Select Committee on Work and Pensions Second Report

8 The Government's employment strategy

141. Recognising the crucial importance of parental employment to the child poverty target, and reinforcing the principle of work as the best form of welfare, the Government has set a range of PSA targets aimed at increasing the employment rate of a range of groups that are currently under-represented in the labour market, including lone parents, disabled people and minority ethnic groups.

Lone parents


142. Research suggests that most lone parents want to be in employment[140] and the Government is keen to increase their employment rate as a step towards reaching the child poverty target. In 2000, the Government set a target to get 70% of lone parents into employment by 2010 and later established a PSA target to increase the employment rate of lone parents and to reduce the difference between their employment rate and the overall employment rate by 2006.

143. Less than half (45.6%) of lone parents were in employment in 1997. By Spring 2001 this increased to 51.7%. In Spring 2003, the baseline year for the PSA target, the lone parent employment rate was 53.4%.[141] According to the Department's Autumn Performance Report, the upward trend is expected to continue over the next three years suggesting the Department is on track to meet the PSA target. However, the report goes on to admit that:

    "these projections and the Spring 2003 LFS figures suggest an increasing risk for both the 2010 target of 70% employment for lone parents and PSA 5 (children in workless households)."[142]

144. In oral evidence, the Secretary of State reiterated the admission that the lone parent employment target was "challenging:"

    "If you just stand back and look at the headline arithmetic, we have made seven or eight percentage points progress in…the last six years and there are six or seven years to go and there are 16 percentage points of progress yet to be made, so you can see how challenging it is." [143]

145. He went on to point out that measures recently introduced, such as the new tax credits and the extension of the Work-Focussed Interview regime will not yet be reflected in the statistics and that further progress on the target is being made.

146. The 70% target is comparable to the employment rate of mothers in couples - 71% in Spring 2003 - and is similar to the lone parent employment rates in other countries.[144] Research by Holly Sutherland shows that if lone parents whose youngest child is aged three or over, excluding those in receipt of a disability benefit for themselves or a child, move into employment, the 70% target is only just met.[145] Other research, which analysed the trends in employment between 1992 and 2000 suggests that, if these trends were ran forward, 62% of lone parents would be in employment by 2010 and 70% by 2015.[146]


147. The New Deal for Lone Parents (NDLP) forms the basis of the welfare to work strategy for lone parents. It is a voluntary programme providing a package of support, advice and information delivered by Personal Advisers. Participation in NDLP doubles the employment chances of lone parents[147] and since October 1998, 51% of all leavers from the programme have left Income Support and entered work of at least 16 hours per week.[148] However, only around one in ten lone parents on Income Support participated in NDLP, suggesting that between 1% and 2% of lone parents leave benefits every six months because of the programme.[149]

148. To encourage lone parents to participate in NDLP and to increase the lone parent employment rate, mandatory Work-Focussed Interviews (WFIs) were introduced nationally in April 2001 for lone parents making a new or repeat Income Support claim and whose youngest child was aged over five years. Since then, mandatory WFIs have been extended to more lone parents on a phased basis and from April 2004 they will be extended to those with children under five years old. Recently published findings from the WFIs evaluation showed that they significantly increased entry onto NDLP and had a small positive impact on the rate at which existing claimants, especially those with older children, moved off Income Support.[150] The evaluation showed that Personal Advisers (PAs) were able to make the most impact in helping lone parents overcome fears that they would be worse off in work. It also found that increased workload pressures on PAs led to increasing concentration on 'job-ready' lone parents rather than those needing more intense support.

149. Further initiatives to help lone parents move into work have been the subject of recent Budget and Pre-Budget Report announcements. These included:

  • from October 2005, Work-Focussed Interviews every three months for lone parents on Income Support whose youngest child is aged 14 or over;
  • from October 2004, a compulsory action plan to be completed at Work-Focussed Interviews;
  • from April 2005, paying the registered childcare costs for those moving into employment via NDLP in the week before they start work;
  • from October 2004, a £40 per week In-Work Credit for lone parents who have been on Income Support for at least a year, to be piloted in twelve areas (four in London);
  • from April 2005, extending In-Work Credit to all lone parents in London who have been on Income Support for a year or more;
  • from October 2004, a new £20 Work Search Premium to be paid on top of benefit entitlements in eight of the In-Work Credit pilot areas and free registered childcare for those receiving the Premium;
  • from April 2004, childcare tasters to be piloted in six cities;
  • from October 2004, new measures including access to NVQ level 3 training in childcare and in areas where local employers identify a demand for skills; and enhanced support for the first two months in work;
  • from April 2004, an increased Housing Benefit disregard for lone parents in employment for 16-30 hours per week;
  • A New Deal for Skills, to include improved information, advice and guidance and the development a 'skills passport' to help the move to sustainable emplopyment.

