Examination of Witnesses (Questions 61
WEDNESDAY 20 DECEMBER 2000
61. You are very welcome. Thank you very much
indeed for the evidence that you have submitted so far, and especially
we have had a chance to glance at your latest Report, at least
looking at the Executive Summary, if not going through the whole
of the Report. You will recall that when we embarked upon our
earliest studies, of the pathfinders, as a Committee, we were
determined that the New Deal would be properly evaluated. And
in fairness to the Government, I think this is probably the most
evaluated programme of its kind that I remember in my political
lifetime, and rightly so, a huge amount of public money going
into it. Thank you very much for the work that you have done.
Do you mind if we call you Garry and Rebecca?
(Ms Riley) No.
(Dr Young) Please do.
62. I am going to start off, if I may, by just
saying to you, how thorough, overall, do you think that the evaluation
strategy is; should it be strengthened, and, if so, how?
(Dr Young) I think, as you said in your introductory
remarks, it has been one of the most evaluated programmes, labour
market programmes, that we have had in the UK, and I think it
is difficult for me to think of anything additional that should
have been done in evaluating it; they have covered a wide range
of areas and a wide range of methods. The part we are doing is
the macroeconomic, obviously, but there are all sorts of other
strands to it which will have provided useful information to the
Government and to other bodies. So I find it difficult to think
of anything they ought to have done which they have not done in
63. So really it is your considered view that
the evaluation strategy is adequate, and you cannot think of any
way in which it can be strengthened? It is not a trick question,
I just want to get on the record the fact that you think that
it is adequate and probably could not be strengthened considerably?
(Dr Young) Yes, I think that is right.
64. Thank you. This time last year, you reported
on the macro-evaluation; can you explain to what extent you have
been involved since last year and how this has been done?
(Dr Young) One of the things that we have done is
to concentrate more of our efforts in finding out what has happened
in a macroeconomic sense to the people who have left unemployment
through the programme. Last time, we did not have much information
on that, but this time we have focused more on whether people
are going into employment or what other possible destinations
there might be. So that is partly different. We have also updated
our estimates from last year, as more information has become available,
so we have updated our assessment of its effect on unemployment
and employment. One of the key factors in our framework of how
the New Deal might work is what its effect might be on wage pressure;
we had not looked at that last year, we have looked at that this
time. Again, we have updated our estimates of the wider economic
implications of the programme; that was, I suppose, previsioned
in last year's Report, and this year again we have got a bit more
information on that. And also we have updated our estimates of
the cost of the programme to the Exchequer, taking account of
more recent information on the amount spent on it. So those are
the sorts of broad areas in which we have been working this time.
Chairman: Thank you very much.
65. One of the key areas we have been looking
at is the impact on the individuals who go through the programme,
and one of the key arguments from DfEE, when challenged on things
such as the low completion rate for the further education and
training option, is that the programme is as much about improving
employability as it is about finding a specific job for a specific
person. And you have discussed this yourselves, you said that
the New Deal for Young People "could have long lasting effects
on the individuals concerned." That it "ought to increase
their employability throughout their lifetime ..." I am just
wondering, do you at this stage have any evidence as to what could
happen and what ought to happen is actually happening?
(Ms Riley) I think that it is not part of our brief
to assess the impact on individuals per se; however, given
the macroeconomic evidence we have found, we can say what the
average effect on individuals is likely to have been. And, since
we have found a sustainable reduction in unemployment and a rise
in employment, that would suggest that there has been a rise in
average employability; whether that has longer-term impacts on
individuals' lives is another question. The literature suggests
that there are scarring effects of long-term unemployment, so,
given that we find long-term unemployment is reduced, it is possible
that there would be longer-term effects; however, you would really
need to have an econometric investigation of that, empirical investigation
of that, which we have not done.
66. The other key indicator, perhaps we would
look at, is the sustainability of the jobs people move into, and,
again, there is a sort of subjective, key political debate, how
long people are staying in beyond the 13-week period, because
whether they have stayed in for 13 weeks we do not really know,
unless they then come back onto JSA at a later date. You are honest
and it is still too early to see how much recycling there is,
which was certainly a feature of earlier employability programmes.
Again, do you have anything to add to that, in terms of any implications
as to whether, when we talk about sustainable jobs, they are genuinely
long-term sustainable or simply sort of 14 weeks and then back
on, or 15 weeks and then back on?
(Ms Riley) We have looked at returns to the claimant
count, and we do find a rise in the returns to the claimant count,
as people come back from the options. However, other evidence,
not our evaluation but evaluation by the PSI, which is still preliminary,
suggests that there is not evidence of early job terminations.
(Dr Young) One of the points to make here, really,
is that young people often have quite short-term jobs, and so
the question is really are these jobs more short-term than normal,
and there is not really much evidence of that. It is true obviously
that a lot of the jobs are not long-lasting, but then that is
fairly typical of this part of the labour market.
67. Could I just ask, following that up, whether
you are aware as to whether there are any sort of control group
figures that would be available, if one wanted to look at this,
for what young people's activity is normally, as it were, without
the New Deal?
(Ms Riley) I would refer to the PSI research there.
(Dr Young) That is not part of our workthere
is another group doing that part of the evaluation.
