Select Committee on Work and Pensions Third Report

Conclusions and recommendations

1.  We welcome the setting of an employment rate aspiration and the DWP's commitment to making sure everyone has the opportunity to work. (Paragraph 17)

2.  We recommend that the DWP produce a clear list of the groups which it thinks should not be expected to work, together with estimates for the percentage of the UK's working age population which fall into each of the groups it has identified. We recommend that it should then take the percentage of the population which remain as its long-term employment rate aspiration. (Paragraph 22)

3.  We therefore recommend that the DWP publish employment rate measures relating both to the ILO definition and to those who work for 16 hours a week or more. (Paragraph 23)

4.  The measure of the working age population should continue to start from the school leaving age, whatever that may be. The issue of NEETs aged 16-18 will remain a crucial one, and we note that DfES publishes a measure of the numbers of people aged 16 to 18 in employment or training. (Paragraph 35)

5.  However, for the sake of clarity, we recommend that the DWP retain the link between the employment rate and the SPA. The measure should, of course, change in future in line with planned increases in SPA. (Paragraph 37)

6.  We recommend that the DWP agree a PSA target of increasing the proportion of people over State Pension age who work. (Paragraph 39)

7.  We conclude that an employment statistic expressed in terms of a percentage, but which does not actually represent the proportion of any single group which is in employment, would be misleading. The measure used by the DWP to track progress towards the employment rate aspiration should be a rate and not a ratio. (Paragraph 42)

8.  As we have explained above, we think that the figure of 80% needs to be more firmly grounded by an explanation of who is expected to be within the remaining 20%. If the DWP is going to take the employment aspiration seriously, then it ought to include it within its PSA targets arising from the next Comprehensive Spending Review. This could be done by agreeing more ambitious targets for raising the employment rate than the current PSA target (Paragraph 43)

9.  We have recommended above the way in which we think the employment rate aspiration should be calculated. In setting a new PSA target for the employment of disadvantaged groups, we recommend the DWP make clear how far achieving the sub-targets will take it towards its employment rate aspiration. The DWP should specify the timeframe within which it wants to achieve the targets which it has set for the employment rates of disadvantaged groups, and, based on this, the timeframe within which it hopes to achieve the employment rate aspiration. (Paragraph 46)

10.  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. (Paragraph 73)

11.  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. (Paragraph 74)

12.  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. (Paragraph 77)

13.  The demand-led approach exemplified by Ambition and Fair Cities is promising, but resource-intensive. We welcome the news that Ambition is to be relaunched, and recommend that the DWP consider extending the Fair Cities programme to more areas. We recommend that the DWP explain in detail how it will incorporate lessons learned from these two programmes into other initiatives, such as the Cities Strategy. (Paragraph 101)

14.  We recommend that the DWP should use a new definition of sustainable employment of 26 weeks, both in its targets for Jobcentre Plus and contracted-out provision. We also recommend that the Government liaise with employers organisations to promote sustainable employment. (Paragraph 109)

15.  We recommend that the Government liaise with employers' organisations to promote take-up of the Skills Pledge. It should set out a timetable for assessing delivery on the pledge. We also note with interest Lord Leitch's proposal that the introduction of a statutory entitlement to workplace training at Level 2, in consultation with employers and unions, should be considered following a review in 2010 of progress in employer delivery. We intend to monitor developments and revisit the issue if necessary. (Paragraph 119)

16.  The Leitch report sets out a compelling argument for an overhaul of the UK's skills strategy. Better skills provision is essential if the DWP is to achieve its employment rate aspiration; increasing workplace training, and the relevance of qualifications to the needs of employers, will improve in-work advancement and make an important contribution to job sustainability and retention. We are concerned that, as yet, there has been no commitment to financing the implementation of Lord Leitch's proposals. The Government should be prepared to make a significant early investment in skills provision, in order to reap these rewards. (Paragraph 123)

17.  The DWP should clarify in what ways the benefit entitlements of people out of work who use Learner Accounts will be affected and what particular impact such participation will have on the job search obligations of those who claim Jobseeker's Allowance. (Paragraph 129)

18.  The DWP should consider the interaction between basic skills training and short-term job placements, and set this out clearly in its response to this report. (Paragraph 130)

19.  Accepting that the issue of what effect migrant labour may have on the UK labour market is a complex one, we conclude urgent, up-to-date, high quality independent research is required. This research should consider the impact of different groups of migrants, particularly those with high and low skills, in different local employment markets in the UK. Such research should be published. (Paragraph 137)

20.   We recommend that the Government include, in its response to the Leitch review, details of how the transition from out-of-work to in-work skills support can be facilitated and how such an approach will be reflected in job entry and learning outcome performance targets. (Paragraph 141)

21.  We recommend that the ESC have within its remit a requirement to continue the employer-led work which the NEP has carried out in order to improve the employment chances of people from ethnic minorities and other disadvantaged groups. (Paragraph 142)