150. It is therefore evident that the Government is putting a lot of energy and resources into helping lone parents into employment in the run up to 2010. It remains to be seen whether or not this will be enough to ensure that the 70% lone parent employment target is met. In addition, until further childcare is available the lone parent employment target remains in jeopardy. The organisation One Parent Families warns that:

    "…we should not approach 2010 and find that we are short of the employment target and that because important investments have not taken place, the perception hardens that we need to resort to greater benefit conditionality…"[151]

151. When asked whether the Department might consider such a move, the Secretary of State pointed out that compulsion already exists in the system in the shape of compulsory Work-Focussed Interviews. He did not, however, rule out further conditionality.

152. The Committee applauds the innovation and effort that the Department is putting into helping lone parents move into paid work. However we also reiterate the objections made in our Employment Strategy Report[152] to the principle of time-limiting benefits and requiring lone parents to be in paid work as a condition of receiving benefit.

Disabled parents


153. Children are much more likely to be in poverty if they live in a household containing a disabled adult (or a disabled child) and families headed by a disabled adult are much more likely to be workless. There are currently 2.1 million parents with disabilities, half of whom are workless.[153] There are currently 968,000 children living in families where a parent is in receipt of Incapacity Benefit, Severe Disablement Allowance or Income Support with a disability premium.[154] Disabled parents have an employment rate of 52% compared with 77% for non-disabled parents and disabled lone parents have an employment rate of 30%.[155]

154. The Families and Children Study (FACS) found that rates of work-limiting long-standing illness or disability were highest among those not in work. One in four lone parents not in work had a limiting long-standing illness or disability compared to 8% of those working 16 or more hours. Similarly, mothers in couples where neither partner was in work of 16 hours or more were six times more likely to have a limiting long-standing illness or disability than those living in couples where both worked at least 16 hours (31% compared with 6%). Almost two-thirds (65%) of lone parents and over half (56%) of mothers in couples with a long-standing illness or disability said it affected or would affect the kind of work they could do or the place where they could do it. It also affected the amount of work they could do for 58% of those lone parents and 44% of the mothers in couples.[156] Research conducted by Professor Richard Berthoud found that disability has a negative influence on a movement into work. Fathers in couples with a limiting health problem were only 40% as likely to move into work as those without a health problem. Mothers in couples with a health problem were a third as likely to move into work as mothers without such problems.[157]

155. Progress on the Government's 2003 PSA target to increase the employment rate of people with disabilities and significantly reduce the difference between their employment rate and the overall rate by 2006 has not yet been assessed, but indications are that progress has been slow. In oral evidence, the Secretary of State said that he believed the target would be met.[158]

156. Employment initiatives for disabled people include Work-Focussed Interviews, the New Deal for Disabled People, Access to Work and the Pathways to Work pilots that began in October 2003, reaching 9% of the inflow onto Incapacity Benefit. Under the Pathways to Work pilots, most new Incapacity Benefit claimants attend a series of five further monthly WFIs. Those moving into work of 16 hours or more would be eligible for an additional £40 per week for the first year of work. Budget 2004 extended the requirement to attend three further WFIs to some existing Incapacity Benefits claimants plus a £20 a week job preparation premium for up to 26 weeks for those following an agreed action plan. In addition, the disability element of the Working Tax Credit is designed to act as a work incentive. However, there are no specific programmes or incentives that target disabled parents and there is no recognition of the parenting role in the existing programmes for disabled people. Gabrielle Preston of Disability Alliance outlined some of the difficulties faced by disabled parents:

    "Disabled parents experience the same kind of disadvantages that disabled people generally experience with barriers to employment and discrimination. However, they have the additional problems that they have parental responsibilities and that has an impact on a disabled parent's health and ability to seek out employment. There is also the childcare issue for them. They may have problems transporting their children and with transport in general. In some ways disabled parents face the same issues as families with disabled children. They need an adequate income to ensure that their health is not adversely affected by the additional caring and responsibilities of becoming a parent. Disabled parents report that becoming a parent tends to compound underlying health problems or a disability, and has an impact on their ability to access employment and their energy levels. Parents who are disabled when they have children need additional support to help them fulfil their parental responsibilities alongside managing their disability. The majority of parents however become disabled when their children become older. These parents will benefit from the Government initiatives to reduce the barriers to employment, and strategies to help them retain their jobs."[159]

157. In oral evidence, the Secretary of State referred to the employment programmes, together with measures being taken to promote the equality of opportunity for disabled people and commented that, "As parents, they will of course benefit from the general measures to help disabled people into work."[160]

158. The Committee believes that disabled parents require increased support to help them into work. We welcome the Budget 2004 announcement of a job preparation pilot, giving incapacity benefits claimants an additional £20 per week but this does not go far enough. We reiterate the recommendation in our Employment For All Report that the Return to Work Credit is welcome but does not need piloting and should be extended nationally as soon as possible. We also recommend that, while undertaking worksearch activities, disabled parents receive free registered childcare in the same way as lone parents; and where a person has found a job through New Deal for Disabled People, we recommend that free childcare is paid for up to one week before they begin work.

Minority ethnic groups

159. Minority ethnic children are more likely to be living in poverty and the rates of poverty differ between different ethnic groups (see section 3). Evidence suggests that minority ethnic groups are more likely to have certain characteristics that put children at more risk of poverty; for example, some minority ethnic groups are more likely to contain large families whereas other groups have a high incidence of lone parenthood.[161] As with the children of lone parents and of disabled people, minority ethnic children are particularly affected by living in workless households. Unemployment rates are particularly high for the Caribbean, black African, Bangladeshi and Pakistani ethnic groups and are also above average for those of Indian origin.[162]

160. In spite of a PSA target to reduce the employment differential between the overall employment rate and that for minority ethnic groups, the gap has remained at around 16% since the target was introduced in 1998. The current employment rate for minority ethnic groups is 58.3% (compared with 75% overall) and the Department admits there has been some slippage in progress.[163]

161. Explanations for the low employment rates and the difficulty in raising them vary although, in oral evidence, both the Secretary of State and Dr Lucinda Platt - an expert on minority ethnic poverty - said that education and skills under-attainment and prejudice and discrimination in education and the workplace accounted for much of the disadvantage. Other issues included occupational segregation, high levels of ill health, language issues and the limited effectiveness of employment programmes.[164] A recent report on minority ethnic children and poverty added to the debate by pointing to the statistics showing that, in 2001, while 69% of white children continued in full-time education after the age of 16, this compares with 77% of Pakistani children, 79% of Bangladeshi children, 82% of black children and 91% of children from Indian families. Combined with the higher than average achievement of Indian pupils, the authors suggest that - unlike low income families - high poverty rates in some minority ethnic families are accompanied by high expectations.[165] However, Dr Lucinda Platt suggested that the extended period spent in education by young adults in minority ethnic groups might be due to 'catching up' for qualifications not gained in school, possibly due to failures in schooling, or the opportunity to gain more qualifications to compensate for a discriminatory labour market.[166]

162. Minority ethnic groups are over-represented in the three main New Deal programmes (20% of New Deal for Young People participants, 14% of New Deal for 25+ and 11% of New Deal for Lone Parents are minority ethnic people, compared with 8.2% of the working age population). However, minority ethnic groups are also less likely to enter work after participating in the New Deal. For example, only 39.6% of minority ethnic groups participating in NDLP move into work compared with 52.% of white participants.[167]

163. The Secretary of State also told us:

    "…of our various initiatives, the one which does best in terms of parity of outcomes for ethnic minorities, not only movement into jobs, but actually better than parity on sustainability of jobs is the Employment Zone approach. When I have looked into the reasons why this is, it appears to be that they are better connected with the network of local employers in the areas they service, their own staff are more representative of the ethnic mix of employers in the areas they serve and they are helping a bigger proportion of their clients into small businesses which of course are the big job generators…"[168]

