Select Committee on Work and Pensions Minutes of Evidence

Memorandum submitted by Tomorrow's People (ES 05)

1.   Introduction and summary

  1.1  In 1998 the Government launched the New Deal, with the objective of addressing unemployment, and hence deprivation issues. This, and subsequent Welfare to Work policies, aim to provide support, training and work placement to the unemployed, as well as access to job opportunities. Jobcentre Plus rolls out nationally in 2002, with services delivered by demand-led intermediaries. From April 2002, pilots of the Job Transition Service run in six areas of large-scale redundancies, and focus on the long-term unemployed. Reforms to reduce structural barriers to employment have also been introduced.

  1.2  Economic slowdown, caused by general global downturn and specifically the aftermath of 11 September, has affected unemployment levels in the UK. Evidence of the number of people applying to the Getting London Working initiative bears this out: 850 registrations from January to June 2001 increased to 1,100 over July to December. Since summer 2000 jobs have been cut in manufacturing, agriculture and service sectors. Unemployment rose in the last quarter by 35,000 to a total of 1.546 million, and the rate increased slightly by 0.1 per cent to 5.2 per cent in January 2002. The employment rate has increased, driven by an expanding labour supply, with more jobs in the public sector, construction and retailing; the claimant count fell in January and February 2002. Greater numbers in the labour pool creates more competition for available jobs, which impacts on those already unemployed.

  1.3  Gradual economic recovery is forecast for 2002 and 2003, but with UK prospects linked so closely to US and world events, it is arguable that the Government should plan for a less optimistic employment scenario medium term.

  1.4  Tomorrow's People is a specialist charitable trust, with 18 years' experience in helping unemployed people from welfare to work. Through training, advice and support, Tomorrow's People has been instrumental in changing the lives of thousands of people who had resigned themselves to long-term, if not lifetime, unemployment.

  1.5  Understanding specific regional and local labour market issues is vital to the success of any programme. Tomorrow's People believe that the best way to tackle unemployment is to help employers. An employer-led service, that provides one-to-one support for both the employer and the unemployed person, is the most effective way to match jobs to employees. Critically, the service does not stop when the match is made, but continues with an aftercare support service for both the employer and the placed employee. We would recommend the Government seeks to work with local delivery partners who have a profound and demonstrable understanding of local employers and their needs, to ensure that resources are used to maximum effect. Provision of targeted training in basic skills and sector or job specific skills is essential, as is the opportunity to gain relevant, work-based experience.

  1.6  Tomorrow's People recommend that the Government reviews the capabilities of its service providers in terms of sustained employment delivery. Minimising repeated returns to the New Deal would free up resources to support the increasing number of unemployed people.

  1.7  Additionally, a review of the allocation of funding is recommended, to ensure the outcomes of any initiative are maximised.

2.   Current Government Employment Strategy

  2.1  The New Deal programme has expanded to encompass a wider range of core target core groups since its inception in 1998, and has undergone substantial revision. New developments will be rolling out in 2002.

  2.2  Whilst the New Deals have been successful in getting people into employment, and some 560,000 people have found work through the New Deal since 1999, the context of strong UK economic growth is also partly attributable. The NAO reported in 2002 that of the 700,000 18-24's in the New Deal for Young People only 20,000 would not have been able to find employment themselves.

  2.3    The job retention record for those passing through the New Deal should be noted: 25 per cent return to benefits within three months, whilst 40 per cent return within six months. A copy of the "Getting London Working" independent evaluation is attached, which shows that Tomorrow's People are achieving 80 per cent rates of sustained employment over twelve months for the programme.

  2.4  There is an established correlation between duration of unemployment and decreasing likelihood of returning to work. This is critical for those who have been out of work and on benefit for long periods of time, such as the 12 per cent of claimants who have been on benefit for over two years. Particular attention needs to be given to these people, to ensure they receive the necessary support over a sustained and sensible period to prevent a lifetime cycle of benefit payments.

  2.5  The DWP and Treasury paper "The Changing Welfare State: employment opportunity for all", November 2001, identified economic inactivity as a priority issue. Specific groups such as lone parents, disabled people, the over 50's and ethnic minorities demonstrate higher than average rates of economic inactivity. Inactivity amongst men, particularly the over 50's who have entered inactivity involuntarily, is a key issue.

  2.6  It is likely that with increasing numbers of recently "in work" unemployed people entering the labour supply, the economically inactive, and those already suffering social exclusion will be pushed further away from the available jobs. It is also possible that these people will develop feelings of scepticism about the use and relevance of the New Deal and other services, as the chances of finding sustainable employment are reduced, and therefore they will be less willing to enter the system.

  2.7  The Jobcentre Plus approach is not yet fully fledged, but is likely to face greater demand from several sources:

      (a)  Increasing numbers of newly unemployed people as job cuts take effect, who are closer to being "job ready".

      (b)  Those already within the system, who are likely to remain there longer as fewer jobs are available, the "nearly job ready".

