House of Commons - Public Accounts

Select Committee on Public Accounts Minutes of Evidence

APPENDIX 1

Supplementary memorandum submitted by the Department for Work and Pensions

Question 58: Trends in youth (18 to 24 year olds) claimant unemployment since 1997?

Graph 1 sets out the information on youth claimant unemployment. The top panel gives the information for those with a duration of unemployment of 0 to 6 months and the lower panel for those with a duration of six months and over. The information is seasonally unadjusted so a twelve-month rolling average is also included to give some idea of the trends. (Because the figures are seasonally unadjusted the comparisons below are given on an annual basis to avoid problems of seasonality.)

The graph shows that both short-term and long-term claimant unemployment have fallen over the period from February 1997 to 2002. The fall was larger for long-term than short-term unemployment and also larger for the longer durations. Claimant unemployment fell by over three quarters (79 per cent) amongst the client group for the New Deal for Young People—those with durations of six months or more—and has been virtually eradicated for those with a duration of a year or more. By comparison, those with a duration of less than six months has fallen by around a fifth (19 per cent).

Since (roughly) the start of the New Deal the New Deal client group has fallen by nearly two-thirds (65 per cent) and those with a duration of less than 6 months by 14 per cent.

CLAIMANT UNEMPLOYMENT: 18 TO 24 YEAR OLDS: 1997-2002

	May 1997	April 1998	February 1997	February 1998	February 2002
0-6 months	227,200	224,200	271,400	255,900	220,700
Change since 19971					-50,700 (-18.7%)
Change since 1998					-35,100 (-13.7%)
	May 1997	April 1998	February 1997	February 1998	February 2002
6 months and over	169,500	119,400	189,000	116,000	40,400
Change since 1997					-148,600 (-78.6%)
Change since 1998					-75,600 (-65.2%)
	May 1997	April 1998	February 1997	February 1998	February 2002
12 months and over	85,500	49,800	100,500	51,800	4,700
Change since 1997[6]					-95,700 (-95.3%)
Change since 1998					-47,000 (-90.9%)

GRAPH 1: UK CLAIMANT UNEMPLOYMENT: 18-24 YEAR OLDS

0-6 Months:

6 Months and over:

Question 82: Evaluation Evidence for NDYP Leavers to Unknown Destinations?

There have been two NDYP evaluation reports relating to leavers to unknown destinations. These are:

New Deal for Young People: leavers with unknown destinations

New Deal for Young People: Survey of Leavers to Unknown Destinations

The first study (ESR 21) was conducted by the National Centre for Social Research to examine the activities of people who had left NDYP between April and August 1998. The aim was to identify actual destinations of people with no destination recorded in ES records. Interviews were conducted in December 1998 and January 1999. The response rate was 55 per cent.

The second (ESR 63) evaluation examined the activities of participants who had left NDYP to unknown destinations between May and October 1999. Forty Units of delivery (approximately one third) were chosen to represent the profile of the national population. The sample was stratified to obtain robust samples from Gateway, each of the four Options and from Follow-through.

Face-to-face interviews took place between June and August 2000. There was a response rate of 51 per cent. 8 per cent of respondents considered they had never taken part in the programme and 1 per cent considered that they had never left the programme. Figures are based on those who considered they had both taken part in New Deal and had since left.

The findings below are from the second (ESR 63) evaluation because these figures are the most up-to-date.

FINDINGS FROM ESR 63

Initial Destination

The survey showed that 56 per cent of participants entered employment on leaving the programme. This is identical to the figure for those leaving to known destinations during May-October 1999. Therefore it appears that unknown destinations do not reflect a lack of success for New Deal in helping participants to find employment.

56 per cent of participants stated that they entered employment on leaving New Deal, when asked to provide their reasons for leaving the programme:

— 43 per cent named the start of full-time employment;

— 8 per cent the start of part time employment; and

— 2 per cent the start of self-employment.

Those who left New Deal for employment were more likely to be in employment at the time of interview.

Sustainability

55 per cent of all respondents, regardless of their perceived participation in New Deal, had achieved at least one period of sustained employment since leaving the programme or since May 1999. Of those who left directly into employment, 78 per cent have had a sustained job. In addition, 66 per cent of all respondents had achieved at least one period of employment within this period.

