House of Commons - Work and Pensions

Select Committee on Work and Pensions Minutes of Evidence

Memorandum submitted by the Work Foundation (ES 02)

1. Unemployment is at its lowest since the 1970s, employment has never been higher and yet there are people and places that have persistently failed to benefit from the UK's booming labour market. The "hardest to help" are now a feature of the welfare to work policy debate—an acknowledgement that unemployment is proving a stubborn problem amongst certain groups of people. Government policy has not moved rapidly towards the view that this problem is also about particular geographical locations, and ultimately, the combination of such places and particular types of people.

2. Economically, it appears rational to look at the big picture—safely stewarding the entire labour market and hoping for gradual improvements amongst the most disadvantaged. Politically, this is less attractive. Where communities continue to feel sidelined from the UK labour market, the macro-economic narrative may not win either the confidence or loyalty of its voters. This is especially true for those areas of the country and for those types of people who have apparently failed to recover any sense of labour market prosperity since more recent downturns. Such people and places are likely to be again the worst hit in any current slowdown. This is because new job creation records have been poor, new skills have been hard to come by and the infrastructure that supports local labour markets have deteriorated. In this sense any further erosion of the levels of economic activity in such areas will, as in the past, be very difficult to replace with new sources of job growth. In other more adaptive and resource and infrastructure rich areas of the UK, the job creation records are likely to remain high thus allowing a constant replacement of job loss with new opportunities.

3. Up to now, welfare to work strategies have been explicitly concerned with moving benefit claimants and other economically inactive people towards participation in the formal labour market—where they are able to work. In practice, UK policymakers have assisted various types of people into various types of employment. Nevertheless, the overriding presumption is that formal, paid work is the best possible outcome—as the mantra "work for those who can, security for those who cannot" makes clear.

4. At best, this is a coherent and ambitious policy response for addressing the needs of low skilled, disconnected individuals at the edge of the modern labour market. At worst, however, it is a one-dimensional approach that misses the needs of particular types of individuals and particular communities. For certain groups of people and certain communities in the UK are still proving difficult to "attach" to sustainable work in today's labour market. Their exclusion is an enduring and perplexing problem in an economy that can boast the highest levels of employment since the early 1970s.

5. The success of welfare to work policy since the mid 1990s has allowed a closer examination of the barriers that continue to hold back individuals and communities from accessing work. It now seems clear that the emphasis on greater supply side interventions and the process of matching people to vacancies has so far had less success with individuals from ethnic minorities, the low skilled, older people (especially men)[1], those on incapacity benefit (ICB) and lone parents, as well as for those communities where such people are disproportionately concentrated. Although many of these groups have recently had specially adapted versions of the New Deal programme constructed for them, it is too soon to quantify their success.

6. At the same time, these groups are operating in substantially different local labour market conditions, with varying levels of local labour demand. [2]Dickens, Gregg and Wadsworth, for example, point out that although regional unemployment differentials are lower than for many years, they do not capture the real patterns of geographical divergence:

7. "The proportion of working age men not in work varies from 13 per cent to 26 per cent across the ten standard regions. At county levels this spread nearly doubles from 8 per cent to 31 per cent. At finer levels of disaggregation this dispersion is greater still, highlighting the plight of many coastal towns and the former coal mining districts alongside major urban areas . . . by far the worst geographical concentrations of joblessness are in our social housing estates." [3]

8. The analysis of local unemployment and regional job vacancy rates usually relies on the imposition of Travel to Work Areas—geographical hinterlands within which people might normally be expected to look for employment. However, there appear to be two drawbacks to this approach. First, there are "Travel to Work" areas where local unemployment is persistently high (see table 1) and second, the areas may be unrealistic descriptions of potential travel habits, particularly where social housing estates are involved.

Table 1

TRAVEL TO WORK AREAS WITH EMPLOYMENT RATES BELOW 70 PER CENT BY REGION, 1990-2000

Wales—19 areas		North West—3 areas
eg Merthyr	61 per cent	eg Liverpool	62 per cent
Aberystwyth	62 per cent	Wirral & Chester	68 per cent
Northern Ireland—9 areas		Yorks & Humber—5 areas
eg Strabane	46 per cent	eg Whitby	58 per cent
Enniskillen	60 per cent	Sheffield/Rotherham
Scotland—14 areas		Devon & Cornwall—7 areas
eg East Ayrshire	64 per cent	eg Newquay	61 per cent
Glasgow	65 per cent	Penwith & Scilly Isles	66 per cent
North East—8 areas		Seaside—3 areas
eg Hartlepool	62 per cent	eg Clacton	60 per cent
Middlesborough	63 per cent	Gt. Yarmouth	69 per cent
Source: IPPR (2001) (from LFS Local Area Database) [4]