164. The Strategy Unit, based in the Cabinet Office, published a report in 2003 on employment and minority ethnic groups resulting in a Taskforce being established to take forward recommendations and monitor progress.[169] Recommended policy initiatives focus on four areas: improving employability; improving the connection of minority ethnic groups with work; promoting equal opportunities; and reforming Government structures. In particular, the report recommends that employment programmes undertake more efficient outreach with minority ethnic groups and, as reflected in the comments of the Secretary of State, 'borrow' from the successful parts of the Employment Zone approach and apply them to the New Deals. In addition, the Department has set up an Ethnic Minority Employment Unit who will be working with Jobcentre Plus to improve their service delivery to minority ethnic communities. Budget 2004 announced a 'fair cities' initiative in three areas. This will involved employer-led partnerships in designing initiatives to improve employment outcomes, retention and advancement for local minority ethnic communities.

165. The Committee is deeply concerned that performance in relation to the PSA target on increasing the employment rate of minority ethnic groups remains static after six years. Progress on this target is imperative if the child poverty targets are to be met. A continued high minority ethnic workless rate would have unacceptable implications. The Committee recommends that the Chancellor's New Deal for Skills, announced in the Budget, should initially be targetted on those areas with a high proportion of minority ethnic groups. We also recommend that active consideration be given to extending Employment Zones to cover more areas with large minority ethnic communities. The Committee will also return to some of these issues in our inquiry into service delivery by DWP to minority ethnic groups and refugees.

140   Finlayson L and Marsh A (1998) Lone Parents on the Margins of Work, DWP Research Report No 80, Norwich: The Stationary Office; Thomas A and Griffiths G (2004) Integrated Findings from the Evaluation of the First 18 Months of Lone Parent Work-Focussed Interviews, DWP Research Report 184, Sheffield: DWP Back

141   The rate fell 0.2 percentage points between Spring 2002 and 2003, although the Department's Annual Report (2003) states that this "is not inconsistent with the strong upward trend over the past decade." Back

142   DWP, DWP Autumn Performance Report 2003: Progress against Public Service Agreement targets, Cm 6044 Back

143   Q 450 Back

144   Ev 209. Although it should also be noted that a substantial number of mothers in other countries are on extended maternity or parental leave Back

145   Millar J and Berthould R in Thurley D (ed) 2003) Working to Target: Can policies deliver paid work for seven in ten lone parents? London: One Parent Families Back

146   Berthould R in, Thurley D (ed) 2003) Working to Target: Can policies deliver paid work for seven in ten lone parents?  Back

147   HM Treasury (2003) Pre-Budget Report Back

148   Evans M in Millar J and Evans M (eds) (2003) Lone Parent and Employment: International comparisons of what works, DWP Research Report 181, Sheffield: DWP Back

149   Ev 209 Back

150   Thomas A and Griffiths G (2004) Integrated Findings from the Evaluation of the First 18 Months of Lone Parent Work-Focussed Interviews, DWP Research Report 184, Sheffield: DWP Back

151  Ev 207 Back

152   Work and Pensions Committee, The Covernment's Employment Strategy, Third Report of Session 2001-02, HC 815 Back

153   ONS, Labour Force Survey, Spring 2003 Back

154   DWP (2004) Quarterly Bulletin on Families with Children on Key Benefits, November 2003 Back

155   Labour Force Survey, Spring 2003 Back

156   Barnes M et al (2004) Families and Children in Britain: Findings from the 2002 Families and Children Study (FACS) Back

157   Berthould R and Iacouvou M (2000) Parents and Employment, DWP Research Report 107 Back

158   Q 485 Back

159   Q117 Back

160   Q 483 Back

161   Qq 99-101 Back

162   Ev 232 Back

163   DWP, Autumn Performance Report 2003 Cm 6044, December 2003 Back

164   Qq 102-110, 487, Ev 232 Back

165   Marsh A and Perry J in Kober C (ed) (2003) Black and Minority Ethnic Children and Poverty, London: End Child Poverty  Back

166   Ev 233 Back

167   Evans M et al (2003) New Deal for Lone Parents: Second Synthesis Report of the National Evaluation, Research Report No 163 Back

168   Q 487 Back

169   Ethnic Minorities and the Labour Market, Cabinet Office, March 2003


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