Select Committee on Work and Pensions Third Report

3  Overlapping Disadvantages

47. To achieve its 80% ambition, the DWP acknowledges that it will need to focus on the groups most disadvantaged in the labour market.[38] As explained in Chapter 2, the Committee called for evidence on three groups in particular: people over 50, lone parents and ethnic minorities. All three groups face significant barriers to work, and these will be looked at in more detail later in the report. Some of the barriers faced will relate to their membership of one of these categories. Lone parents, for example, face particular challenges in being the sole breadwinner and carer for children.

48. However, it became clear in the course of the inquiry that categorising people in this way did not do justice to the complexity of individual circumstances. A common theme in all the evidence about lone parents, people over 50 and people from ethnic minorities was the importance of overlapping disadvantages. Witnesses told us that the main reason why many people in these groups had difficulty in finding and retaining employment was not the simple fact that they were, for instance, a lone parent. It was the number and complexity of the problems they faced.[39]

49. We asked DWP for information on how labour market disadvantages overlap, and the tables they provided show the size of the effect that multiple disadvantages can have.

50. For instance, the overall employment rate of people from ethnic minorities is 60%. For those members of ethnic minorities who are also lone parents, the rate is 42.4%, and for those lone parents from ethnic minorities who have no qualifications, the rate is just 11.3%. People over 50 have an employment rate of 69.9%, but if they are disabled this falls to 42.9%, and if they also lack qualifications the rate is 24%. Nearly a million people fall into this last group. The tables are given in full in Appendix 1. This chart shows the cumulative nature of labour market disadvantage:[40]

Figure 1:

In addition, we heard that the combination of difficulties such as poor health, low skills, transport problems, finding childcare, and caring responsibilities towards other family members meant that it was extremely difficult to find work.[41]

51. Organisations working with lone parents told us about the range of barriers they faced. One Parent Families told us that the "most frequently cited barriers to employment for lone parents are the lack of affordable childcare, the fear of being worse off in work than on state benefits, and a lack of confidence in their own skills and experience. Other barriers include health problems."[42] David Coyne of One Plus told us: "Most people are out of work for more than one of those reasons and, therefore, a simple categorisation by type of benefit probably does not give you the tools you need to understand the pathway to work."[43]

52. Andrew Harrop of Age Concern told us that being aged over 50 was "not much of a barrier" on its own, but that problems could arise when it was combined with other factors: "If you do not have level 2 qualifications and have a disability you only have a one-in-three chance of being in work. It is higher if you are disabled but have skills, and it is very high indeed if you are non-disabled and have skills."[44]

53. In order to gain a better understanding of the impact of multiple disadvantages on people's chances of finding and keeping paid work, the Committee asked DWP what analysis it had done in this area. In its strategy document Full Employment in Every Region, the Government explained that:

"An added complexity in the challenge of reducing worklessness among disadvantaged groups is that individuals may belong to more than one of these groups. Jobless lone parents, or people with disabilities, for example, tend to have low or no qualifications. Many people have several characteristics associated with labour market disadvantage. The probability that a healthy white male, aged under 50 and not living in a disadvantaged area will have a job, is 96 %. The probability that a white male aged over 50, with a physical impairment and no qualifications will have a job, is less than half that; and if this same person had an ethnic minority background or lived in an area of high unemployment, the probability would be lower still."[45]

54. DWP also explained that "there may be links between the working of the welfare state and the degree of inactivity amongst these groups." It argued that it is clear from the figures that "a very few people not looking for work find work. Conversely, if you do look for a job there is a good chance that you will find one."[46] This view is reflected in DWP's welfare to work strategy - the increasing requirements on lone parents to attend work-focused interviews, for example (see Chapter 8).