9. In these areas and for these people, the fabric of community infrastructure has been severely eroded. There are fewer affordable transport services, fewer locally-based public services, fewer childcare places, poorer housing conditions, the greatest levels of health inequality and the lowest rates of economic activity. Government research suggests a strong connection between lack of transport, social exclusion, narrow horizons and economic activity. [5]In this sense, it may be that the psychological definitions of mobility are very different to that suggested by using the travel to work area analysis. In fact, it is likely that within these figures and on social housing estates in particular the employment rates will be very much lower and the practical mobility of unemployed and inactive individuals much more restricted:

"Since 1997, unemployment has been reduced in every region of the UK. Nevertheless, masked behind this overall picture of falling regional inequality are localised pockets of high unemployment and high deprivation. Most of these areas are in inner cities, but some are seaside towns or former colliery areas. Nearly all such areas face multiple disadvantages with not only high unemployment, but also low employment, large numbers of people dependent on benefits and often poor housing, health and transport."

Labour Party National Policy Document[6]

Table 2

EMPLOYMENT CHANGE IN 12 TOWNS AND CITIES 1984-91 (DEPARTMENT OF THE ENVIRONMENT 1996)

City/town	Inner areas—change in number of jobs (per cent)	Outer areas—change in number of jobs (per cent)
Preston	¸8	14
Plymouth	¸7	29
Nottingham	2.5	4
Coventry	¸5	6.5
Bristol	6	2
Sheffield	¸6	1
Newcastle	¸7	9
Manchester	¸6	41
Liverpool	¸12	¸9
Leeds	6	7
Birmingham	¸7	10
London	¸8	¸2.5

10. Table 2 shows clearly the extent of employment change in major UK towns which reveals high levels of net indigenous job loss. Work has fled the inner cities to outer urban or to new areas and has simply left many people and communities behind. All of this leaves us with a clear but multi-faceted problem. We have high pockets of joblessness where mobility is restricted and where public services are fragmented. Communities and individuals are becoming more marginalised and overall levels of prosperity are making the problem more visible. Here, social capital[7] has declined and the community infrastructures that often underpin successful economic activity are fragmented. Where there are too few jobs[8] there are inadequate mechanisms for supporting job and business creation.

11. There is also an important political dimension to this problem. There may indeed be sufficient jobs in or within relatively easy reach of the majority of the UK"s towns and cities. However, the perception that certain parts of the country have been left out of the current economic boom remains strong. In the event of a downturn, then it will be these areas that are likely to suffer first. This is the labour market element of the "heartland" problem. Civil servants may not be convinced of the economic analysis of local jobs gaps, but the political pull is likely to be different.

12. For people in these places—especially those in the vulnerable groups identified above—"work for those who can, security for those who cannot" does not apply very well. Conventional patterns of paid employment (even part time) may not fit with their caring responsibilities, particular disabilities, or skill sets—particularly if they have been out of work for many years. [9]As Figure 1 below shows—a consideration of the types of client that one provider is currently working with on New Deal—many such people face severe barriers in moving into conventional labour market participation.

Figure 1 IN SEARCH OF WORK IN GLASGOW

More Able: 10 per cent

Eligible but have a good work record and/or educational background

In with a Chance: 30-40 per cent

Young people with few skills and low expectations

Older people who have been made redundant, and who cannot get back in

Needing Care and Work: 40-60 per cent

People with learning difficulties/family responsibilities/alcohol problems/drug problems/

anti-social behaviour

Source: Sinclair and Westwood (forthcoming). [10]

13. What does this mean for welfare and work?

In this context, the dominance of single size solutions make little sense. Accepting this argument has large ramifications for both the "welfare" and the "work" parts of the welfare to work project. On the welfare side, it follows that national welfare to work programmes such as New Deal should be devolved to provide far greater local flexibility and discretion along the lines of the Employment Zone and Action Team models. These issues have already been widely aired and debated. The argument is that "welfare", in this sense, should be about understanding and meeting individual needs through a broad range of welfare interventions, rather than forcing everyone through the same process. The recent Green Paper "Towards Full Employment in a Modern Society" goes most, if not all of the way by setting out a range of measures to concentrate resources on particular places and particular groups. [11]

14. It also follows that instead of a one-size-fits-all approach, employment policymakers should be looking to extend the range of "work" outcomes available. While the Government puts the virtues of "work" front and centre, it seems to retain a very narrow view of what that work is.

