Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 40-56)



  40. My final question is on the local jobs gaps. Would you recommend to this Committee that we need to profile localised jobs gaps more and that there needs to be both more and more intensive area-based practical solutions drawing on some of the recommendations you have just made?
  (Mr Westwood) Certainly profile jobs gaps and actually try to reduce travel to work area analysis and use that as a way to look at jobs gaps within tighter areas and act accordingly.

James Purnell

  41. I would like to concentrate on what you said in your memorandum about the concept of work involving Jobcentre Plus. You say that there should be a longer devolution to the level of Jobcentre Plus, which I have sympathy with. What kind of flexibility would you expect Jobcentre to have? If you were the Fairy Godmother and you were in charge of redesigning the whole system, would you be talking about different benefit rates? Would you give them budgets to apply from one area to the other? What kind of flexibility would you want them to have?
  (Mr Nathan) Overall there is a differentiation, of which I am sure you are well aware, between increasing levels of flexibility for particular area-based and pilot-based back to work programmes, where there is a personalised service: there are pots of money that can be spent at advisers' and individuals' discretion and there is also some element of tailored-in work support. All of those elements seem to work fairly well. New Deal is very slowly moving in that direction but it needs to go a lot further, so that at a general level in Jobcentre Plus we would be looking for much more devolution along the lines of employment zones or job action teams.

  42. And get rid of the five options? Would you just say the adviser decides with the client what their programme should be?
  (Mr Westwood) The five options are a useful guideline but I think there are problems within all of them. I think a degree of flexibility in how you interpret those options should be given; say, the capability of the local FE provider to deliver a decent bit of learning that is relevant to that labour market. There has to be more discretion at the adviser level to react to individuals as they see fit.
  (Mr Nathan) That is a useful way of looking at it, I think: relatively skeletal guidelines with considerable discretion to not only shape the programme around the local provider capacity but also around individual client need, and, as we have seen, that is likely to be quite complex.

  43. You mention amending the 16-hour rule and the earnings-disregard rule. Again, can you give us an idea of how you would do that. Would that be a universal change or would you say the personal adviser would have the discretion to amend that for an individual client; say, if they had volunteering or educational opportunities?
  (Mr Nathan) This really depends on how you take the ideas in our submission. What we are arguing, I guess, on a practical basis as much as anything else is that if you are going to look at this on a broad work approach, it is most germane to people who . . . We name a whole set of groups of people who are likely to have various quite hard-to-remove barriers to entering into conventional patterns of work. As a starting point, at any rate, we would say those would be the first groups in the queue, if you are going to look at putting these kind of things into place. The 16-hour rule is one thing; earnings disregards are extremely low for most groups in the labour market, and that is something we should be looking at anyway—and perhaps over a wider basis, I am not sure.
  (Mr Westwood) I think it goes back in terms of the five options but also to the jobs gap in particular parts of the country. We would advocate focusing on particular people in particular parts of the world where it is very hard to find an employment option, so what you do is you make the best use of what you can, which are opportunities for volunteering in communities, opportunities to address infrastructural issues that are deficient, and have a disregard towards that kind of stuff rather than just a blanket approach to everybody across the country and another version of one-size-fits-all. I think we would either talk about specific employment zones with those specific measures built in, which would become targeted at particular parts of the country, or we would look at discretion within particular areas in the kind of tool-kit of the personal adviser.

  44. To summarise, you are saying that on the earnings rule you think that is a general issue where it may well be that the earnings disregard is too low for everyone.
  (Mr Westwood) Yes.

  45. But around the 16-hour rule there are more specific things you are saying about the wider concept of work, and that is something that would be built into either specific areas or at the discretion of the adviser?
  (Mr Westwood) Yes. Certainly that is the way to start.

  46. In terms of your idea of broader work, it seems to me, again, that has two slightly different client groups: people who may well have good skills and may be relatively close to being ready for work, who live in areas where there are no jobs; and people who are just very far removed from the labour market—approximately 30 to 40 per cent in relation to the Glasgow example. With them, is broad work the immediate step or are there more primary types of intervention that need to be taken?—if you think in terms of the hardest to reach cases, getting people to have some kind of order in their lives and to overcome drugs problems. When we went to Holland we saw what they described as reintegration centres where they start to work on very basic things about organising their lives, doing the washing up, facing up to drugs problems, but that was contracted out from their equivalent to Jobcentre Plus. Is that something you have looked into?
  (Mr Westwood) We were quite careful and we spent a lot of time thinking about this ourselves, about broad work not being an end in itself and not thinking that if you can deposit people in this range of activities, then, fine, it is sorted. We think it should work pretty much along the same lines as the kind of transitional employment pilots, which start with heavy intervention, high subsidy, a high care approach at the beginning for those particular types of people and then trying to get it down so that you have got some quite solid outcomes at the end, whether that is the paid formal labour market or a start-up as a social enterprise in an inner city or a public sector job or whatever. It is the same kind of approach, effectively, which is: put as much effort as you can up front and eventually try to reduce the reliance as people move through. That is not saying how long that will take but, clearly, with some people, quite a long time.