41 per cent of those whose initial destination was full- or part-time employment stated that they were still engaged in this job at the time of interview (21 per cent of the total sample).

Subsequent and Current Activities

43 per cent of those who provided information about their activity at the time of interview were in employment at this time, and 30 per cent were unemployed claimants. Information was not available for 3 per cent of the total sample.

Claiming JSA or Benefits, Sanctions

48 per cent of the total sample stated that they were in receipt of at least one benefit at the time of interview and 32 per cent were in receipt of JSA. There is a 2 per cent variation between this figure and that for claimant unemployment provided for current activity, but these are derived from different questions in the survey and slight variations in response are not uncommon.

23 per cent of the total sample stated that they had had their JSA stopped or reduced since May 1999. Twenty-four respondents gave reasons related to sanctions for this disruption to their benefit.

Barriers to work

55 per cent of the total sample stated that they have experienced at least one barrier to employment in the past year. The main barrier experienced is lack of personal transport (19 per cent), followed by ill-health or disability (14 per cent), lack of jobs in the area (15 per cent) and a lack of public transport (12 per cent). 17 per cent of the total sample mentioned at least one problem which might be expected to restrict "employability".

Those who have experienced barriers to employment are no more likely to have had repeat participation in New Deal than others.

Question 103: Variations across Units of Delivery?

Although the New Deal is planned on the basis of an average cost per participant, which includes both the cost of providing Personal Adviser support for everyone and programme support, in practice expenditure can vary quite markedly between individuals. These differences arise for two principal reasons:

— New Deal is demand led. In other words the help that an individual receives depends on their circumstances and needs and is not constrained by any personal cash limit;

— linked to this, participants move into jobs at different stages in the New Deal process and, therefore, have access the various parts of the programme to differing degrees. In addition we know that some people leave the New Deal but do not move immediately into a job.

There are also some local variations in the costs of delivering parts of the programme—eg different contract prices—but these are less important in explaining cost variations.

To illustrate this the average unit costs for each element of the New Deal are currently as follows (including Personal Adviser support):

Gateway:	£773
Employment Option:	£2,180
Full Time Education and Training Option:	£2,427
Voluntary Sector Option:	£2,877
Environment Task Force Option:	£2,877
Follow through:	£395

An individual with relatively modest barriers to employment may well find work relatively quickly. This could, for example, simply be with the help of their Personal Adviser during the Gateway and without any additional programme support. In these circumstances New Deal expenditure on that individual could be less than £100.

By contrast another individual with greater personal barriers to employment, or living in a less buoyant labour market, may require additional help from each of the elements of the programme. So, for example, they might receive more intensive help with jobsearch, additional careers advice and/or help with debt problems alongside the Personal Adviser support. There is no limit to the amount that can be spent in the Gateway although the overall four month limit and the focus on shorter provision at this stage means that the average cost is relatively low. If the individual does not leave New Deal at this point they may then move onto Option provision which is more cost intensive. Where necessary further assistance is provided in Follow Through again constrained primarily by time and the focus on capitalising on the Option experience rather than simply extending it.

Accordingly the help provided to someone with relatively severe barriers could conceivably amount to £5-6,000. In practice this would be funded by effectively re-deploying resource not needed by those with less severe barriers who find jobs relatively quickly.

In theory the extent of these differences could affect the national approach to resource distribution between regions and Units of Delivery (now Jobcentre Plus Districts). However, in practice there has been no need to attempt greater refinement of the national allocation model to date although some Employment Service regions have altered the balance of resource allocation between Units of Delivery to reflect expected demand. But even this has not been widespread, in large measure because the success of the programme in helping people into work during the Gateway process has meant that few local allocations have been exceeded. This links to the point made in the NAO Report (paragraph 3.16) about the difference between planned and actual expenditure. Information on outcome unit costs by Unit of Delivery is not, therefore, routinely compiled.

At the same time additional resources have been targeted in areas and for clients with especially severe barriers. This includes Action Teams, Progress to Work (offering extra help for people with drug problems), Minority Ethnic Outreach and the StepUP pilots which, from the end of April, will be providing transitional employment opportunities in some areas of particular disadvantage.

