Select Committee on Education and Employment Minutes of Evidence

Examination of Witnesses (Questions 61 - 79)




  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 this area.

  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.

Mr Allan

  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 work—there 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; okay. Thanks.

Judy Mallaber

  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 the options?
  (Ms Riley) Not necessarily in an option but out of unemployment.
  (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 long.

  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 activity?

  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 month?
  (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.

Mr Twigg

  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 economy?
  (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 employment?
  (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.

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