Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. May I quickly keep flogging this horse, evaluation, a little bit more and hopefully kill it? I am content, from what I read in the National Audit Office Report, that more could be being done to measure and evaluate and it seems to me odd that you would set up a programme the fundamental aim of which you could not measure from the outset. It does say in the National Audit Office Report in paragraph 2.18, "The quality of information on the programme's performance and outcomes would be improved if the Employment Service was better able to identify the subsequent labour market activity". I am looking forward to hearing the greater detail that you say will hopefully come as a result of the Employment Bill. One quick question about paragraph 2.13 which says, "Thirty per cent of leavers from the programme have no recorded known destination". What happens to them or what do you think happens to them and why do you lose them?
  (Ms Lomax) A lot of them go into jobs but they are not recorded as jobs, for reasons which Leigh can explain.
  (Mr Lewis) We do know a great deal and we have done two major surveys.

  81. Do you mean you know a great deal about the flow out?
  (Mr Lewis) Yes; about the 30 per cent of leavers to so-called unknown destinations. It is worth saying that this arises because when someone stops claiming a social security benefit they are not required to tell us what has happened, where they have gone. They can just stop claiming and no longer appear in our offices. We have conducted two major surveys in 1999 and 2001 and they have both involved an extensive programme of surveying people who had left, trying to contact them to find out what had happened to them.

  82. Would you mind sending us a note with a bit more detail about that?
  (Mr Lewis) Yes, I will. The headline figure is that in each case 56 per cent of those people had gone into jobs.[2]

  83. Paragraph 3.19 of the Report says that the Treasury allocated £3.15 billion for this programme and that ". . . for every £5 spent on the New Deal for Young People about £3 is returned to the Exchequer through savings on benefits and increased tax revenue". I make that that for every £3.15 billion you spend you get £1.89 billion back leaving a net cost to the Exchequer of £1.26 billion, which I do not square with £140 million. Does that mean that not all the £3.15 billion has been spent yet?
  (Ms Lomax) It has not all been spent yet and also the £140 million is a per annum figure and not a total.

  84. Yes, but over the five years of this Government it is £700 million.
  (Ms Lomax) How much have we spent? About half. On a UK basis it is about £1.2 billion so far.

  85. One other question about the cost of evaluation. It says in the Education and Employment Committee Report, admittedly a year ago, that £4 million to date has been spent on evaluating the programme, representing some £7 per New Deal participant. That was a year ago. Could you say what the total cost of evaluation so far is to date?
  (Mr Wells) It is the same number. That was the cost of the evaluated programme.

  86. When you say it is the same number, do you mean there has been no evaluation in the last 12 months?
  (Mr Wells) No, but the money was spelt out in the £4 million. The £4 million includes the continued evaluation this year.

  87. So when this was published in March 2001 and it said "The total cost of the Government's evaluation programme to date", presumably to March 2001, "has been £4 million"—
  (Ms Lomax) My understanding is that that £4 million applies to the budget for the evaluation over the period 1998-2002, which will be an ongoing programme. It may well all have been committed by March 2001 but the research is ongoing.

  88. Seven pounds per New Deal participant sounds quite cheap. If you are spending £3.15 billion, £4 million is obviously very, very small. If a charity were spending that proportion on administration they would be hymned to the rooftops, would they not? Have you thought about spending a bit more on evaluation to get some more accurate data? The NAO criticises the Employment Service for not having enough data.
  (Ms Lomax) We are spending more all the time. Basically it is not administration, this is on top of administration, this is evaluation. It is an enormously elaborate programme by the standards of most evaluation. The results have been fed back into policy as we went along. We will spend what we need to spend to improve the policy.

  89. I want to place on record that I am not very satisfied with the answers about measuring employability. While I accept a lot of what has been said, it does seem to me that there are many characteristics of employability which can be measured, like literacy, numeracy, IT skills, qualifications and so on. It is disappointing to me that more of that was not done from the outset. I hope that more will be done from now on.
  (Ms Lomax) May I elaborate a little on what I said before the break, which is that in order to obtain this information it has to be got from someone somehow, by surveying firms, by requesting information from individuals? It is not information which naturally comes to the Employment Service once someone has gone into work. There is a real issue about what is an appropriate burden of requests for information, particularly from small firms.

  Mr Bacon: I accept that, but £4 million out of £1.5 billion spent so far does not sound like a huge burden as a percentage. I only make the point in conclusion that there is an old saying "If you can't measure it, you can't manage it". It seems to me that should be there at the inception of any Government programme involving this sort of expenditure.

