is a characteristic of front-line,
sharp-end, however you like to describe them, services that they tend to be
more stressful and that sickness rates tend to be higher, and the management
of that Service therefore needs to take account of that. And I think that the
Employment Service are very alive to that, and the latest staff survey, which
shows very high job satisfaction rates, in the face of an increasing range of
demands for modernisation of the Service, shows that that management strategy
is working.
52. The other aspect is that, earlier in your evidence, you said that
one area you were bidding for money from the Treasury for, for the next three-
year spending review, was the Follow Through period, where you highlight that
that is an area where there has not been the same work put in, in relation to
personal advisers. Can I assume, from that, that that is a bid which would
enable more personal advisers to be taken on and that will be specifically
working with people over that period?
(Tessa Jowell) I think it probably would mean more personal advisers
being take on, but it would certainly mean more personal adviser contact with
young people in Follow Through. And, again, and this is obviously part of the
discussion with the Treasury, but the judgement we have got to make is how you
maximise the useful contact which is more likely to get the young person into
work and avoid what is referred to as the dead-weight cost; in other words,
invest extra help which has no material benefit in terms of the increased
likelihood of the young person getting into work. The challenge is to create
more structure in the Follow Through period, a stronger work focus and higher
levels of support for young people to get them into work.
53. And would that also include the work, the use of mentors; and how
successful and widespread has mentoring been, within this process?
(Tessa Jowell) We are using mentors in the New Deal, I think we have
3,000 mentors recruited altogether, and they are being deployed by different
Units of Delivery, and I think that it is a function which, as the New Deal
develops, is also very much being developed. And one of the important things
to work out is the distinctive role that a mentor plays, as opposed to the
personal adviser, and one of the areas in which we think the development of
mentors would be extremely productive is in providing support for young people
who are doing work experience, and also in-work support for young people. And
here we would draw on some of the Intermediate Labour Market experience from
the States, which underlines the value of people who may have been
disadvantaged in the labour market having somebody who can help them sort out
the problems that if they are not resolved will interfere with their ability
to continue to work. And that is the sort of potential area in which we think
mentors in the future will be very useful. And recently I addressed, in
Nottingham, a national conference on mentors and mentoring in the New Deal,
which established some very clear ways in which to move mentoring forward.
Judy Mallaber: Another area for us to look at when we go to the States.
Chairman
54. Indeed, yes.
(Tessa Jowell) See the Goodwill organisation, in Boston, which, I think,
has done some fantastically good work in this area.
Chairman: Thank you for that suggestion. Ian, can we move on briefly
to the private sector-led Units of Delivery.
Mr Pearson
55. Yes, very briefly, given the time. I was wondering if you could
tell us, Minister, something about the performance of the private sector-led
Units of Delivery, compared with the public sector-led units, and what initial
conclusions you have reached from this, as to the relative performance and
implications for policy in the future?
(Tessa Jowell) Yes, certainly. The first point is that there is not a
significant difference in the performance of private sector Units of Delivery
as opposed to the public sector, ES-led Units of Delivery, and, as you will
be aware, the private sector-led Units of Delivery are fairly small in number,
there are about 12 in the 144 Units of Delivery overall. Where they do differ
is that the unit cost is somewhat higher than the unit cost is now coming in
at for the public sector-led Units of Delivery. And there is a very specific
reason for that, which is that the contracts that the private sector Units of
Delivery are currently operating are contracts that were set when the New Deal
was first being established, on the planning assumptions that prevailed at
that time, and they will obviously be scaled down now, as the new contracting
round begins, and so in the second contracting round we would expect that the
unit costs would be lower than they were in the first round, but in terms of
performance there is no consistent pattern. I looked up some figures on this
before I came to see you, and it might be interesting if I just gave you some
illustrations of the way in which the private sector has, in some clusters,
outperformed the other Units of Delivery. In North Essex, the private sector-
led Unit of Delivery there has secured a 50 per cent job entry rate, against
a cluster average of 44 per cent. Hackney and Southwark, and Southwark I have
already referred to, have seen an improvement of more than 10 per cent which
has been of disproportionate benefit to young ethnic minority New Dealers.