15. There are, though, voices from within and around government who are beginning to push a broader concept of work:

"The challenge, however, is to provide a wider definition of what employment means. Social democrats have traditionally equated participation with the paid labour market. Yet there is non-paid work that should be considered legitimate. Caring, informal education and volunteering all enhance individual wellbeing and are good for society. An active welfare state designed to encourage people into work should recognise this. In its second term, New Labour has to broaden the scope of its "welfare to work" policies." Peter Mandelson

16. This could be seen as softening existing labour market policy. This would be premature. Such "softening" should provide a much broader trigger to sustainable economic activity than current welfare to work policy—and as such, provide a much more effective intervention for disadvantaged individuals and communities.

17. UK policy is actually further down the broad road than first appears. Self-employment, supported by a generous employment credit, is an option in the New Deals for over 25 and over 50s and typically focused on local types of service activity. Support for moving lone parents into jobs as registered childminders is a principal part of the government's Neighbourhood Nurseries Initiative, creating local jobs and addressing low levels of available childcare places in deprived communities. Using money from the European Social Fund, the New Opportunities Fund and the Department for Education and Skills, the scheme is designed to deliver a massive increase in childcare places and to create both jobs and infrastructure. In addition, the Children's Fund—worth £450 million—whilst addressing older children at risk of social exclusion, simultaneously promotes and funds a variety of activities. According to the DFES announcement, these activities might include:

— mentoring programmes, eg mentors talking to young people at risk about crime, drugs or sexual health issues, often based at local youth centres;

— parental education and support—this could be delivered through parenting courses run by the voluntary sector, or support work in the home;

— befriending, counselling or advice services—including drop-in centres run by health services or voluntary organisations, or local groups where lone parents or step parents can support each other; and

18. Creative interventions of this nature not only deliver outcomes for the individuals involved but also trigger others' economic activity, through enhanced childcare provision and through the multiplier effect of basic economic activity. The creation of additional social or community enterprises via welfare to work should become an important objective for triggering improved levels of both individual and community economic activity.

19. Work by the Cabinet Office Performance and Innovation Unit on non-activity among older people[14] is useful to revisit here. The Unit's report makes a number of trenchant suggestions to increase social participation and community capital. These include:

— Ensuring Employment Service and Benefits Agency staff understand and promote benefit claimants' opportunities to do volunteer work; and allow staff to make small advance payments to claimants to cover volunteers' expenses.

20. The report points out that:

"In an age of air miles and loyalty points, a scheme that emphasised the mutual benefit, to oneself and the community, that can arise from unpaid activities might start to unlock wasted potential . . ."

21. The paper illuminates the limited extent of broad work outcomes currently on offer. Those claiming Incapacity Benefit can currently move not just into paid employment, but also into varying amounts of training, therapeutic work or community volunteering. The New Deal for Lone Parents offers participants a number of options for combining work, education and childcare. However, few ICB claimants are aware of the choices they have; and such notions of constructive participation are strictly limited to these two groups. [16]

22. The role of local government subsidy in fostering community enterprise is also important. In the 1980s a city council contract for insulating Glasgow homes allowed the Wise Group to begin to develop its Intermediate Labour Market model. More recently local government contracts for leisure have been increasingly awarded to not for profit mutual organisations such as Greenwich Leisure and Groundwork. Social enterprises are increasingly a model which can allow the combination of service delivery[17] with local job opportunity, particularly in local areas where service disintegration has been matched by high levels of aggregate job loss.

23. The success of the Intermediate Labour Market concept has been reflected in official policy circles with the announcement of a series of "Transitional Employment" pilot programmes.

24. We need to go further. The Government's whole employment policy programme has been about extending labour market choice through individual empowerment. While the primary aim of employment policy remains reattachment to the conventional labour market, there is a clear case for allowing a much larger set of people to mix and match—to a rather greater degree—different forms of economic and social activity.

25. This flexibility would apply not just to routes taken towards formal employment, but also to final destinations. These could be regular employment, a combination of formal and informal activities, or in a few cases, predominantly the latter:

"After a period of unemployment, the state should offer its help not in the form of hand-outs but through the guarantee of work. This is no airy-fairy idea. It has been the system in Sweden for 40 years. Once people have been unemployed for a year (or six months if under 25) the ES will be obliged to find them at least two offers of reasonable full time work . . . in some cases especially where unemployment is high it may be impossible to find enough jobs with regular employers. In such cases temporary jobs will be provided through job creation projects run by public authorities or voluntary bodies. There is socially useful work crying out to be done . . ." Richard Layard

26. Richard Layard, usually more identifiable with the "stick" of New Deal, is clear that there is a role for this kind of approach, especially if linked to a formal job guarantee. In practical terms this might be linked to work such as childcare—considered to be in deficit in high unemployment communities—education and volunteering (classroom assistance, playgroup/nursery work, time bank activity etc). This may also provide another method of New Deal option delivery in the form of an intermediate labour market or transitional employment process. As Geoff Mulgan states:

27. So how could we broaden work? The next two sections explore some promising ways forward already in operation.

28. Intermediate Labour Markets (ILMs) are a growing labour market phenomenon in the UK. According to a recent study by the Joseph Rowntree Trust, [20]there were 5,300 ILM places on 65 programmes in 1999. These programmes involved approximately 9,000 people per year and are clustered in the big cities and older industrial areas of the North, Midlands and Scotland. Activities include environmental work, childcare, town centre guides, IT services, sports and community work. The majority of places are for 18-25-year olds.