      (c)  The high number of people returning to benefits who do not sustain their employment, and are not job ready.

  2.8  The Job Transition Service is being piloted in six areas of large-scale redundancies from April 2002, therefore efficacy of helping the long-term unemployed via this service is as yet untested.

  2.9  Training is increasingly important, to improve skills and job prospects and ensure continued participation in the workforce, and enable the UK to remain competitive in the global economy. The Learning and Skills Council has a budget of £6 billion to tackle low levels of basic literacy and numeracy amongst adults, and improve overall qualifications. The DfES has identified six key skills: communication, ICT, applied numeracy, working with others, improving own learning and performance, and problem solving. The CBI suggests that of these, applied numeracy and literacy are the most fundamental skills to acquire because they form the basis for all further skill development.

  2.10  Specific sectors have lower commitment to training, such as manufacturing and primary production, and therefore those facing redundancies in these sectors are less likely to be equipped for an easy transition to alternative employment. The Government's approval of "mature apprenticeships" pilots, such as that for the over 25's in construction, aim to address sector skills shortages.

  2.11  Employment Bond initiatives have been successfully launched in Sheffield (1999), Newcastle (2001) and in the City and East London from 2002. The raising of funds through zero interest Employment Bonds enables partnerships to deliver social and economic benefits to deprived individuals and communities. The physical environment and social fabric is regenerated through re-development of sites, creation of employment, and support for business and community organisations. The "Getting London Working" in East London programme is part of the Employment Bond, and provides one-to-one counselling of unemployed individuals, tailored matching of individuals with employers, employer preparation and support for entrepreneurial talent.

3.   Non JSA Benefits

  3.1  In addition to the likely squeeze in the Welfare to Work system, it is important to also review the situation for the large numbers of people of working age claiming out-of-work sickness and disability benefits who also comprise 30 per cent of the economically inactive population.

  3.22.  7 million people claim out-of-work sickness and disability benefits. Of these 1.4 million would like to work, but face barriers in terms of making work pay.

  3.3  Incapacity Benefit and lone parent claimants have trebled in the last twenty years, and the Incapacity Benefit claimant count now stands at 2.3 million.

  3.4  Gaining proximity to the labour market is extremely difficult for these people. Not only do these groups generally lack qualifications (in 1998 17 per cent of 25-54's with no qualifications claimed these benefits, in contrast to only 1 per cent educated to degree level) but problems are further compounded by duration of time on benefits.

  3.5  Some 75 per cent of Incapacity Benefit and 60 per cent of Disability Benefit claimants have been on benefits for over two years. As with JSA claimants, the relationship between duration of unemployment and likely return to work is proven, and requires specialist intervention to break the cycle.

4.   Conclusions and Recommendations

  4.1  Tomorrow's People recommend working with partners who offer an employer-led one-to-one service, and can demonstrate the best understanding of the specific needs of local communities and the socially excluded.

  4.2  Additionally, Tomorrow's People would recommend that the Government review the capabilities of the intermediary partners in terms of sustained employment delivery, to ensure the most effective deployment of funds. Tomorrow's People are able to deliver both added value and value for money, and an average of 85 per cent of placed employees are still in work one year later.

  4.3  Every effort should be made to address needs of key economically inactive groups to prevent further disenfranchisement, isolation and social exclusion.

  4.4  The significant numbers of disabled people who want to work need attention and appropriate interventions. Tomorrow's People would recommend that the Government brings together a small dedicated task force of leading intermediaries, with specialist skills in working with the disabled, to develop and implement a strategy which is tailored to the needs of this group.

  4.5  With regard to Incapacity Benefit, Tomorrow's People would recommend establishing a pilot study of one-to-one interviews with claimants, independent of the health and benefits systems, to understand the true nature of barriers to employment. A confidential, non-prejudicial interview would enable an intermediary to find ways of assisting claimants. Tomorrow's People have a proven record of helping individuals to return to work so they are no longer claiming Incapacity Benefit.

  4.6  During economic uncertainty, businesses look first to employ people who can add commercial value to their operation, and veer away from the risk of employing the lower skilled or long-term unemployed. Victims of social exclusion continue to be left outside the labour market. Tomorrow's People therefore recommend the establishment of a Community Employment Initiative so that people who would otherwise struggle to add a consistent level of commercial value to a business are able to contribute value to their community. Businesses could adopt a local scheme, and could be incentivised through tax relief to create entry-level jobs for those people who would otherwise be excluded. A kite-marking scheme could be developed as part of this initiative, accrediting companies that commit to ethical, community-focused values.

  4.7  To conclude, Tomorrow's People would urge the Government to engage the private sector in interventions that are business-led, community focused and individually tailored. Government investment in accelerating the Employment Bond will provide both commitment and capital for supporting such schemes. Tomorrow's People believe these strategies will help people maintain and develop their skills and hence their employability, and to be ready to take advantage of improvements in the labour market as the economy returns to growth.

April 2002

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