Chairman
56. Was not that from a low base, Minister?
(Tessa Jowell) It is certainly from a low base, that is absolutely right,
and I think this is a point I made when I came to see you last time, that the
range in the performance of the private sector-led units was certainly wider
than the range in the performance of the public sector-led Units of Delivery.
Chairman: Sorry, Ian, I did not mean to interrupt.
Mr Pearson
57. In the next contracting round, do you expect the number of
private sector-led Units of Delivery to increase, stay the same, or decline?
(Tessa Jowell) I have no settled view on that. The contracting round
will proceed. What we are concerned about is achieving value for money,
achieving maximum innovation and flexibility, and we will let the contracts
to those providers whom we are confident can deliver on that, bearing in mind
that the nature of the New Deal is constantly changing. And one of the areas
that I think is part of the negotiation is the balance. It is increasingly
important, I think, to allow more local flexibility, in order that we improve
the matching between young New Dealers and the training that they receive and
the needs of the local labour market. So we would not proceed down any
doctrinaire route which expressed a preference for either one or the other;
the judgements will be made on the grounds that I have outlined.
Mr Nicholls
58. Obviously, when Graham Brady was referring to the figures from
NOMIS, and the figures from the IFS as well, about the fact that a steep
decline in youth unemployment has been going on since at least 1993, the
question of dead-weighting arises, and you mentioned it yourself a moment or
two ago. What estimate do you have about the degree of dead-weighting in the
New Deal?
(Tessa Jowell) The NIESR estimate is about 50 per cent, which, in their
judgement, is what you would expect for an active labour market programme like
the New Deal. But if I can just add to that, I think that is a pretty good
guide figure, and I think that what the research has shown us is really three
levels of effect. There are some young people who get a job and only get a
job because of the benefit that the New Deal brings, and, in a sense, it is
the young people themselves who are the most powerful advocates of that view.
But the second is that there is evidence that there is a second group of young
people who move more quickly from unemployment to employment, as a result of
the help that they get from the New Deal. And the third group are the young
people who move into a better job, because they have acquired basic skills,
than they would otherwise have got. And, so far, what the evaluation has
captured is the first of those three, the pure New Deal effect; but what is
absolutely clear is that there is the sort of broader, halo effect. But we
keep this judgement very much under review, and, as I think I have indicated,
in all the answers I have given so far, new investment is a constant judgement
between what the investment actually achieves, in terms of increased
employability and young people into work, as opposed to the kind of progress
that might have happened anyway.
59. Did you expect it to be as high as that? I take your point on
the qualifications you are making on some perfectly fair points, but did you
in fact expect that the dead-weighting would be as high as 50 per cent?
(Tessa Jowell) That was broadly the estimate, because that is the sort
of estimate that is made by labour market economists about the dead-weight
effect of labour market programmes. My expectation is much less important
than that sort of objective benchmark, and against that objective benchmark
which formed part of the NIESR conclusions. I think that we are on track,
that we will constantly monitor that. And can I just say, finally, on the
figures, before anybody runs away with any mistaken impression that somehow
the falls in the rate of youth unemployment was sharper before the election,
if you let me see the figures, give me time to consider them, - - -
60. Absolutely.
(Tessa Jowell) I am quite confident that the points I have made to the
Committee about the New Deal impact in reducing long-term youth unemployment
by 40 per cent, a 60 per cent fall since the election, will be borne out.
Chairman: Thank you, Minister; like us, you have been a seeker after
truth, and so we will look forward to that immensely. You have now been with
us for almost an hour and three-quarters, and it has been a long and
exhausting session, I think, for us all, particularly trading statistics
across the floor is particularly difficult. Thank you very much for the able
way in which you have dealt with the questions, and for the way in which you
have dealt with the statistics for us, too. Thank you very much indeed.