29. They are the growing expression of the view that the best way to prepare people for work is to recreate as real a work experience as possible—and if possible, to make this "socially useful" work. First coined by the Wise Group[21] in 1990, the concept of the Intermediate Labour Market is the notion that there is a market for paid labour intermediate between unemployment and full employment—work which also delivers benefits to disadvantaged individuals and communities. The first Wise Group ILM project started by upgrading poor quality insulation in Council homes in Glasgow—clearly work with a social purpose, both for individuals refamiliarising themselves with work and for the recipients of the work itself. They now offer training programmes as diverse as landscaping, home security, childcare and catering. The concept has three broad benefits in this context:

— It links the long-term unemployed to their communities and the local economy through the provision of useful products and services;

— If well managed it should have a life span beyond the duration of any particular funding regime;

30. The Seacroft Partnership in Leeds is another highly successful ILM. It involves inputs from Leeds City Council, the East Leeds Family Learning Centre, the Employment Service and a group of local employers led by Tesco. Seacroft is an area of Leeds with a high percentage of social housing and high levels of unemployment and benefit receipt. Crucially, the area is four or five miles away from the bustling regenerated heart of the City and there is very little travel to work in the city centre from Seacroft residents.

31. When Tesco announced that they were to open one of their flagship "Extra" stores in Seacroft with the creation of approximately 450 jobs, they knew that the majority of its staff were likely to come from within a mile of the store. The resulting partnership involved training of up to a year with guaranteed jobs at the end. Existing ILM programmes in Leeds were used as the model. Participants on this programme engaged in learning and socially useful work that was relevant to real employment outcomes. When the store opened in November 2000, over 200 unemployed local people many of whom have been out of work for more than two years were amongst its staff after following the programme. Recent evidence from the scheme suggests that up to 10 per cent of these participants have now been promoted to more senior and better paid jobs[23]. Since Seacroft, Tesco have opened two further regeneration stores—in Durham and Glasgow with plans for a fourth in Beckton well under way.

32. Local Economic Trading Schemes, or "time banking", also represent a growing phenomenon in UK cities. Essentially, individuals exchange time for services within the community. This means that participants earn credits for doing jobs or providing services: an hour of your time entitles you to an hour of someone else's time. Credits are deposited centrally in a bank and withdrawn when the participants need help themselves.

33. Proponents make grand claims for time banking, arguing that the system recast both conventional value norms and social relations:

34. In practice, time banks work in a number of different ways. A Health Centre in Rushey Green is using time money to galvanise patient self-help and support groups. In Watford, older people are revitalising local services like waste recycling, local transport and homework clubs for children using time money to unlock time, knowledge and expertise.

35. In a speech earlier last year the then employment minister Tessa Jowell made the importance of this community activity clear:

36. These examples illustrate two things. Firstly, that "socially useful" work can form an important transition between inactivity and the formal labour market; and secondly, that such an approach can also have benefits for restoring social fabric in deprived communities. A third benefit may also be the ability to translate such work into social enterprise business start-ups, such as the Neighbourhood Childcare Initiative's attempt to increase the number of registered childminders in such communities.

37. It would seem logical then to target particular communities and socio-economic groups with a broader approach to both welfare to work and to work itself. Widening the types of "work" activity in such areas and with such people should also attempt to address deficiencies in community infrastructure.

38. Our key argument is this: not only should policymakers encourage social capital-building through the benefits system, but also that all of these activities—jobsearch, training, formal and informal activity—can develop employability and move people towards independence. We should widen our ideas of "work" to this end.

39. Eligible groups for broad work programmes[26] might include older workers; lone parents and parents of children under 11; those with caring duties; those with recurrent/degenerative conditions; long term ICB recipients; and those on social housing estates or in areas of low labour demand. There might be others who would qualify on the basis of a severe shortage of skills, or persistent substance abuse/behavioural problems.

40. So why not simply set up more ILMs or time banking projects? This might seem the obvious response. However, we believe something much more ambitious is required: putting broad work into practice means incorporating broad work principles into the benefit system as a whole— not simply establishing new waves of pilots for single groups.