  47. Can I go to two practical issues. You have talked about this interesting concept of time banks. Can you tell us whether you would try to establish a community time bank in certain areas or would it be that the Government effectively would be trading certain government services, like education, for time committed? Which model are you thinking of?
  (Mr Nathan) I think our attitude to time banks so far is that the successful ones work relatively well but at the moment it is an extremely small sector. We are probably talking about 10,000 odd people a year going through time banks. If you look at national figures for economic inactivity, there are about 2.3 million people who are economically inactive but would like to work. The capacity of both the time bank and the ILM sectors at the moment is nothing like big enough for even beginning to tackle this problem, so, as we see it, some kind of government push to get these ideas off the ground is inevitable, I think. Whether that takes the form of the Government directly subsidising particular services or whether it is simply a government-brokered scheme to enable people to interpret credits which can be cashed out in a variety of ways, I do not think we have a completely firm view on yet.
  (Mr Westwood) They tend to grow up in high social capital areas. Examples are in Greenwich, Dulwich, Bath, Stroud—which are not without their problems but these are kind of areas where people bond more easily and set up these kind of schemes. There needs to be a mechanism and push which helps to transplant that approach, which we think is important as far as infrastructure is concerned, to areas where it is harder to get things going but the need is that much greater.

  48. One final question: in terms of costs, have you looked at what a scheme along these lines would cost?—and it does not have to be particularly specific. Or, if you have not, is there any way you could give us a quick estimate of whether we are talking about tens of millions or hundreds of millions?
  (Mr Westwood) It depends how focused you want to be. It depends how quick you want to be as well. I think the easiest way to address this, and certainly the cheapest and most effective way, is to talk about a number of areas and try and set in place more flexibility rather than new services, in the first instance. So really it could be a very, very small amount and actually just a change in the processes of delivery and the processes of focus, or it could be something that you could pump a lot of extra resource into via Jobcentre Plus or particular pilot schemes. But I do not think at any time we were expecting it to be a new layer of activity or a new layer of people or anything like that, so we could not say it would cost £x, but, if it was appropriate, I think something we would be keen to do is to look at how much in reality a particular pilot might cost to operate within a particular Jobcentre Plus area, and we can get on with that as and when.

Mr Selous

  49. In terms of regenerating local communities, I have seen in my own constituency how very severe congestion has led to a significant loss of local jobs, both industrial and retail in fact. What sort of work or evidence or modelling have you done about transport helping to regenerate local areas in terms of helping employers to get raw materials in/finished goods out, regenerating retail centres and so on? A criticism could be made that by focusing public funds on a road or railway or whatever you are helping quite a small area and this would be a large use of public funds for perhaps minimal effect. I just wonder if you have done any work to show what the employment of community regeneration benefits would be,
  (Mr Westwood) We have tended to do more work on the use of transport and the infrastructure affecting individuals to areas where work exists rather than as an incentive to invest or inwardly invest into regions, so I suppose our main answer is no. But transport is obviously a multi-use thing. We have tried to develop the notion where there are various uses of transport. One of the areas that we talked about in the submission was Seacroft in Leeds, where at one level you have a relatively congested area coming out of Leeds City Centre but you have a dual-carriageway ring road where you have the meeting point between people who are relatively highly mobile in a congested place (ie, who are driving in and out of work) and people who are completely immobile in a congested area because the buses are late and are not reliable, they cannot get into the city centre at a particular time to find work. What I think Tesco in particular have been very quick to seize on—and this is partly as a reaction to a business opportunity, in effect—is to pick those areas—and they are doing it in Glasgow, Durham, Beckton and they have done it in Seacroft—and site a store—and these are the biggest stores in their range for 500+ people—in areas where they have a very tight local labour market. They offer job guarantees via transitional employment processes for people that are, effectively, within half a mile of the store, yet the customer base they are trying to attract is those who are more highly mobile, the people who are passing through, and the congestion is kind of working two ways for them. That is part of an answer. Probably not as good an answer as you would like, but that is the beginnings of something that we think is quite interesting.