68. Can I just press you a bit on the first
question that Richard asked. I must admit it, I was surprised
to see the statement that the extra training they receive through
the New Deal "ought to increase their employability throughout
their lifetime and not just in the short-term." Now, from
my experience, if it does not lead fairly soon to a job then any
improvement in employability seems to dissipate fairly quickly.
I had assumed that, frankly. Now have you got any evidence to
prove your statement or to disprove my assumption?
(Ms Riley) I think what we are saying is that we have
not tested whether there is a longer-term impact, and we have
not necessarily assumed that there are those impacts in our evaluation.
We are saying that if there are those longer-term impacts there
are likely to be longer-term positive effects of the programme.
69. Sure; but that strikes me as saying that
you have got no evidence to support the statement which appeared
in your last year's Report, the one which I quoted, I think, "ought
to increase their employability throughout their lifetime"?
(Dr Young) It is what we expect to happen, but we
do not actually have any evidence that it has happened yet.
Chairman: You have no evidence to support it;
70. One of the issues we have been interested
in, as a Committee, right from the beginning, has been how effective
the Gateway period is, as a fairly key feature of the programme,
and whether it is effective in people moving through, whether
people should be allowed to be on it for longer, if necessary,
and it is something that you have looked at. In your Report, the
early evidence that you highlight was that around 11 per cent
of those people that entered were still in the Gateway eight months
later; that was fairly early on. Has the percentage of participants
staying in the Gateway for more than the four months, which was
what was intended, changed since you made your Report?
(Ms Riley) I cannot give an exact figure for that,
but we do find the reason that people stay in the Gateway for
a longer time than four months is often because they leave temporarily,
return to unemployment within 13 weeks and then rejoin the programme
where they left off, so at the Gateway stage, which prolongs this
Gateway period. And we find that around 30 per cent of exits from
unemployment via the Gateway represent individuals who return
to the claimant count within 13 weeks and rejoin the Gateway.
71. So that kind of eight-month period is likely
to include a period when they have actually been out, in one of
(Ms Riley) Not necessarily in an option but out of
(Dr Young) I think it is also true that some people
have uninterrupted long periods on the Gateway.
72. Do you have any figures as to which fall
into which category?
(Dr Young) I do not know, off the top of my head.
I think part of the reason for that is that when some of the people
are waiting to go on courses, and so on, there are particular
times when certain courses start, it is just going to take a slightly
longer wait for that.
73. So, out of that, would there be any impact
of having a significant number of people that were in the Gateway
for longer than four months, and would that have an impact on
the effectiveness of the programme as a whole, or are the other
factors that you have talked about such that it does not really
affect how the programme in total works?
(Dr Young) I think you obviously do not want to have
people on there for too long. I think the idea is that you identify
some way out of unemployment for people and then you move them
into it; so you do not want people to be on the Gateway for too
74. Do you have any information from your analysis
about how intensive their activities are while they are on the
Gateway? It has been said to us at different times that they are
not occupied the whole time. Have you looked, at all, at how much
they do, over the Gateway period, as part of the programme?
(Ms Riley) How much they do, in terms of job-search
75. Yes, and how much of their time is spent
on activities in which they are given assistance, encouragement,
as part of that programme?
(Ms Riley) We have looked at the impact of the intensity
with which they receive interviews with personal advisers, whether
that has a noticeable impact, and we have not found a significant
effect of that.
76. So if they see their adviser twice a week
it does not make that much difference from seeing them once a
(Ms Riley) It might do, but in our analysis we have
not been able to pick that up.
(Dr Young) We focus more on outcomes from the Gateway
rather than what the process is going into it.
77. Can I move us on to the impact of the programme
on unemployment itself, and obviously in recent years we have
seen a very steep decline in the overall level of unemployment
and a larger decline, a faster decline, in levels of youth unemployment.
Are you able to give us an indication, from your research, of
how much of the decline in youth unemployment we can attribute
to the New Deal itself, as distinct from wider trends within the
(Dr Young) Yes, we can do that. I will just check
I have got the numbers. In terms of youth unemployment, we now
think that it is about 40,000 lower than it would otherwise have
been without the New Deal; long-term youth unemployment is lower
by about 45,000, and there has been a slight rise in short-term
youth unemployment, as some of the people who have been through
the New Deal come back onto short-term unemployment afterwards.
So at a point in time the answer is 40,000 lower than it would
have been, in total, as of about now.
78. At any one point, yes. And how far is that
decline in youth unemployment matched by an increase in youth
(Dr Young) The youth employment figure is about 17,000
higher than it would have been; that is what you might call regular
jobs. And, in addition to that, there are people on New Deal options
who are counted in the official employment series as being in
work, and if you add those in the total is around 30,000.
79. In your Report, you make the point, which
you have hinted at there, that, because a high proportion of the
participants in the New Deal take the full-time education and
training option, fewer taking subsidised jobs, the negative impact
on those not eligible to take part "is likely to be minimal."
Has your subsequent research shed any more light on that, has
it confirmed that, or disproved it?
(Dr Young) That is still our view. You would expect
the adverse effect on other groups to arise , because of the subsidised
employment option, rather than other things. But because that
is a relatively small part of the programme, as it turns out,
you perhaps might expect any adverse effects to be relatively
small; and certainly we have not really been able to identify
any adverse effects.