41. The benefits of Intermediate Labour Markets are well established. [27]By contrast, recent research shows that in practice, the operation and dynamics of UK time banking is more complex than proponents suggest. [28]Members tend to be highly skilled and less than representative of the possible client groups discussed in this paper. Moreover, time banks in action often seem to reinforce, rather than transform, individuals' confidence, motivation and skill sets. At worst, UK time banking seems to exploit existing social capital rather than generating new forms of it, and in practice deteriorates into "the translation of unequal relations"—the most assertive people coming out on top.

42. Both ILMs and time bank projects also tend to be small scale. As a whole, the UK ILM sector currently has around 5,300 places in 65 programmes, involving just 9,000 people a year. [29]There are 300 or so time banks in the UK, but average levels of activity are usually low—as few as four hours a month, twelve "trades" a year, with an average annual per capita turnover of just £70. [30]

43. To deal effectively with the problems of people and place we have outlined—particularly the numbers of people affected—it is clear that much larger and more transparent mass mechanisms are required. The wisest policy would take the most successful elements of time banking and ILMs and incorporate this into the mainstream welfare state.

44. We suggest that a mainstream broad work programme be set up for the groups outlined above. Essentially, people in these categories should be allowed to "patch" jobsearch with combinations of socially constructive activity—for example, learning and training, volunteering, community work, occasional employment or therapeutic activity. The aim would be to have clients eventually combining some paid, formal work and informal, socially constructive activity. The latter would combine individual and social benefit—building self-confidence, social and interpersonal skills, and developing community capital and networks.

45. Doing broad work would operate something like this. After an initial employability and contingency assessment, Jobcentre Plus clients would draw up participation plans with their Advisers. These plans would set out the mix of training, jobsearch and informal activity matching individual needs best. The understanding would be that some clients would be able to move more easily and quickly into paid, formal work than others. In a few cases, paid formal work might stay a long term goal.

46. Parallel investment in community infrastructure should be considered concurrently. Capital funding from the New Opportunities Fund, European Structural Funds and other regeneration monies should be prioritised and harnessed to the same ends.

47. To make these programmes work, benefit regulations will have to change. The 16 hour rule governs the maximum amount of time claimants can spend while still receiving benefit payments and being counted as available for work. This rule will need scrapping or revising greatly upwards. Benefit earnings disregards govern the amount of money claimants can earn on top of benefit before the latter starts to be withdrawn. These, too, will need revising substantially upwards. This will allow claimants to make practical choices about combining different types of formal and informal activity—particularly as they will be compensated for both.

48. Alone, allowing people do undertake socially desirable work will not be enough. A broad work programme should actively encourage it. One way of doing this would be to use the Personal Job Account mechanism (currently deployed in Employment Zones) to combine benefits, training and money and a State stipend for informal activity. A smarter solution, however, is to use the time bank mechanism, paying people for informal constructive activity in time credits, which could then be cashed out in a number of useful ways. The benefits of this approach are explored in the next section.

49. There is a strong equity case for making these changes to policy—the intuitive appeal of extending choice. But such changes also score on efficiency grounds. At the human scale, placing people into a range of sustainable positions now prevents fallback later, and demonstrably meets individual needs better. There are also significant community social and economic benefits from recasting work, not least the likelihood of increasing the amounts of money and time that will "stick" to local areas.

50. In doing so, policymakers can encourage and make attractive all kinds of desirable activities that the market alone will fail to provide. One option is to use time banks and time credits to "pay" people for volunteering and other community work. [31]These credits could then be cashed out in several ways—converted into hard cash to be placed in an ISA; converted into Attachment Account or an Individual Learning Account with funds to be spent on learning and employability; or spent locally on a range of other time-funded services, or in select local shops and services. At the very least these types of activity should be disregarded in current benefit rules and seen as a productive method of moving people closer to sustainable economic futures. Credits would be contingency-based. Within these categories, they could operate more or less like existing government credits.

51. These ideas for improving social and economic conditions can potentially help rebuild the social fabric of a community, and improve its infrastructure through a local multiplier effect. This new approach would further stimulate attitude change about regenerating communities—seeing them as new markets and places of economic potential, rather than no-go areas. As Grogan and Proscio point out, inner-city areas in particular have inherent vibrancy and energy that when properly tapped, can attract consumers and companies in droves—a new experience to counter the failing allure of suburban shopping centres. [32]The renaissance of East London and other urban centres across the UK—Liverpool, Manchester, Newcastle, Glasgow—stand as strong examples.

52. Research from the Brookings Institute in the US suggests that poor areas lose up to 70 per cent of local expenditure as they lack the employment structure to "keep the money in". This is compared to an average of approximately 37 per cent for average neighbourhoods. Smart policymakers are already making these links. The Rockefeller Foundation are increasingly offering start up funding to LETS schemes in inner city areas and with disadvantaged groups. The US has a range of state "incubation" or assistance programmes. In Australia the 1995 Social Security Act disregards LETS income in benefit calculations, and new benefits claimants are encouraged to join such schemes at the beginning of their claims.

