Select Committee on Education and Employment Appendices to the Minutes of Evidence


Memorandum from Greater Manchester Low Pay Unit

  The Greater Manchester Low Pay Unit is an independent research and information body which provides advice on pay and employment rights to employees, employers and other organisations, and which undertakes research on a range of issues including employment trends, local labour markets, pay and the interface between welfare and work.

  The Unit has regularly contributed to the welfare reform debate. In addition the labour market position of young people had been an issue of consistent concern and the Unit has carried out research in this area particularly in relation to the minimum wage. In the autumn of 1999 the Unit published a report "Rhetoric and Reality: The Impact of the New Deal on Young People". This report drew on the actual experiences of young people on the New Deal and was widely distributed including to members of the Education and Employment Committee.

  The purpose of this brief paper is not to reiterate the concerns that were raised in that report but instead to highlight the practical problems experienced by a New Deal provider. In the course of our earlier research on the New Deal, which primarily focussed on the views of young people themselves, it became clear that there were also a number of concerns amongst those delivering the New Deal, particularly in the voluntary sector.

  The government's extensive evaluation of the New Deal means that there are already many research studies and statistics which consider the questions of sustainable employment and young people's experiences. Therefore, the Greater Manchester Low Pay Unit thought it would be opportune to consider the issues of concern that have been raised by a New Deal provider in the voluntary sector.


  This brief paper is based on discussion with both a New Deal provider and the young people placed with that provider. The discussion took place at a workshop organised by the New Deal provider during their AGM. In addition a few young people made further comments via an anonymous questionnaire.

  The New Deal provider in question is a Citizens Advice Bureau (CAB) which provides placements on the voluntary sector option in either advice or administration. The New Deal has different delivery arrangements across the country. One scheme in the North West is run by the City Pride Partnership (CPP).

  The CPP has created what is commonly known as an "enhanced" New Deal. This means that the voluntary sector option lasts for 12 months rather than the standard six months and the young people are paid a weekly wage equivalent to the minimum wage. The enhancement has been made possible through the use of funding from various sources including the New Deal, the European Social Fund, and the Single Regeneration Budget. The New Deal is delivered through local partnerships with Employment Regeneration Partnerships (formerly TECs) playing a leading role.

  The CAB is located in the area covered by the CPP and they saw the enhancement of the voluntary sector option as an extremely good opportunity for young people. The CAB started out with an optimistic view about how they could contribute to the New Deal programme. They rightly regard themselves as good employers who have a long track record of helping volunteers gain skills and experience to enhance their future job prospects. Therefore they thought they would have a useful role to play in the programme in helping young people become "job ready".

  It is worth noting that CABx located outside the City Pride area have reported that they did not feel able to participate in the New Deal. The reason being that a straightforward six month placement is, in their view, not long enough to train and provide someone with skills and experience. Previous research[23] by the Unit raised the question of the inflexibility of the options. This reinforces that point. It would be beneficial to young people if the government were to consider being more flexible over the length of time of the options. The current restriction to six months for the voluntary sector option means that good opportunities for young people are being missed out on.


  The government's claim that the target of moving 250,000 young people off benefits and into work is almost achieved is based on counting jobs that are both sustained (lasting more than 13 weeks) and those that are not sustained (lasting less than 13 weeks). The latest figures show that up to the end of July 2000[24], almost a quarter (56,440) of those who have started work have returned to claiming benefit within 13 weeks.

  Although 237,040 young people have started work there have actually been 318,390 jobs gained by young people. This means young people are moving into a job, back onto the New Deal and then into a job again which reinforces the point that the New Deal is not creating secure employment. Of the 318,390 moves into jobs only 191,840 have lasted more than 13 weeks. Therefore, less then two out of every five of all moves from the New Deal into jobs have not resulted in a sustained move off benefit.

  Moreover, the Labour Force Survey[25] shows that in the three years Spring 1997 to Spring 2000 employment amongst 18-24 year olds rose by only 1.5 per cent or 50,000.