55. A related issue is the nature of the welfare to work provision available and whether or not it meets the need of individuals. This has evolved over time, with different programmes for different groups. For example:

  • The New Deal for Young People, launched in 1998, was shaped by a recognition of the fact that young people should become "accustomed early to the world of work". It involves "access to a Personal Adviser, a 4-month gateway period of intensive support, and - for those still without a job by then - a programme of compulsory back-to-work options at 10 months of unemployment."[47] The same principles of help were extended to people aged 25 and over at 18 months of unemployment (originally at two years).
  • The New Deal for Lone Parents, introduced in 1997, is a voluntary programme and "provides lone parents with a Personal Adviser who puts together an agreed package of support, which can include training, and financial help with formally recognised childcare, to assist the lone parent with preparing for and finding a job."[48]
  • The New Deal 50 Plus was introduced in April 2000.[49] This is a voluntary programme, available to people on certain benefits for six months or more. The provision includes assistance with an action plan to help get a job; help with job-search and applications for suitable jobs; organising possible training opportunities in order to improve skills; organising voluntary work which may develop employable skills; providing support and reassurance throughout the programme.[50]

Lack of flexibility in support services

56. The New Deal currently offers a range of options depending on the group to which a jobseeker belongs. Witnesses told us, however, that the division of the New Deal into these different schemes, whilst helpful for those with few barriers to work, was making it more difficult for those with overlapping disadvantages. Dave Simmonds of Inclusion told us:

"I think put simply it is those people with multiple disadvantages who are not well served […] whilst the present programmes we have are defined around age groups with a strict eligibility, it is still a one-size fits all approach, and whilst that has worked for many people who have one main disadvantage […] those who are not well served are those where it is a lot more complicated […] our present system is not geared up sufficiently to tackle the hardest cases."[51]

57. Lisa Harker, author of a report on child poverty commissioned by the DWP, told us that:

"There does need to be greater flexibility between welfare-to-work programmes. To give you an example, there are 260,000 lone parents who report having a health condition or a disability - a self-reported condition. Very few of them will be on the New Deal for Disabled People or will go onto Pathways to Work because they are automatically channelled into the New Deal for Lone Parents. Their lone parenthood trumps their disability in terms of welfare-to-work. That is a real problem because it means they do not have access to support with managing their health condition, which may be a major barrier to work."[52]

58. Professor Paul Gregg went further, arguing that the different New Deals should be "swept away" and replaced with a flexible menu of provision:

"We have a system that is based on rules according to what benefits you have moved on to - the unemployed, partners of the sick and disabled, the sick and disabled themselves, and lone parents. They all have a complex and highly variable system of rules concerning allowable work rules, linking rules and all this kind of stuff […] we need to move towards a system that I would describe as a personalised welfare system where the support package to help the individual back to work is tailored to fit that individual's needs and is not driven by the rules of the system - so you have a case adviser who works with that individual, to work out what their back-to-work plans should look like and to monitor its success. All of the rules-based system of what you can and cannot do should be completely got rid of. The providers, in terms of caseworkers and so on, should be incentivised on the basis of getting people back to work."[53]

59. Rather than categorising clients on the basis of the benefit which they claim, we agree that the DWP should free Personal Advisers to focus on people as individuals, and consider their particular barriers to work and how they should be addressed. This is by no means a new observation. In 2001, the then Work and Pensions Committee, in a report on the Government's Employment Strategy, recommended "that the Government considers removing the different options and pilot programmes within the various New Deals, and instead allow advisers much more flexibility to design support around the needs of the individual."[54]

Building on the New Deal

60. In June 2004, the DWP announced that it was piloting Building on the New Deal (BoND), which seemed likely to respond to many of these concerns. It was described by the DWP as a vehicle for greater flexibility and tailored support: "This will create a New Deal unique to each individual through an exciting 'pick and mix' approach, which builds on success to date, giving more flexibility to customers and staff […] We are removing barriers between the New Deals so people can get the help they need as individuals rather than according to the benefit they are claiming."[55]

61. In June 2004, DWP published a paper setting out its proposals for Building on the New Deal. This explained that:

"Drawing on experience and evaluation evidence, three core principles emerge which will help achieve a modern, customer tailored, and work-focused service:

- a national framework of rights and responsibilities;

- greater local flexibility, devolution and discretion; and

- accountability, targets and contestability."[56]

62. The initial intention was to pilot BoND in 11 areas, but in September 2005 Jobcentre Plus announced they were cutting this to seven "as a result of our extremely tight financial settlement".[57] In our report on the Efficiency Savings Programme in Jobcentre Plus, the Committee concluded that: "The decision to reduce the scale of the piloting of BoND, in this Committee's view, is a mistake. We recommend that the Government sets out its thinking - in detail - on the next steps for BoND."[58]

63. In its response, published in June 2006, the Government said: "The Government's plans for BoND remain under review, in the light of the Welfare Reform Green Paper and the resources available. It was originally intended that each Jobcentre Plus Region would have the opportunity to operate a BoND pilot. However, in the light of the available resources, the Government has decided to limit any piloting of BoND to seven areas."[59] (Our emphasis.)