53. As described so far, the broad work proposals say little about some of the other barriers to finding and keeping work outlined earlier. In particular, allowing people to combine different types of activity on the way towards the regular labour market, whilst valuable in itself, does not seem to go far in meeting the very different needs of the client groups described.

54. In fact, broad work can meet these needs, by allowing people to spend their time in several ways. Broad work does not simply enhance individual employability by improving education, skills and so on. Over time, it also provides practical help in holding onto a job, or maintaining desired combinations of activity. Time money, for example, gives additional access to childcare, emergency transport, household maintenance and other everyday needs—all of which normally require not just money, but time commitment:

55. The notion of mutual support at work here is underpinned by the same kind of reciprocity that characterises the relationship between individuals and the state in existing welfare to work policy. This though is a more horizontal mutualism—one that is developed and strengthened at community level.

56. Multiple equity mechanisms of this kind are essentially paying people to participate in a range of constructive activities. In this regard, they are little different from the Participation Income programmes suggested by Tony Atkinson[34], and more recently revived by Carey Oppenheim. [35]

57. A participation income, as defined by Oppenheim, is:

A flat rate benefit paid to adults who are "participating", ie working, retired, unable to work through disability, caring for dependants, volunteering or unemployed.

58. Two different arguments are at work here. The kernel of the broad work idea is to widen the idea of "work" to allow benefit recipients to undertake a wider range of work-like activities than employment policy currently allows. This in turn should help to close the gap between economic activity and unemployment by increasing individuals' job readiness and motivation and by further incentivising particular types of socially useful work. Participation income proponents, meanwhile, argue that while people may obtain non-monetary benefits from work, paid employment alone does not capture an attractive idea of social inclusion. [36]Work is central to social inclusion, but not identical to it. To achieve a truly inclusive society, therefore, a wider set of activities than just work needs to be valued, supported and encouraged.

59. In the end, both policies take different routes to the same destination. As we have seen, putting broad work into practice implies that some clients will do little formal paid work, while the informal activity they do undertake is seen as socially desirable. Scale and scope aside, therefore, broad work and participation income schemes are very similar and have many of the same advantages.

60. Potential problems:

Proponents of broad work and participation income programmes have to deal with a range of possible objections, both technical and political.

61. Not everyone will approve of a welfare-to-work system that does not put formal paid work absolutely front and centre. Conversely, broad work schemes could be seen as unjustified use of state power; government prescribes some activities as more deserving than others, rewarding some and penalising the rest. This is more or less what happens already with the New Deal and its famous "no fifth option". But in that case, the rationale seems very clear—paid work is good, anything else is bad. Traditional welfare to work is primarily an economic policy programme, with some positive social spin-offs achieved through people being in work, and through people becoming more employable.

62. In multiple equity schemes, the division between the social and the economic, and thus between good and bad activities, is not so clear. Furthermore, while a good economic outcome is easy to quantify, good social outcomes are often more murky. It would be easy to find activities on the margin, which could be argued to build social/economic capital for some, but might still be considered negative by others. Putnam[37] makes the distinction between "bridging" and "bonding" social capital, arguing that the latter can sometimes be socially destructive. This might be seen in activity that would strengthen a particular sector of community (eg a minority faith-based organisation or venture) but would be rejected by others.

63. The only way over this objection is for policymakers to set very clear programme aims. They need to state why some activities are "constructive"—ie they have clear individual and community benefits, and score highly on building social, economic and employment capital. At the same time, they will also need to take a view about whether one or many social capitals should be encouraged—ie are multiple equity schemes about allowing pluralistic communities to flourish, or about guiding people towards narrow prescribed social/economic norms?

64. These are the classic hard choices of legend. In practice, allowing people to choose their own forms of equity accrual towards greater economic self dependency may prove most effective—especially in areas and with particular socio-economic groups where policies like New Deal have had least effect. The key is to angle the activity to ensure that genuine social participation/employability benefits result. We should consider how a wider definition of work can 'broaden the funnel' and allow more people to move from benefit dependency to sustainable economic activity, or at the very least to a practical combination of the two.

65. There are also more technical objections to the policies suggested in this paper. Both Broad Work and Participation Income schemes reduce replacement ratios by rewarding activities other than paid work. This may have the effect of keeping some people further out of the labour market than they would be now. Given that sustainable paid employment is the best route to economic self-sufficiency, multiple equity schemes may increase choice but also dependency on state support.

66. Of course, this point could equally be made about current and future government policies, which have vastly increased the scope of in-work benefits. Whatever the outcome of this argument, however, for a government which prioritises formal economic activity, seeing paid employment and good works as broadly one of a kind may not be politically acceptable. This suggests a desirability hierarchy may evolve, with paid work at the top and good works ranked somewhere below it. Depending on the position of informal activity within the scheme, this could end up as little better than the status quo. It is important that a strong case for non-formal work is made.

