Select Committee on Work and Pensions Written Evidence

Memorandum submitted by Association of North East Councils


  1.  The Association of North East Councils, the representative body for the region's 25 local authorities, and One NorthEast, the Regional Development Agency, welcome the House of Commons Work and Pensions Committee's Inquiry into the issues of Incapacity Benefit and Pathways to Work. This is an important area of policy for the North East, is a key focus for the Northern Way Initiative and is an issue which the Association has pledged to address within their recently published Manifesto.

  2.  Through addressing worklessness and the regional economic disparities that exist between regions of the UK the Association is committed to fundamentally improving opportunities and quality of life in the North East.

  3.  The Association and One NorthEast are keen to ensure members of the Committee receive a clear picture of work underway within the region to address issues of worklessness as well as some of the difficulties faced by partners in the region. We are committed to identifying policy and practical solutions to address the issue of worklessness in the North East.

  4. The Regional Skills Partnership for the North East of England seeks support from the Department for Work and Pensions for our approach, in particular by:

    —  engaging with the regional approach to maximise the value that this can bring to national policy and programmes in addition to providing the freedoms and flexibilities necessary at the local level to address concentrations of worklessness;

    —  ensuring that national policy and programmes provide adequate scope and resource for locally based flexible responses to meet the needs of workless people in the North East;

    —  addressing the issue of the reduction in Job Centre Plus budgets in the North of almost 33% for the coming year. These cuts will seriously affect the ability to deliver core employment focused programmes designed to tackle the issue of worklessness. Current funding formulae allocating funding per capita do not address regional disparities or concentrations of worklessness which exist in the North East; and

    —  addressing the operational/regulatory barriers above which are limiting the ability of the region to address issues of worklessness.


  5.  The North East is developing a regional approach to improving access to employment through active labour market policies which are appropriate for our Region. We will provide a coherent, joined-up approach that adds value to national policies, brings together key partners from the private, public and voluntary sectors at regional level, and gives scope for locally responsive, flexible measures.

  6.  Our approach is led by the Worklessness Strategic Direction Group (membership and Terms of Reference are detailed at Appendix A) under the auspices of the Regional Skills Partnership. The approach taken reflects the particular conditions of labour markets in the North East, including:

    (a)  the overall low level of demand for labour in the region, especially at higher levels, which creates a relatively undynamic labour market;

    (b)  the nature of worklessness in the region, which is:

    —  deep, with almost 30% of streets being concentrations of worklessness;

    —  widespread, with employment rates in most areas of the North East well below the national average;

    —  engrained, with some families now containing two or three generations without employment;

    (c)  a mismatch between employment growth areas and a dispersed population which means many people seeking employment face long, difficult and costly journeys to access employment. Low car ownership levels in some parts of the region accentuates this issue and highlights the need for effective action to address access to, and frequency of, public transport links to employment growth areas; and

    (d)  the very high levels of reliance on Incapacity Benefits, reflecting the poor health of many people in the region.


  7.  The region's approach to improving access to employment is based around a number of key principles:

    —  ensuring the benefit and tax regimes meet the needs of the North East in encouraging and rewarding people taking up employment. A number of barriers and specific issues already identified are detailed at paragraph 8-19 below;

    —  engaging employers (from the private, public and voluntary sectors) to ensure that "supply-side measures" to enable people to take up employment meet the "demand-side" needs of the economy;

    —  addressing the health needs of the workless population through active health promotion and integrated care services with a vocational focus;

    —  maximising the involvement of the voluntary and community sector, alongside public sector bodies, to provide a person-centred approach to meeting people's needs. This builds on evidence that "organisations less obviously connected to government can play a much more effective role in securing engagement from some members of target groups";[44]

    —  ensuring that people are given skills that are directly related to specific employment opportunities, within a work context wherever possible. Work is also required to ensure those not in employment are aware of the demand for such skills and are able to access opportunities for training;

    —  maintaining appropriate support for people once in employment to encourage retention and progression in employment. Support is also needed to assist employers in ensuring issues of equality and diversity are addressed which will also assist in retention and progression;

    —  supporting employers to help and enable them to take on and retain people not currently in employment. Targeted support is necessary to encourage employers to recruit and retain employees from disadvantaged communities; and

    —  in addition to bringing individuals back into employment there is a need for preventative measures to stem the flow from employment on to incapacity benefit. Measures are needed to support employers to address the health needs of their current employees through employment practices which promote smoke free workplaces, flexible working practices and address stress in the workplace.