64. In a Parliamentary written answer in June 2006, Mr Jim Murphy, the Minister of State for Employment and Welfare Reform, stated that "We are still considering the timing of implementation of the Building on New Deal pilots."[60]

65. Witnesses told us that BoND had never been piloted and that there seemed no likelihood of any pilots taking place. Patrick Grattan of TAEN/Help the Aged told us, "We accepted that we were moving away from a world where New Deal is defined by age, and that New Deal 50 Plus was gradually dying, on the basis that the whole thing would be rejuvenated for all ages. That has not happened because of resource constraints or for whatever other reasons."[61] Richard Exell of the TUC agreed that "Unfortunately BoND has died but it has not been buried because no one wants to admit it is dead."[62] Dave Simmonds of Inclusion told us, "[w]e said back in the summer […] that BoND should be buried because in effect, from our point of view, BoND has not happened. The key decisions to roll this out have not been taken, we understand because of resource issues."[63]

66. Jim Murphy told us that he could not add anything to the response he had previously given:

"[…]I do not think I can add much detail to the specifics about where we should go next on New Deal […] I cannot recall if in June we identified the specifics of any reframing on building on the success of New Deal, but certainly on the issue of flexibility, the flexibility for advisers, the flexibility for customers to undertake whatever options are most suitable, the idea is that we address that in that early intervention of the personal advice gateway, and also we will see what we can do to reduce the number of people who are […] repeating within the New Deal […] I cannot give you any more comfort about specifics, but the principles are there and we are discussing with all interested parties just how we get the detail right."[64]

Resource constraints?

67. We heard evidence that financial reasons might lie behind the apparently indefinite suspension of BoND. Dave Simmonds of Inclusion told us that "we have to see it as a direct casualty of the tough settlements for DWP and Jobcentre Plus as part of the CSR [Comprehensive Spending Review]."[65] Patrick Grattan of TAEN/Help the Aged agreed that "resource constraints" might lie behind the demise of the programme.[66]

68. Witnesses told us that, if successful, BOND would not be more costly, and would eventually save the exchequer money. Dave Simmonds of Inclusion told us, "[w]e still dispute the fact that it [BOND] would actually cost more money; we have not seen any conclusive evidence from the department as to why it should cost more money."[67] Professor Paul Gregg told us that flexible provision need not cost more: "if it is successful in the sense of meeting individual needs, and the caseworker is incentivised in order to move that person to work effectively, I would see absolutely no reason why it should be more costly."[68]

69. DWP expenditure falls into two categories:

  • Departmental Expenditure Limit (DEL) spending, which is planned and controlled on a three year basis in Spending Reviews.[69] DEL includes spending on employment programmes such as the New Deals; and
  • Annually Managed Expenditure (AME), which is "expenditure which cannot reasonably be subject to firm, multi-year limits in the same way as DEL." AME includes expenditure on social security benefits.[70]

70. If spending on social security benefits falls, for example, because of a reduction in the claimant count, this money is not available to DWP to spend on its employment programmes, expenditure for which is set in the spending review process. The HM Treasury website explains that:

"Departments have certainty over the budgetary allocation over the medium term and these multi-year DEL plans are strictly enforced. Departments are expected to prioritise competing pressures and fund these within their overall annual limits, as set in Spending Reviews. So the DEL system provides a strong incentive to control costs and maximise value for money."[71]

71. We asked Jim Murphy whether there had been any progress in persuading the Treasury to allow savings from benefits to be recycled to pay for programmes. He told us:

"On incapacity benefit customers we have got an agreement in principle from the Treasury to use the success that we see through Pathways, with the opportunity and the legal framework that the Welfare Reform Bill provides, to support a million people off incapacity benefit over a decade. There is the agreement in principle now in place to enable that recycling of benefit savings so that that can be invested in further success. That is a real shift in terms of how we fund and incentivise the welfare system and the welfare market. If we establish that on a successful basis there is no reason why in theory it could not be extended to other customer groups."[72]

72. He also told us that he hoped a similar agreement could be reached about the Cities Strategy programme:

"Quite reasonably, the Treasury - to argue their case for a moment - hears ten proposals a week, I suspect, which say, 'Honestly, this will save you money' and we have got to prove through the Pathways success and the recycling of benefits and reinvesting that money from the success of Pathways that can then be taken across to reinvest in the savings of the Cities Strategy consortia."[73]

73. The Committee is concerned that, apparently, no progress has been made in piloting BoND and concludes that there is a lack of clarity in the information the DWP has provided on what has happened to the programme and the extent to which delays were the result of resource constraints. We ask for an explanation in response to this report.