  Some of the rise in this age group must be accounted for by the growth in part-time working by young people who are at school or are students. Indeed, there are now 93,000 more students or school children working part-time than there were when the government came to office. Given that most students or school-children will be under 25, and given that 16 and 17 year olds in employment fell by 24,000 over this period, it could be argued that there may actually be fewer 18-24 year olds in full-time employment than there were when the government took up office. There needs to be closer examination of the impact on the New Deal on employment opportunities for 18-24 year olds.

  It must be questioned whether a move into any old job is of benefit to young people. A constant moving in and out of employment means young people will quickly become disillusioned with the programme and view it as a "revolving door" rather than an opportunity to secure a job. Arguably, constantly moving in and out of short-term employment will also demoralise and reduce the confidence of young people as they question their ability to find secure employment.

  The emphasis on meeting job targets without questioning the quality or sustainability of employment could in fact create an adverse impact as is highlighted by the recent experience of the CAB.

  Approximately 30 young people have been placed with CAB. For many this has been a very positive experience with a positive outcome in terms of both jobs and self-esteem. For example, two young people, following their New Deal placement with the CAB, secured full-time permanent employment as advice workers with local authorities whilst other young people have moved into higher education. One of the young people in response to a question about whether the experience of the CAB placement was worthwhile commented "yes—good workplace, position had actual prospects of a job at the end—which I got".

  For those still on the New Deal with the CAB there was also positive feedback about the quality of the placement and the likelihood of future employment as the following comments show:

    "It's the first time I love my job and really want to carry on in this branch if I can. For the first time in my life I know what I want to do. I believe New Deal is good in this way as it opens doors to jobs you may not have done or not thought about . . . I will come out from my New Deal option hopeful in my jobsearch."

    "I have changed so much, I really believe I can get a good job now, I am so much more confident."

  However, the CAB is concerned that the increased pressure put on young people to find a job during their placement with CAB could reverse much of this positive experience. Six months into their placement with the CAB young people are sent on jobsearch training and encouraged to find a job. The CAB was initially concerned about this as it would mean that young people were being encouraged not to complete their placement. However, the situation has notably deteriorated in that this now happens after only three months into the placement. As a result, from an early stage much more pressure is put on young people to find a job. Moreover, the CAB has been told by the local partnership that it does not have a good record in terms of job outcomes and that therefore some aspects of their funding may become related to achieving better job outcomes.

  Rather than helping young people find secure employment, this emphasis on taking a job in the middle of a placement and the introduction of job related targets may have a negative impact for three main reasons outlined below:

    —  The CAB has pointed out that to become fully trained and gain enough experience to compete for jobs in the advice sector it is imperative that young people spend at least 12 months with the CAB. Therefore if young people are put under pressure to find a job prior to the completion of their placement it means that they will be taking jobs below their full potential. Moreover, the type of jobs that young people will gain, without completing a placement and achieving a qualification, will be more likely to be short-term jobs. Young people themselves emphasised that it was more time with their placement and more training that would help them find "good" employment. In response to a question about how their experience of the New Deal could be improved upon, one young person commented "more training would be useful so that it would help to find future work and more time to gain experience".

    —  CAB training is highly regarded and if completed would certainly add to a young person's skills and help in the process of finding work. However, if young people are not given the opportunity to complete their placement then it will become increasingly difficult to motivate them to undertake the training in the first place.

    —  The linking of funding to job outcomes could have a detrimental impact on the most disadvantaged groups. If New Deal providers are put under pressure to get young people into jobs as soon as possible then they will only take on young people whom they expect to be successful, ie they will become selective as to whom they take on. The different outcomes form the New Deal for young ethnic minority people in comparison with white people has been recognised as one of the main weaknesses of the programme. The linking of any aspect of funding to job related targets will only exacerbate and reinforce the discrimination that already exists rather than overcome it. Moreover, the CAB saw their role as helping people become "job ready". They are prepared to put a lot of time and effort into young people who perhaps are more vulnerable or disadvantaged. If they were to become selective about who undertook CAB training then this would go against the original aims of the New Deal.