  8.  This approach will be delivered consistently across the region through an agreed regional framework, overseen by the Regional Skills Partnership, which will reflect changing national policies and priorities. This regional framework will add value to national policy through an agreed assessment of needs and opportunities, better alignment of resources to address these, and a common performance management framework across different funding streams Including Job Centre Plus, Neighbourhood Renewal, European and One NorthEast Single Programme Funding.

  9.  A focus on delivery at city/sub regional level will be taken forward through:

    —  demand-led, sector-based measures at Travel To Work Area level (City Regions) to enable employers to lead on actions to attract and develop potential employees; and

    —  locally-based flexible, responsive programmes to engage individuals at neighbourhood level, bringing together key partners within the Local Strategic Partnerships.

  10.  Action will be taken, including background research into effective interventions, to ensure that measures taken reflect emerging best practice and developing policy priorities in this rapidly changing area and where necessary, pilot projects will be developed to test new approaches. This research will need to ensure the views of IB claimants are sought and able to influence delivery from the user perspective.

  11.  We also note the recent announcement of reorganisation within the Learning and Skills Council and will be looking to ensure measures are taken to ensure the reorganisation contributes to tackling worklessness in the region.


  12.  In working together on this, partners in the region are looking at how a number of barriers might be overcome. These are both operational and regulatory and are set out below. National funding decisions such as the proposed cut in job centre plus (JCP) budgets in the region for the coming year also pose a range of issues.

  13.  There is concern that the cuts in JCP budgets will reduce the potential for locally based action programmes, such as Action Teams for Jobs, to continue to make a difference at the local level.

  14.  The North East Strategic Worklessness Group has identified a number of operational/regulatory barriers facing individuals when they are considering a return to work following periods of incapacity.


  15. As customers become "established" on higher rates of Incapacity Benefits (IB), there is a concern that any move into work puts that financial stability at risk, especially if a return to benefit will be at a lower rate than before. This risk can be heightened by the impact on other benefits being received within the household.

  16.  Although there are existing rules that protect a return to higher rates of benefit and the 2005 Budget contained extensions to this process, this process relates only to those who, for whatever reason, return to IB following a period of work. In the event that a job simply does not work out, or was of a temporary nature, and the customer leaves work to return to Jobseekers Allowance (JSA), there is no such protection. Given the volume of short and fixed-term jobs available, this may act as a disincentive to IB customers who might otherwise consider the option.


  17.  IB customers are eligible for the full range of Work Based Learning for Adults (WBLA) training offered by Jobcentre Plus in the same way as JSA customers. An exception is the "Self Employment Routeway" where the "test-trading", phase is not available to IB customers. ("Test-trading" can last for 26 weeks where a customer continues to receive benefit whilst building their new business—this process is generally regarded as the most crucial element of the programme).

  18.  Self-employment may, in some cases, be the preferred way out of IB but this policy barrier clearly represents a disadvantage to IB customers and limits entrepreneurship. This may prove a barrier to the success of, the recently announced Local Enterprise Growth Initiative (LEGI) which is intended to stimulate economic activity in deprived communities through limiting those able to participate.


  19.  IB customers can, in some cases, work a limited number of hours, known as "permitted work". The maximum period for which this can be undertaken is 26 weeks, although there are occasions where this can be extended; earnings cannot exceed £78 per week.

  20.  A technical anomaly here is that customers receiving only the contributory element of IB will also receive all of the wages earned from this permitted work. Customers who receive the non-contributory element (Income Support) will earn only the £5 "disregarded" element (this can in some cases be raised to £20)—the rest, however, will be deducted from benefit.


  21.  IB customers can currently access WBLA training on a full-time basis. There will be no effect on the benefit received but as long as they receive IB they are not eligible for the £10 per week bonus paid to JSA customers who participate in WBLA.


  22.  The 16 hour rule while being complex, relates only to recipients of JSA. It is embraced within primary legislation that in order to receive JSA, customers must be available for and actively seeking work. The view was taken to the effect that anyone undertaking a course of study under 16 hours per week could still be held as actively seeking and available for work. This rule does not apply to IB and other benefit recipients.


  23.  A further anomaly exists between recipients of the means-tested and non means-tested elements of IB. Specifically we understand that means-tested benefit recipients are entitled to fee remission from LSCs whereas this does not apply to those on non means-tested benefits. This results in some customers having access to free training while others are not able to do so, depending upon which benefit they receive.

44   ERS (2005) Effective Interventions to Tackle Worklessness-Review of Evidence. Back

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