  50. Moving on to a different area now, the complexity within the welfare system. If I understand the sense of paragraph 75, the penultimate paragraph in your submission, you seem to be advocating a greater differentiation of the welfare system to take more account of people in different circumstances. If that is what you are saying, is that not going to make an already quite complex system even more complicated? Could I add another question to that. I was intrigued by something that, I think, Max said earlier about the possibility of providing a human resources function for smaller businesses, because there is certain anecdotal evidence that some very small employers are wary of taking on extra categories of employee because of the extra administration that they will have to be responsible for. I wonder if you could perhaps include something on that in part of your answer.
  (Mr Nathan) Taking those points in order, I think when we talk about complexity, this paper, this part of the submission, is focusing on work outcomes rather than routes through the system necessarily. Obviously that feeds back into how one would move from welfare or inactivity into employment and, one hopes, stay in employment. I think what we were arguing is that there is considerable ambition in terms of extending the welfare-to-work approach to larger groups of people who are often quite far away from the labour market, but, in contrast to that, the primary outcome is paid work on relatively conventional patterns. There are exceptions to that, such as the needing to work parents, which offers them a range of work outcomes, but generally speaking the primary push is towards conventional patterns of paid work. We were trying to make the case that that is not going to be suitable for quite large numbers of people and to think about introducing some complexity there. That does not necessarily feed into additional complexity in the welfare system itself. I mean, there is kind of good complexity and bad complexity there. There is complexity in the sense of understanding and paying attention to individual needs and there is complexity in the sense of needless bureaucracy, absurdly high benefit clawbacks, and so on and so forth. In terms of the HR function, I absolutely take your point that many SMEs have been wary of the bureaucracy that they have either experienced or imagine they will experience in taking on people through programmes such as this. That is one of the things we are concerned about here. One of the things we see, I think, is there is a cluster of issues which it is relatively easy and intuitive to join up at strategic level (which is welfare to work, workforce development and business support systems) and practically speaking those are rather more scattered than we would like them to be across various Government Departments and responsibilities, and even more so in practice, I think—and that is leaving aside how effective those actually tend to be. So we would want to see some joining up, both up here and down there, I think, in that field.

  51. One final question. Over what sort of period would you see the changes you talk about in your paper being implemented? Is this a five, 10, 15 year project?
  (Mr Westwood) I think some should be very short term indeed—just kind of freeing up particular responsibilities and templates that local advisers are working in. So some we would recommend and would like to see in place as quickly as possible; others clearly take some time. It took some time for us to get our heads round them, let alone anybody else! I think it is probably a five . . . certainly a five year, top end, cycle, but when we are talking about particular communities and the infrastructural issues then perhaps even longer—you know, the agenda is much more long term.


  52. I am interested in something Max said about the coordination. Do you have anything useful that you might be able to share with us about the ways that the various parts of the public framework work together, local government departments and Whitehall? Does your experience extend to knowing anything about how well the central government and local government nexus is coordinated?
  (Mr Westwood) It varies. The more work we have done in particular areas—and clearly our research has taken us down that road—you come across some incredibly well developed partnerships, in effect, not just between local and national government but between local government and levered in employers and stuff like that. In Leeds you have an incredibly good partnership between the Labour council, the local learning provider, the local (what was then) Employment Service, and the kind of missives that are coming down from national government, and they have taken it and run with it and been incredibly successful. But in other parts of the world you are starting from a much more frayed set of people.

  53. How important is that? Do you think the fact that the Leeds people work well together is the unique selling point that makes them successful or do you think that coordination is just something that it is good to have? Is it an essential ingredient or just good to have?
  (Mr Nathan) It is an essential ingredient. It may not be the unique thing that distinguishes success and failure, but it is going to play a large part in whether a place can get its act together or not.

  54. Finally, the $64,000 question. You can only do one thing. You have got a lot of very good ideas. You have obviously been thinking about this deeply and the evidence is very valuable to us. What is the paramount priority from your point of view, if you had only one thing that you could really change?
  (Mr Westwood) One each?

  55. That is cheating. All right, one each.
  (Mr Nathan) The main thing I would say—and Andy may have his own—my number one thing, is flexibility. I think that pans out into two areas. We have been talking about how the crux of this is about places and people, and it really is about extending the flexibilities that are already there and, in some cases, I think, taking a step change in enabling flexibility and in bringing employment opportunity to particular places and in making sure the people there connect to those opportunities.

  56. Even more important than more money?
  (Mr Nathan) That would entail cash, yes.
  (Mr Westwood) I was struck by something I heard the other day at a conference in Manchester about core cities. A guy from France said that if you compared the amount of money spent in local areas and where the discretion for spending that money took place, in the UK it is about 30 per cent of what is spent in a local city that is decided at local level; in France it is more like 70 per cent. He also made the point that it takes gold to pave the streets, and, you know, hard cash is always useful. But the difference in local autonomy was quite striking in a country where the city problem is a bit more advanced in terms of solution than we think it is here.

  Chairman: That is very helpful. Thank you both for your memorandum and for your very helpful evidence this morning.

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