74. We welcome the agreement to pilot re-using benefit savings as part of Pathways, and recommend that the DWP continue to press the Treasury to allow further pilots of this in the Cities Strategy. We consider that the ability to re-use benefit savings will encourage the DWP to innovate, and consider that, if successful, it should be introduced across the DWP's employment programmes in future.

Taking forward the principles behind BoND

75. Witnesses told us that the DWP still seemed to be committed to the principles that lay behind the BoND proposals. Dave Simmonds of Inclusion told us:

"I do not think that the department, from what I have heard, has actually rowed back on the fundamental principles on which BoND is based, and that is introducing far more flexibility into the system, introducing the menu-based approach so that individuals and personal advisers together can pick and choose. […] How they are introduced in the future, whether or not it is called BoND or something else, we do not particularly care, as long as the system as a whole is progressively freed up in one way or another […] let us look at in 2007 the best way for strengthening the New Deals and introducing more flexibility and ending the one-size fits all."[74]

76. There were also suggestions that the Cities Strategy would be a good opportunity to take forward the principles behind BoND. Paul Gregg told us that "the idea of the City Strategies running that personalised welfare service makes a lot of sense, as long as the funding rules can be sorted out […] We should try it in certain places in order to get it moving, and city strategies could be one of those."[75] Cities Strategies are looked at in more detail later in the report.

77. Evidence to this inquiry has led us to conclude that there would be clear advantages in allowing greater flexibility in employment programmes to respond to individual needs and local labour market conditions. We recommend that the DWP pilot BoND, or a programme based on the same principles, as soon as possible, and also incorporate those principles into the Cities Strategy.

38   Ev 242 Back

39   See, for example, Ev 179, Q 4, Q 114. Back

40   HM Treasury and Department for Work and Pensions, Full employment in every region, TSO, December 2003, p 24 Back

41   See for example Qq 4, 6, Q 224 [Mr Simmonds], Q 272 [Ms Oppenheim, Mr Gaffney],  Back

42   Ev 179 Back

43   Q 4 Back

44   Q 114 Back

45   HM Treasury, Full employment in every region, p 23 Back

46   Ev 330 Back

47   Department for Work and Pensions, Building on the New Deal: Local solutions meeting individual needs, June 2004, p 5 Back

48   Department for Work and Pensions, Building on the New Deal, page 8 Back

49   Department for Work and Pensions, Building on the New Deal, page 7 Back

50, New Deal 50 Plus Back

51   Q 224 Back

52   Q 306 Back

53   Q 306 Back

54   Work and Pensions Select Committee, Third Report of Session 2001-2, The Government's Employment Strategy, HC 815, para 84 Back

55   "Minister unveils new deal evolution plans", DWP Press Release, 17 June 2004 Back

56   Department for Work and Pensions, Building on the New Deal: Local solutions meeting individual needs, page 15 Back

57   "Jobcentre Plus contracting/Building on the New Deal - Announcement Update", DWP Notice to Partner Organisations, September 2005 Back

58   Work and Pensions Select Committee, Second Report of Session 2005-06, The Efficiency Savings Programme in Jobcentre Plus, HC 834, para 287 Back

59   Work and Pensions Select Committee, Second Special Report of Session 2005-06, The Efficiency Savings Programme in Jobcentre Plus: Government Response to the Committee's Second Report of Session 2005-06 , HC 1187, p 20 Back

60   HC Deb, 6 June 2006, col 1686W Back

61   Q 129 Back

62   Q 129 Back

63   Q 226 Back

64   Q 444 Back

65   Q 226 Back

66   Q 129 Back

67   Q 226 Back

68   Q 308 Back

69, Spending Review.  Back

70, Spending Review.  Back

71, Spending Review.  Back

72   Q 447 Back

73   Q 486 Back

74   Q 226 Back

75   Qq 311, 313 Back

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