Mr Jenkins

  90. I thought employability was quite an acceptable concept in so far as it was to meet a market demand for a skill at the required level and at an agreed price. What variables we have in that are pretty easily categorised. From the time I have spent with the Tamworth office on the New Deal I can only say that the New Deal transformed the morale of the staff and the level of motivation of the staff. No longer were they just giving someone a number and saying "Stand in line"; they believed they were doing the job they had been employed to do, helping young people. I am not surprised young people liked it because maybe for the first time in their life they had someone who sat down, listened to them and had total interest in them and were there to assist them, so this feedback is to be expected. The big difference of course is that unemployment numbers are down. In some respects I find it churlish if someone says that the economy is doing well. Yes, but that was not an accident, we had to work hard at it, so let us take credit on both fronts, shall we? We did get the numbers down through a number of competing programmes. I hope literacy and numeracy will be better in future, because I hope that when the primary school programme is transferred into the secondary school we do not get the numbers leaving with such a poor level of numeracy and literacy. One of the things I do find difficult and I cannot find in the Report and no-one has asked it yet, is that unemployment is about the number of jobs available and it is a lot harder to find a job in some of the Yorkshire coal mining areas than it is in some of the peripheral towns around London like Slough or Swindon. When you say that one third of the youngsters have barriers to employment, yes, but some of those barriers are that there are no jobs in their areas or region so it is very, very difficult to get young people into work. If there are employers who want employees they will take people with lower levels of skill to fill the jobs. There are certain areas where schools do better at retaining youngsters to the sixth form and sending them off to university. To me it seems fairly obvious and should be part and parcel of the programme. I notice in the programme there are subsidised jobs or subsidised work opportunities when we get to the harder people to place. I remember a few years ago people working for the local authority were almost ring-fenced; they were people we would now call educationally sub-normal, illiterate, innumerate and they had jobs in the local authority and they did very, very good jobs. They turned up regularly and they were very worthwhile employees. Then the rules changed to become more competitive and they could not compete and they were put on the scrap heap and that is what happened to us as a society. So even with this small amount of money we cannot cure all society's ills. I think we should say that loud and clear. Do you think as a society, as a Government, we should start to look at creating ring-fenced employment opportunities within our services?
  (Mr Lewis) In many ways that is a question for Ministers and Parliament and not for us as civil servants. One thing I would say is that I would just echo a great deal of what you said in your question about the impact on the motivation of staff and on the motivation of young people. I do not think many of the young people I have met on the New Deal—and I have met a great many—want in a sense to be characterised as a problem person. They want to feel that they are going to be given an opportunity to show what they can do. The great strength of New Deal has been that with the more active support of personal advisers and other members of staff and other organisations than we have ever been able to offer before, more young people have been able to demonstrate to employers that they have what it takes on merit to get the job with that employer and retain it and leave on a Friday evening with their pay, with their heads held high. That has been the great strength of the New Deal and I do not think there are that many people who want to be put into a category marked "problem case".

  91. When these people disappear without trace and for all you know they could go into prison and come back a couple of years later, that is a difficult one which you maybe cannot know, but one thing you can know is when they disappear onto another benefit, a disability benefit. Do you not ask yourself why they are on the New Deal to start with?
  (Mr Lewis) Yes, we tend to do that. Sometimes it is because genuinely people's circumstances change. To give an obvious example, a young woman may come onto New Deal and then may become pregnant and may qualify for Income Support as a lone parent; people's circumstances can change. There are instances where people might not have been on the right benefit to start with because they might not have been available for work or actively seeking it. One facet of the New Deal has undoubtedly been that in some cases it has helped people to qualify for the benefit they were more accurately entitled to receive.
  (Mr Wells) I should say that the numbers going on to benefit are a gross number. There will always be people moving between benefits and that is a feature of all benefits. It does not necessarily mean that because people move onto another benefit it is because of the New Deal.

