Examination of Witnesses (Questions 40-56)
MR ANDY
WESTWOOD AND
MR MAX
NATHAN
WEDNESDAY 1 MAY 2002
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.
Chairman
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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