  A major concern raised by the CAB has related to the advice they were given by the lead member of their local partnership when they sought advice on questions of employment practice as the following three examples show:

    —  Sickness:  The CAB was advised in relation to sick pay and leave that "an individual is entitled to a maximum of 10 days sickness absence, after which time they should be terminated and advised to apply for sickness benefit". The CAB pointed out that proper disciplinary and grievance procedures have to be followed before employment can be terminated. In addition even if it was judged fair to dismiss someone then notice would have to be paid.

    —  Maternity:  There was some confusion when the CAB asked for advice on the position of a young woman who was pregnant and had handed in a sick note for three months. It was suggested to the CAB that the young woman had no rights and could be dismissed as she could not be paid for that length of sickness absence. Again the CAB had to point that dismissing a woman because of her pregnancy was automatically unfair dismissal.

    —  Holidays:  The CAB has also been informed that "employees/participants are allowed a minimum of two weeks and a maximum of six weeks annual leave during a 12 month period. All employees/participants can take up to a maximum of two weeks in the first six months". In the firs instance an employer who provided only two weeks' paid holiday would be breaking the Working Time Regulations and secondly, an employer cannot stipulate that holiday has to be accrued.

  The CAB had been given advice which conflicts with good employment practice and also with statutory rights. If acted upon this advice could have left them open to claims of unfair dismissal or to being taken to an Employment Tribunal in relation to other statutory rights. Given the service the CAB provides they were able to recognise this and raise it with the local partnership. However, it can only be assumed that other employers would have followed the wrong advice.

  The crux of the problem is the status given to young people on the New Deal. Are they to be regarded as simply trainees/participants or employees? The New Deal provider clearly sees them as employees as they are given a contract when they start their placement. If New Deal participants are employees then they must be covered by existing employment legislation.

  The uncertainty over the status of New Deal participants also impacts on the young people who feel they have to comply both with the practices of the employer and the additional requirements placed by the Employment Service and the New Deal programme. One New Dealer commented "I feel caught in the middle as I am neither with the employer nor with the Employment Service".

  This is an area where it is imperative that national rather than local guidance is provided. It surely must have been anticipated that some young people on the New Deal would become pregnant and there should be appropriate and fair procedures for New Deal providers to follow in such situations. At the moment the arbitrary way in which decisions are made, dealing with each individual case as it arises at a local level means that some young people could be "thrown off" their placement.


  Previous research[26]from the Unit recommended a closer and more regular monitoring of New Deal placements for both general quality and in particular the quality of the training provided. One story from a young person reinforces the need for this. Prior to being placed with the CAB, one young woman was placed with a private sector employer as a Personal Assistant. Not only was she working in an office with no equipment but after a short while the manager stopped turning up, leaving her with the responsibility of opening and closing the office every day. In addition, she did not get paid for three weeks and her benefit was never backdated. It was only as a result of her persistent enquiries that she found out that the employer was actually in hospital. Throughout her placement she raised these concerns with her Personal Adviser but they were never followed up and the placement was never investigated.

  This is in stark contrast to the experience of the CAB which has felt at times that it has been over monitored. The CAB is a nationally recognised and respected organisation with proper systems and procedures already in place for managing staff and volunteers. Moreover, the local partnership recognises and acknowledges that the CAB is a good employer. In spite of this bureaucratic burdens have been placed on them which in effect have hampered their ability to deliver the New Deal. There are two main areas where the CAB has faced particular problems, namely paperwork and training.


  As was mentioned earlier the Cab placements are not solely funded by the New Deal. Whilst additional funding has made it possible to make the voluntary sector option more attractive in terms of duration and pay it is also the case that the additional funding has placed onerous requirements on the New Deal providers in the form of paperwork as the following examples show:

    1.  The CAB has been asked to complete more than one time sheet for each New Deal placement. They have been told this is necessary for auditing by the European funders and the Employment Regeneration Partnership;

    2.  The CAB is required to make a monthly claim to the lead partner of the local partnership. Not only is this a very time consuming process, but there is no flexibility as to when the claim is made. In one instance the claim was made a day early because of the anticipated absence of the manager on the normal day of the claim. This caused enormous problems;

    3.  The CAB managers are required to fill out different review forms for New Dealers. Although CAB managers complete staff review forms for all employees as well as the New Deal placements, these are not accepted and additional forms have to be completed.

