Background to the Inquiry
1. The Department for Work and Pensions Five Year
Strategy, published in February 2005, announced the Government's
long-term aspiration for an employment rate of 80%:
"We are on the verge of achieving our initial
aspiration of having at least 75 % of the working-age population
in work. The next stage will be even more stretching with a long-term
aspiration of moving towards an employment rate equivalent to
80 % of the working age population […] This is a modern vision
of full employment."[1]
2. The aim was reiterated in the Department's January
2006 Green Paper, A new deal for welfare: empowering people
to work, in which the connection is made to other important
objectives: tackling child poverty -"for individuals and
families […] work is the best route out of poverty";
and meeting the challenge of an ageing society: "only by
ensuring that everyone who can work is in work can we secure dignity
and independence in retirement."[2]
3. Previous Committee inquiries have touched on the
Government's employment strategy. In our inquiry on the Efficiency
Savings Programme in Jobcentre Plus, for example, we expressed
our concern about the uncertain direction of policy:
"Vacillation about the future of BoND [Building
on the New Deal], small-scale adoption of Ambition [see Chapter
4], uncertainty over New Deal funding, a reduction in the use
and scale of the Adviser Discretion Fund, major reductions in
Work-Based Learning for Adults and the 2005 contracting problems,
are significant issues in themselves. The cumulative impact is
even more considerable. We are concerned that some good provision
- which saves money in the long run - could be lost. We recommend
that DWP and Jobcentre Plus should commission an independent overall
review, with significant stakeholder involvement, of its provision
of employment and training programmes, the effectiveness, costs
and benefits of those programmes, and how funding is prioritised.
The results of the review should be made available to the Committee."[3]
4. In our report on Pension Reform, we concluded
that:
"Getting more older people into work will be
necessary both for pensions reform to be successful and for the
achievement of the Government's aspiration to reach an 80% employment
rate. However, as alluded to in the evidence we received, achieving
this aim will be a considerable challenge.
Partly because of this complexity, and the importance
of older workers, the Committee has decided to conduct an inquiry
in the autumn into the Government's employment strategy and will
include as part of that a detailed study of this aspect of labour
market policy. We will therefore return to the matter later this
year."[4]
5. We therefore announced on 24 July 2006 our inquiry
to:
"examine the effectiveness of the Government's
employment strategy and the action required to achieve the aim
of increasing the employment rate to 80%."
6. As we had recently conducted an inquiry into Incapacity
Benefits and Pathways to Work, we decided not to focus on people
who were prevented from working, or found it difficult to work,
because of ill health or disability. Instead, we announced that
we would "examine some of the measures proposed in the recent
Welfare Reform Bill and will predominantly focus upon lone parents,
people aged 50+ and ethnic minorities." Together with people
with the lowest qualifications, these groups are the focus of
the Department's PSA Target 4 - relating to the employment of
disadvantaged groups.
7. We announced that we would particularly examine:
- the barriers to work, such
as housing costs and employers' attitudes, experienced by the
above groups;
- the effectiveness of DWP's national employment
programmes, such as the New Deal and Employment Zones, and the
different pilot schemes in operation around the country;
- area-based variations in employment rates in
both urban and rural areas and the initiatives aimed at tackling
them, including the new Cities Strategy;
- the provision of services by, and the contracting
out of functions such as work-focused interviews to, the private
and voluntary sectors; and
- job sustainability.
8. We received 38 pieces of written evidence and
held seven oral evidence sessions. The Committee also conducted
two visits, one to Glasgow and one to New Zealand. We are grateful
to all those who contributed to the inquiry. Thanks are also due
to our two Specialist Advisers who provided invaluable assistance
throughout the process, Professors Dan Finn from the University
of Portsmouth and Jane Millar from the University of Bath.
Scope of the inquiry
9. The Committee considered it important to analyse
the employment rates of people who are lone parents, members of
ethnic minorities or aged over 50 as a way of examining the effectiveness
and relevance of the PSA target. We therefore requested information
from the DWP and the House of Commons Library, which is included
in Appendix 1.
10. The information provided by the DWP shows that
inactivity rates are high for all of the groups on which our inquiry
focused. The unemployment rates of lone parents and people from
ethnic minorities are also higher than the average. The unemployment
rate of people over 50 is low, but we found that there were still
important issues to be addressed for this group, as Chapter 7
explains.
Table 1: Employment status of PSA target groups[5]
