Select Committee on Work and Pensions Third Report


The DWP has an aspiration of achieving an 80% employment rate, which it describes as "a modern vision of full employment." We welcome the aim of increasing employment opportunity and raising the rate. However, we think that there is a lack of clarity in how the aim is defined. The DWP should set out who it thinks should be expected to be outside the labour market, and how many people it estimates fall into these categories. It should then use the percentage of working-age people remaining as the basis of its employment aspiration.

In addition, the DWP proposes, for the purpose of measuring progress towards the employment aspiration, to introduce an extra employment ratio, defined in a way which could be confusing. We think it should stick to a clear percentage of those of working age who are in work. At present, a person will count as employed if they work for one hour a week. We ask the DWP also to publish statistics on the number of people working for 16 hours a week or more. An extra measure of people in work over the State Pension age should also be set.

We found that not enough attention is being paid to the problem of overlapping disadvantages. New Deal packages offer different types of support depending on the type of benefit which a person claims, but in reality the barriers to employment an individual faces will vary in each case. A person with multiple barriers to employment may well not receive the right mix of support. The Building on the New Deal programme, which the DWP announced in 2004, would have been an important step towards tackling this issue, but it seems to have been delayed indefinitely, and the Minister could not give us any information on when, or if, it would arrive. We are concerned that this approach may be abandoned and we recommend that the BoND programme, or another programme based on the same principles, should be piloted as soon as possible.

Whilst Jobcentre Plus focuses on job entry, we found that job advancement and retention were as important for helping people leave benefits and escape poverty. Our visit to New Zealand convinced us that an outcomes focus, with ongoing support and a focus on job quality, was needed. Although there are no easy solutions to these issues, we think that targets both for Jobcentre Plus and contracted provision should recognise the importance of sustainable employment lasting 26 weeks or more. We were impressed with the "pipeline" approach piloted in the Ambition and Fair Cities programmes by the National Employment Panel, where tailored training programmes are created to meet the needs of local employers, in exchange for a guaranteed job interview. We would like to see this approach put into practice more widely.

The Leitch Review of Skills, which reported during our Inquiry, made some recommendations which we support. The Government should be prepared to invest significantly in putting these proposals into action. Low skills is one of the most important barriers to work. We ask for clarity on how some of the proposals would interact with existing arrangements.

We took evidence on the Cities Strategy, which the DWP is piloting in 15 areas, and visited Glasgow to find out first-hand how the Strategy is being planned. We think that it has the potential to make a difference to inner-city worklessness and poverty. However, we do not think this will happen unless local consortia are given the flexibility to pool budgets, tailor programmes and have a real influence over procurement decisions. We ask the DWP to grant this flexibility, and, in particular, to ensure that the recent moves towards centralised procurement do not prevent Cities Strategy consortia from exercising control over budgets.

We also looked in detail at the barriers to work faced by three groups of people with especially low employment rates.

People over 50 are now increasingly likely to be in work, but there is still a large pool of people on inactive benefits who are not benefiting from this trend. Employment programmes available to older workers do not always suit their needs. We ask the DWP to audit its programmes to ensure that they are working well for older people, and to set a target to increase the employment rate of this group. We stress the importance of making sure older people receive support and do not drift away from the labour market to become involuntarily "early retired".

Lone parents are likely to face a range of barriers to work, and we conclude that increasing conditionality is not necessarily the best way to increase their employment rate. We ask the DWP to consider making the Work-Related Activity Premium available to all lone parents on an opt-in basis. We welcome pilots of the New Deal Plus for Lone Parents and recommend a wider roll-out of this programme. Lone parents, and others, face particular problems in London and we ask the DWP to consider offering enhanced work incentives, and to explain how it plans to tackle this issue.

People from ethnic minorities are not a homogenous group; very high and low employment rates are found among different ethnic and gender groups. We are concerned that the Ethnic Minorities Outreach programme, which was showing promising early results, has been wound up and the money fed into the Deprived Areas Fund, which does not include a specific focus on people from ethnic minorities. We ask DWP to allow procurement using Deprived Areas Fund money to take place at a local level, to allow small local providers to continue working. We think more English Language training should be available for those who would benefit from it.

As DWP contracts out more functions to the Private and Voluntary sectors, we ask it to ensure that the Prime Contractor model does not result in the demise of local providers and a loss of expertise. Small-scale operations are vital for outreach into more deprived communities, which will be essential if the employment rate aspiration is to be achieved.

Finally, the DWP has recently launched a review of its welfare to work strategy. We are concerned that there is not enough detail about how interested parties can contribute. Welfare to work is a complex area and a rushed review would be a backward step. We ask the DWP to ensure the review is conducted in a transparent manner, engaging all stakeholders.

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