67. Participation income schemes need to be funded by raising average marginal tax rates. Depending on the benefit level set, tax rises could decrease incentives to work for the broader population. [38]The more ambitious the programme, the bigger this obstacle becomes. Broad work schemes do not face this problem as such, because they use alternative currencies. However, multiple equity schemes that allow people to cash their credits in a variety of ways do represent a real spending commitment for government.

68. For both types of programme, as for means-tested systems, administrative and monitoring costs could also be substantial.

69. Conclusion: re-framing the social contract

There are two distinct ways to understand broad work programmes. At one level, they represent a pragmatic response to "hard to help people and hard to help places"—the needs of many inactive people now being moved towards work through Jobcentre Plus; and the labour market conditions of many deprived communities.

70. At another level, broad work is a far more radical proposal. It aims to recast—for the better—the current balance of rights and responsibilities between citizen and State, through a broader understanding of social inclusion through participation, not just paid employment.

71. Intuitively, this is a powerful story with a powerful extra attraction—much of it is being actively considered by those closest to power. As so often happens, genuinely new policy ideas can be quickly assembled from existing fragments of activity and thinking. Our argument is partly that we need to finish the job of innovating in employment policy; partly that we need to fit together the two key narratives of work and community.

72. We are not advocating an alternative to work. Rather, we are considering how best to widen the definition of work, in order to trigger greater levels of individual and community development—and conventional economic activity. Our focus is on developing approaches to welfare to work that can best achieve this, for those individuals and communities that are proving the hardest to help. Indeed, we explicitly recognise that solutions for both problems can and should be combined. Individual development promotes community development and vice-versa. Deprived communities are dominated by people with chaotic lifestyles. Part of this chaos is caused by a lack of infrastructure amidst such communities.

73. Community re-investment and the need to create sustainable work opportunities in deprived areas and for people with limited mobility should go hand in hand. Multiple equity programmes enable this connectivity by operating as a kind of employment support network; participants can use their time equity to purchasing ongoing domestic and other support services which will allow them to keep the jobs they find.

74. Social equity programmes of this kind represent a substantial re-framing of the current social contract. Under New Labour, the welfare state is becoming increasingly orientated towards work, and welfare to work mechanisms are more widely spread across the system. Welfare to work sets out a relationship between the individual and the State based on a series of rights and responsibilities. Unrealistic demands on either side make the system unworkable.

75. The current difficulty with "work for those who can, security for those who cannot" is that it offers everyone the same deal. The state now expects a much wider, more heterogeneous group to seek work. Given the diversity of people's needs and the places in which they tend to live, it's both unfair and inefficient to narrow their options by prioritising orthodox paid employment. As Jobcentre Plus begins operations, and the sheer range of client and circumstances becomes apparent, the case for rethinking work will become ever clearer and more urgent.

76. It is vital to address the disabling tension between two of the Government's most powerful policy themes—on the importance of community and the need for labour market reform. The latter seems to involve matching supply and demand by all means necessary, moving people to work regardless of the effect this might have on the communities they leave behind. The former, meanwhile, focuses on exactly those communities and how to strengthen their social and economic fabric. Ensuring stable and attractive places—encouraging people to stay—is seen as central to making this happen. In the best traditions of joined-up policymaking, broad work programmes offer a neat way to connect the two. Work and community can sit more comfortably together—both in Whitehall and in Labour's heartlands.

Andy Westwood

Head of Policy Research

Max Nathan

Researcher

11 April 2002

1 Employment rates for men aged 50-64 have declined markedly since 1979, although the downward trend has more or less levelled off since 1990. Compared with men aged 25-49, a significantly lower proportion are in work (LFS data). Back

2 R Martin, C Nativel and P Sunley (2000): "The Local Impact of New Deal: Does geography make a difference?", Paper presented at the Annual Conference of the Institute of British Geographers, University of Sussex, 4-7 January. Back

3 R Dickins, P Gregg and J Wadsworth (2001): "Non Working Classes-Britain's New Chronic Unemployed", Centrepiece, June. Back

4 P Robinson and N Burkitt (2001): "The Challenge of Full Employment", in N Burkitt (ed) A Life's Work: Achieving full and fulfilling employment, London: IPPR. Back

5 TraC (2000): Social Exclusion and the Provision and Availability of Public Transport, Report by TraC at the University of North London for the Department of the Environment, Transport and the Regions, London: DETR. Back

6 Labour National Policy Document 2001. Back

7 Social capital can be defined as the potential value gained from an individual"s or community"s social networks. Such value may or not be translated into economic worth. Back