In summary, therefore, the general principle is that the provision and, therefore, the resources made available to a client should meet the needs of that individual in their particular labour market.

Question 115: The spread of employment and unemployment across the country?

At 74.5 per cent the UK's employment rate[7] as a whole is one of the highest in the world and much higher than the EU average of 65.3 per cent.

In addition, every region of the country has an employment rate above the EU average. However, regions are not the ideal geographical unit for analysis of the labour market as differences within regions are much greater than differences between regions. Therefore, Graph 1 gives the employment rates by local authority districts in Great Britain for the years 1997 and 2000[8] together with the GB and EU averages for comparison. The information is ranked from the lowest employment rate to the highest in each year in order to show the spread across the country.

There are a small number of areas within each region with low employment rates. These are concentrated in the major cities—particularly London and Liverpool—some seaside and coastal towns, and some, though not all, coalfield and other industrial areas particularly in Wales and the North East. For these local authorities have been used as the geographical unit. It is a broadly similar story if we use either parliamentary constituencies or wards.

Between 1997 and 2000 there has been a general overall rise in most areas of the country with the areas with the lowest employment rates tending to do slightly better than others. Although it is not evident from the graph (because it is ranked from lowest to highest in both years) there have been some areas where the employment rate has fallen.[9]

In addition, later information from the claimant unemployment count tends to confirm this picture. Although the claimant count rate presents a partial picture it does provide the latest information on developments in the labour market. Graph 2 shows the distribution of claimant unemployment rates in the UK for February of the years 1997, 2000, 2001 and 2002. A different geographical unit is used here—parliamentary constituencies—to suggest that the same picture holds, whichever geographical unit is chosen.

Between 1997 and 2001 there has been a general improvement in claimant unemployment rates across the country with the largest improvements in the areas that started with the highest rates. Over the past year there has been a slowdown in the labour market but most areas of the country have continued to see an improvement with 415 Parliamentary constituencies having seen a further fall in their claimant count rate, 64 are unchanged and 180 have seen a (generally small) increase. Overall the improvements have again tended to be in areas, which started with high claimant unemployment rates.

GRAPH 1: EMPLOYMENT RATES BY LOCAL AUTHORITY DISTRICTS: GB 1997 AND 2000

GRAPH 2: CLAIMANT UNEMPLOYMENT RATES BY PARLIAMENTARY CONSTITUENCIES: UK (SEASONALLY UNADJUSTED)

Question 155: Statistical breakdown by gender, race, class and geographical area of those returning to the Programme?

Gender

71% of all starts to NDYP are male, this increases to 78% for those with a second or subsequent spell.

	All Starts	2nd and Subsequent Spells
Male	71%	78%
Female	29%	22%
Ethnicity 16 per cent of all starts to NDYP are from minorty ethnic groups. This proportion remains the same when looking at those with a second or subsequent spell on the programme.
	All Starts	2nd and Subsequent Spells
White	84%	84%
Minority Ethnic	16%	16%

Geography

The table below shows that all ES Regions have a similar proportion of second and subsequent starts on the programme as to their proportion of total starts. No ES Region experiences a disproportionately high number of returners to the programme.

	All Starts	2nd and Subsequent Spells
Office for Scotland	11.4%	12.5%
Northern	7.7%	8.4%
North West	14.2%	13.9%
Yorkshire and the Humber	11.5%	12.3%
Office for Wales	6.3%	6.4%
West Midlands	10.6%	10.6%
East Mids. & Eastern	8.6%	8.2%
South West	5.7%	5.0%
LASER	24.0%	22.7%

Note: LASER stands for London And South East Region

There is no recording of participants' class or socio-economic status.

Department for Work and Pensions

April 2002

6 Because the figures are seasonally unadjusted and the latest figures are for February 2002 the percentage change are annual. Thus, the change since 1997 is the change between February 1997 and February 2002 and the change since 1998 is the change between February 1998 and February 2002. Back

7 The employment rate is the proportion of the population of working age who are in work. Back

8 The employment rates are from the annual local Labour Force Survey (LFS) databases. The employment rates are for the residents of an area and relate to the period March-February. Thus, 2000 relates to March 2000 to February 2001. Back

9 Although because the LFS is a sampling survey and these are relatively small areas this may be due in some cases to sampling variation. Back