Select Committee on Work and Pensions Minutes of Evidence

Letter to the Committee Assistant from the Department for Transport (ES 12A)


  Thank you for your note of 28 May asking for further information arising from questions put to Chris Riley and Alan Riddell of former DTLR by the Committee. The points in your note are dealt with below.


  Mr Selous asked (Q. 223-224) about the role of local authorities and Registered Social Landlords in sourcing from local and intermediate labour markets.

  Many authorities have local economic regeneration as one of their key corporate objectives and some attempt to support this objective through their own employment practices as well as trying to promote this amongst other businesses. For example some authorities have initiatives to recruit the unemployed, young people, ethnic minorities or disabled people, for example through the use of New Deal. A survey carried out by the Employers' Organisation for Local Government shows that in December 2001, there were a total of 1639 men employed or trained in local authorities under New Deal options and 447 women.

  The Employers' Organisation is currently producing some guidance entitled Modernising the Recruitment Process which touches on the need for activity in this area and provides some case study examples. Obviously there are other benefits to recruiting from these specific groups, for example to widen the age/ethnic/disability profile of the authority and reduce recruitment difficulties.

  The Local Government Act 2000 introduced a new duty on local authorities to prepare community strategies for promoting or improving the economic, social and environmental well-being of their areas. Through working with local partners, the strategy is very likely to consider a number of issues relating to local employment opportunities and what action the local authority and others should take. However, the government is not being prescriptive over the content of the strategies, since it will depend on an assessment of local priorities.

  The 2000 Act also introduced a new wide ranging power for local authorities to undertake any activity which is likely to promote the economic, social or environmental well being of its area. Whilst the power does not allow a local authority to do anything which is prohibited under other legislation or to raise money, it nonetheless provides new opportunities for local authorities to tackle problems facing the local labour market. It will support the efforts of councils and their partners to work more closely together on initiatives, by providing councils with powers to make arrangements or agreements with local partners. In addition to providing financial assistance to individuals or organisations, this can extend to other forms of assistance including staff, goods and services and accommodation. The well-being power also enables local authorities to form or participate in companies, trusts, or charities, including joint venture companies, provided that they are satisfied that the this is likely to achieve the promotion or improvement of the economic, social or environmental well-being of the authority's area. While again the Government does not prescribe how authorities should use the power, it nonetheless provides a means for local authorities to tackle the challenges around training and upskilling local people.

  Individual local authorities may seek to use local labour clauses in contracts particularly in the interest of wider regeneration objectives. However, the scope to do so is limited by the EC Treaty and the European Public Procurement legislation. The European Commission has recently provided some clarification on how social considerations may be taken into consideration in public procurement exercises. This is in the form of an Interpretative Communication that explains how social concerns may be taken into account at each separate stage of the procurement procedure. But it remains the responsibility of individual local authorities to make their own judgement about the use of social considerations in procurement, consistent with domestic law, including the duty of best value, and the EC legal framework.

  However, the Interpretative Communication makes it clear that unemployed labour clauses can be used as a contract condition provided that this is non-discriminatory and mentioned in the contract notice. It is possible that this labour may turn out to be local but it is not lawful to require local labour; to do so would amount to discrimination against non-national tenderers. A statement from a tenderer that they are presently and will in the future, be unable to comply, could rule their bid out as non-compliant.


  Mr Marris asked (Q. 239-245) what impact the New Deal for Communities partnerships have on employment rates.

  The NDCs programme runs over 10 years and the evaluation phase is just getting underway. Although we will be monitoring the programme in real time, it is too early to provide any indication on outcomes. However, most NDC strategies have taken account of the research evidence—the "What works" menu/booklet identifies many of the interventions adopted.

  The "what works" booklet/menu was published alongside the NDC evaluation launch and should be considered a work in progress. Copies of the menu and the evaluation glossy have already been sent to the committee clerk. The booklet contains a number of key points on worklessness—these include which interventions are often relatively effective. The booklet also provides some examples, which are summarised below.

    —  Virtually all NDCs are implementing an "employment intermediary" or "job brokering" service, in some cases contracted out to a specialist agency, in other cases building on previous projects. A key element of such a service is close partnership working with JobCentre Plus to ensure added value to mainstream provision

    —  Most NDCs place heavy emphasis on addressing the barriers faced by disadvantaged groups through outreach work, basic employability skills development and childcare provision

    —  The use of Intermediate Labour Market (ILM) solution is common to most NDCs to provide disadvantaged people with a route into work in the normal labour market, commonly based upon community enterprises to address local needs (eg childcare). In East Manchester ILMs are being established to deliver projects addressing crime and community safety issues thus providing a basis for linking across themes

    —  Some NDCs recognise the need to provide continuing support and mentoring to people once they have found work in order to promote sustainability of employment and progression beyond the "first rung of the ladder".


  The Chairman asked (Q. 295) for a list of the cross-cutting studies being carried out as part of the Spending Review. They are as follows:

    —  Children at Risk.

    —  Improving the Public Space.

    —  Role of the Voluntary Sector in Delivering Services.

    —  Public Sector Labour Market Science and Research.

    —  Services for Small Businesses.

    —  Tackling the causes of Health Inequalities.

  As Chris Riley noted, information on all of these is available from the Treasury website. The relevant page is:—Review/spend—ccr/spend—ccr—index.cfm.


  Your note asked what links there are at Government level between the Urban Regeneration Unit in DTLR and the Transitional Employment "Step Up" pilots established by DWP.

  Six "Step Up" pilots were launched in April 2002 with a further fourteen being rolled out in the Autumn. StepUP is designed for those unemployed who have not been able to secure a full-time job after a New Deal programme and require more intensive support to make the move to unsupported employment in the open labour market. While the pilots are targeted at areas with concentrations of high unemployment which lie close to areas with high vacancies, they are intended to be a precursor to a national scheme and as such there have been no direct linkages between DWP and the Neighbourhood Renewal Unit on this issue. However, when fully rolled out, all pilots in England will be located within the 88 Neighbourhood Renewal Fund areas.

  Mr Dismore also asked Mr Riddell (Q. 300) to provide a note on the links between urban regeneration projects and the intermediate labour market and to what extent the NRU is working with DWP on this. This is at the Annex 1 to this letter.


  Finally, the Chairman asked for a list of all the different programmes within the former DTLR that had an employment element. In principle, almost all of our programmes have an employment element of some kind, even if only because they impact on employment in a way incidental to the main purpose of the programme, and it would not be practical or useful to list them all. I think the areas most relevant to the Committee's work will be the programmes under the New Deal for Communities, the Neighbourhood Renewal Fund and the European Regional Development Fund. Details of these are at Annex 2.

  I hope this information is helpful to the Committee's work. If we can be of further assistance, please let me know.

Paul Davies

Parliamentary Clerk

14 June 2002

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