8 M Nathan (2000): In Search of Work: Employment strategies for a risky world, London: Futures, The Industrial Society. Back

9 J McCormick (2000): On the Sick: Incapacity and inclusion, Edinburgh: Scottish Council Foundation. Back

10 A Sinclair and A Westwood (forthcoming): "Policy v Process", in A Westwood (ed.), New Deal 2, London: The Industrial Society. Back

11 DfEE (2001): Towards Full Employment in a Modern Society, London: The Stationery Office. Back

12 As quoted in The Observer, April 2001. Back

13 DFES press release July 2001. Back

14 Performance and Innovation Unit (2000): Winning the Generation Game: Improving opportunities for people aged 50-65 in work and community activity, London: The Stationery Office. Back

15 Performance and Innovation Unit (2000): Winning the Generation Game: Improving opportunities for people aged 50-65 in work and community activity, London: The Stationery Office. Back

16 R Martin, C Nativel and P Sunley (2000): "The Local Impact of New Deal: Does geography make a difference?", Paper presented at the Annual Conference of the Institute of British Geographers, University of Sussex, 4-7 January. Back

17 A Westall, P Ramsden and J Foley (2000): Micro Entrepreneurs: Creating enterprising communities, London, IPPR and New Economics Foundation. Back

18 R Layard (1997): What Labour Can Do, London: Little, Brown. Back

19 G Mulgan (2001): "Full Employment: The UK", in A Hood and F Michel (eds.) Achieving Full Employment, London: Policy Network. Back

20 B Marshall and R McFarlane (1999): The intermediate labour market: A tool for tackling long-term unemployment, York: JRF. Back

21 The WISE Group are a Glasgow based organisation operating programmes for the long term unemployed-originated the concept of the Intermediate Labour Market (ILM) with the opinion that there existed a demand for paid labour somewhere between unemployment and the formal labour market. They are currently one of Scotland's largest deliverers of welfare to work programmes through New Deal, Employment Zones and City Council and European Funded projects. Back

22 See B Marshall and R McFarlane (ibid.) for a comprehensive evaluation of the ILM mechanism. Back

23 Conversation with Martyn Venning, Head of Regeneration, Tesco, September 2001. Back

24 G Seyfang (2001): "Restitching the Social Fabric, One Favour at a Time: Community currencies, time banks and volunteering", article for submission to "Town and Country Planning", July, www.timebanks.co.uk. Back

25 Speech given to New Economics Foundation, April 2001. Back

26 As suggested by McCormick and Max Nathan. Back

27 B Marshall and R McFarlane (1999): The intermediate labour market: A tool for tackling long-term unemployment, York: JRF. Back

28 T Aldridge, J Tooke, R Lee, A Leyshon, N Thirft and C Williams (2001): "Recasting Work: The example of Local Exchange Trading Schemes", Work, Employment and Society, 15:3. Back

29 B Marshall and R McFarlane (1999): The intermediate labour market: A tool for tackling long-term unemployment, York: JRF. Back

30 T Aldridge, J Tooke, R Lee, A Leyshon, N Thirft and C Williams (2001): "Recasting Work: The example of Local Exchange Trading Schemes", Work, Employment and Society, 15:3; G Seyfang (2001): "Working for the Fenland Dollar: An evaluation of Local Exchange Trading Schemes as an informal employment strategy to tackle social exclusion", Work, Employment and Society, 15:3. Back

31 A Westwood (2001): "Social Equity, LETS and Employee Mutuals: Stimulating activity in deprived areas", mimeo, London: The Industrial Society. Back

32 P Grogan and T Proscio (2000): Comeback Cities: A blueprint for urban neighbourhood renewal, Boulder: Westview Press. Back

33 Private correspondence, 2001. Back

34 E.g. A Atkinson (1998): Poverty in Europe, Oxford: Blackwell; A Atkinson (1995): Incomes and the Welfare State, Cambridge, CUP; A Atkinson and H Sutherland (1988): Integrating Taxation and Social Security, London: LSE. Back

35 C Oppenheim (2001): "Enabling Participation? New Labour's Welfare to Work Policies", Policy Network News, 14 June, www.policy-network.org. Back

36 E.g. F Vandenbroucke (2001): "European Social Democracy and the Third Way: Convergence, divisions and shared questions", in S White (ed.) New Labour: The progressive future?, Basingstoke: Palgrave; F Vandenbroucke (2001): "Active Welfare", Policy Network, issue 1, summer. Back

37 R Putnam (2001): Bowling Alone: The collapse and revival of American community, London: Fireside Books. Back

38 D Clinton, M Yates and D Kang (1994): Integrating Taxes and Benefits?, London: IPPR. Back



© Parliamentary copyright 2002	Prepared 13 June 2002