Jon Trickett

  92. I do not want to ask questions which will elicit fairly self-congratulatory responses, because it is axiomatic that the New Deal, at least in my philosophy, was a good thing. I do think that there are unacceptable variations across the country in the performance of your officials and I want to try to tackle that. The first thing to say is that there is obviously a correlation between the difficulty of a particular labour market and the performance of the units of delivery which you are using to deliver the New Deal. Even taking that into account, the table on page 38 indicates very substantial variations and I want to ask how you account for those variations and whether you think they are as unacceptable as I do.
  (Mr Lewis) Let me say something first. We have spent a great deal of time since the programme was initiated looking at variations in performance between units of delivery and we have gone to great lengths to try to ensure that we were comparing like with like by putting units together in what we have called clusters of similar labour market conditions. There is no doubt that there have been some underlying variances in performance and, as the Report from the NAO points out, we have gone to great lengths to try to even those out and bring poorer performers up to the level of the best. I do not want either to engage in self-congratulation. I know better than anyone that there are areas where we can still improve and should. What I do take comfort from is the conclusion in the NAO Report that actually the action taken by the Employment Service to improve performance has reduced local variations to the extent possible and the programme had largely reached its limit for a reasonably attainable improvement by March of last year.

  93. So you find a 15 per cent differential between the best and the worst acceptable. It seems to me that for those poor people out there, the long-term unemployed youths, to be served by an office which is under-performing by as much as 15 per cent relative to the best is a rather upsetting prospect, is it not? I think your response is somewhat complacent.
  (Mr Lewis) I should not like to make clear that that was not what I was saying in any degree, because I do not think it is acceptable for a single person to be long-term unemployed if we can seriously do something to help them address that. The issue is at one level below that. It is to what extent those variations in performance are because of unacceptable differentials in performance between different units of delivery and to what extent they reflect other factors underlying labour market conditions. I think what the NAO Report is saying is that it is the latter much more than the former which gives rise to those differences in performance.

  94. I am not sure whether it is saying that or not. There has been an attempt to take out the significant variables so that we are comparing like with like and there are still substantial differences. Since government is really about prioritising I just want to try to understand one thing, which is the following. The normal way that an accountant or an auditor would measure the performance of a unit of delivery such as these would be to apply some financial calculations as well as outputs, because at the end of the day if we are spending a lot of money to achieve an output relative to another organisation, we are not necessarily very effective. I wonder whether I can ask the National Audit Office whether or not they bothered to make an analysis of the cost per unit. No, you did not. Why not?
  (Mr Jones) The cost does not vary very much between units. We were just looking at the performance in terms of putting people into jobs.

  95. Is that correct?
  (Mr Lewis) Inevitably there are some costs which do vary between different units of delivery where we are putting in place more intensive provision. What I would say, without seeking for one moment to suggest we have been complacent about this issue, is that the Report sets out on page 24 a whole set of means by which the Employment Service sought to stimulate improved performance by individual units of delivery. I do not think I have ever lived through a period in which we subjected units of delivery and individual leaders and managers in the organisation to more intense scrutiny.

  96. Nevertheless, you do have these variations which I think are unaccounted for. I want to try to understand, because I represent an area which is an extremely difficult labour market, the differences in financial provision. It is much easier to get people into work in some areas than in others. I just want to understand whether there are variations because the NAO seem to say that there were no substantial variations between different units of delivery presumably working in very difficult conditions and some in less difficult conditions. Without giving me a-long-winded answer can you try to explain to me how that differential distribution of finances is calculated?
  (Mr Lewis) The very simple answer is that in areas which have much higher levels of unemployment, there is increased provision both in terms of the number of personal advisers, in terms of the amount of provision under the Options. So more will be spent in those areas than in areas where unemployment is seriously down.

  97. That implies that the average cost per job at between £5,000 and £8,000 or between £4,000 and 7,000 varies considerably between labour markets. Is that correct?
  (Mr Lewis) No, it is not necessarily because that is saying we will put more provision into area A than area B but that will normally reflect that there are more young unemployed people in area A than in area B. It does not necessarily imply that the units will be different.

  98. It seems to me that this is crucial to the governance of this whole project and its capacity to deliver or not. Are financial allocations made relating to the number of long-term unemployed rather than to their employability or lack of employability?
  (Mr Lewis) The basic allocation is made in respect of the number of long-term young unemployed people in an area. That is the starting point.

  99. That might account for some of the variations here, might it? Not wishing at all to denigrate the people I represent who I think are wonderful, as we all do in our constituencies, we have acute problems in my constituency. Am I to understand that the amount of money per young person in an area like mine would be the same as the amount of money allocated for each young unemployed person in a place in the more affluent South East?
  (Mr Lewis) No. What I was saying was that that is the starting point of the allocation process but is not necessarily the finish point of the allocation process. In an area which has a higher concentration, for example, with people with particular problems, say homelessness or addiction or whatever it might be, then we would tend to have greater provision available in that area. That greater provision tends to have a high unit cost and that would tend to mean that there would be a higher expenditure per individual in that area.

2   Ev 21-22, Appendix 1. Back

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