  The end result is that many CAB managers have said they are unwilling to continue with the New Deal because of the over burdensome paperwork requirements. Although this is not a direct result of the New Deal programme itself and appears to be caused by the additional funding that this particular local partnership has secured, it is still an issue which should concern the government as it could mean that good placements are lost.


  Initially, it was suggested that all young people on New Deal placements with the CAB should undertake an NVQ in advice work. The CAB argued that it would be of greater benefit to the young people for them to undergo CAB training as this was more highly regarded than the NVQ and would therefore be of greater value to them in the long run when looking for a job. After much discussion the Employment Service in Sheffield accepted the CAB qualification. Following that the local partnership also accepted that CAB placements should undertake the CAB training rather than an NVQ in advice work. However, the CAB has faced persistent problems in being properly and fully refunded for the training they have provided. The CAB feels that the cost of administering NVQs would never have been questioned.

  In addition the jobsearch training which was initially delivered by the CAB is now delivered via the local partnership. The CAB has concerns about the quality of this training. For example, advice jobs always require a completed application form rather than a CV for equal opportunities reasons, yet the jobsearch training still focuses on CVs. In addition the young people did not rate very highly the quality of the jobsearch training.

  The paperwork demands placed on the CAB and the question mark over their training has given the CAB the view that they are not valued by the local partnership. The CAB notes that they are members of NACAB and quality audited by Community Legal Services and therefore raise the question as to why the procedures they already have in place for managing staff cannot on their own be accepted without the imposition of additional requirements from the local partnership.

  In addition the CAB feels that there is still a stigma attached to the voluntary sector option which is particularly dependent on the New Deal Personal Adviser. Where an adviser has known of the CAB and the quality of their training they have had a number of good referrals. Problems have arisen when the adviser has just pushed somebody into this option as a last resort. This is reinforced by the comments from young people who said that people in general don't want to go on the voluntary sector option. Although the same person pointed out that if she had known about the CAB option earlier she certainly would have taken it up but instead she was encouraged to find a job.


  In spite of the difficulties they have experienced, the CAB concluded that it was still worthwhile continuing with the programme. For the CAB this was because of the satisfaction of seeing some young people, who had little in the way of skills and qualifications, leave the placement with skills and work experience that have helped them either secure a job or move into higher education. In addition, the CAB feels that all of the young people have left their placement with greater confidence and self respect which in itself has made the programme worthwhile.

  Whilst it is the case that many of the problems the CAB has experienced have arisen as a result of the unique local delivery arrangements it is important that the government is made aware of these local problems. Whilst the local delivery of the New Deal programme has been advantageous in that it has allowed local partners to secure additional funding and offer enhanced options it is also the case that local delivery has brought with it its own set of problems. Of particular concern is that decisions about issues such as employment practices have been made at a local level. It is essential that national guidance is given to all New Deal providers on such matters and that such guidance shall satisfy both statutory requirements and accepted good practice. Therefore there would be national minimum standards that all local providers would have to comply with.

  Any labour market programme which aims to increase and improve the participation of young people in the labour market is welcome. However, the emphasis on job outcomes could actually have the opposite impact. Simply pushing young people into any old job is not a long-term solution to the problem of youth unemployment. It is right that there is currently much concern about the sustainability of the employment that young people have entered. Questions also have to be raised about the quality of employment that young people are finding as a result of the New Deal. We urge the government to consider monitoring the quality of jobs as well as the overall number of jobs young people are gaining.

Greater Manchester Low Pay Unit

November 2000

23   C Faichnie (1999) Rhetoric and Reality: The Impact of the New Deal on Young People, Greater Manchester Low Pay Unit. Back

24   Statistical First Release on The New Deal released by the Department for Education and Employment on 28 September 2000. Back

25   Labour Force Survey Quarterly Supplement No 10, August 2000. Back

26   C Faichnie (1999) ibidBack

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