22.  Centralisation of procurement may reduce the extent to which Cities Strategy consortia can make locally appropriate decisions. We recommend that the DWP make clear how consortia will be able to "influence" procurement decisions, and ensure that they have a significant role in choosing providers. Consortia should be able to control at least some funds directly; [for example, their allocation from the Deprived Areas Fund as recommended below in Chapter 9]. (Paragraph 178)

23.  We recommend that DWP publish the full list of flexibilities requested by the 15 Cities Strategy pathfinder areas, as it has published the initial Expressions of Interest. If it has decided not to grant any of the requested flexibilities, it should explain why. (Paragraph 185)

24.  Unless the Cities Strategies are able to make use of core budgets from organisations such as Jobcentre Plus and the LSC, and make significant alterations to the way in which services are delivered, it is doubtful whether they will be able to achieve as much as the DWP hopes. We recommend that DWP clarify as soon as possible what budget and programme flexibilities will be available to the Cities Strategies. We recommend that it be bold in allowing local consortia to make real changes in order to tackle worklessness and social exclusion in cities. (Paragraph 186)

25.  We recommend that the DWP's next set of PSA targets include a clearer target for increasing the employment rate of people over 50, as a stepping stone clearly linked to the achievement of the employment rate aspiration. (Paragraph 193)

26.  We recommend that the DWP publish data on whether those employment programmes available to over 50s and under 50s are working equally well for both age groups, and this should be done at least yearly. Area based initiatives, including the Cities Strategy pilots, should be included in this data. The DWP should more explicitly monitor the participation of people over 50 in skills training programmes. (Paragraph 203)

27.  As recommended in Chapter 3, the DWP should move towards a flexible New Deal along the lines of the Building on the New Deal proposals, and pilots of this programme should include people over 50. Allowing older people to become distanced from the labour market, and come to think of themselves as "early retired", is a loss to the economy, limits the choices of older people and increases their risk of poverty. We recommend that the DWP move towards making New Deal support available for this age group as soon as benefit is claimed. (Paragraph 209)

28.  We recommend that the Government monitor, through the new CEHR or directly, the effectiveness of age discrimination legislation. (Paragraph 217)

29.  We welcome the Government's initiative on outlawing age discrimination, but we remain concerned that it still leaves people over 65 without adequate protection. Given that the State Pension age is due to rise steadily in future, and that there is a consensus in favour of making retirement a process rather than a cliff-edge event, we recommend that the Government reconsider its decision not to address this issue until 2011. (Paragraph 221)

30.  We conclude that Jobcentre Plus needs to do more to successfully engage harder to reach lone parents. The further increase in the frequency of WFIs announced in the Pre-Budget Report 2006 may not be an effective use of Jobcentre Plus advisers' time and may undermine the quality of the provision that is already there, making it more difficult effectively to engage disadvantaged lone parents in preparing for paid work. We recommend that DWP monitor carefully the success of the implementation of this measure. (Paragraph 248)

31.  The Committee welcomes the introduction of the Work Related Activity Premium, which appears to be a sensible way of engaging lone parents to prepare for work. We have received evidence, however, that targeting it at lone parents with secondary school age children may not be the most effective use of the programme, and we conclude that the DWP should consider making it available to lone parents with children of all ages on an opt-in basis. (Paragraph 249)

32.  We recommend that, in its evaluation of the WRAP, the DWP should attempt to quantify the effectiveness of the quarterly work-focused interviews which accompany the WRAP payments. Particular attention should also be paid to whether the six months allowed is long enough to engage disadvantaged lone parents. (Paragraph 250)

33.  We conclude that it is essential to ensure good links between voluntary and community organisations and Jobcentre Plus and the Learning and Skills Council to help engage lone parents with Jobcentre Plus provision. (Paragraph 251)

34.  We recommend that Personal Advisers be given greater discretion over further benefit extensions. (Paragraph 256)

35.  We recommend that the Government ensure that lone parents receive advice on their existing employment rights. The Committee welcomes the piloting, in the New Deal Plus for Lone Parents, of measures which offer increased support for lone parents preparing for and moving into paid work. We recommend that a commitment be made in the Comprehensive Spending Review to roll out the effective elements of this nationwide, either as New Deal Plus for Lone Parents or as part of a more flexible Building on the New Deal programme, as recommended in Chapter 3. (Paragraph 258)

36.  We conclude that the performance of Jobcentre Plus and the New Deals in London will need to improve if the DWP is to have a chance of achieving its 70% lone parent employment target. Lone parents and other groups with low employment rates face particular barriers to work in London, including a lack of affordable childcare and high housing costs. We also recommend that the Government should examine the take-up rate of the childcare element of Working Tax Credit in London. (Paragraph 269)

37.  We will follow with interest the evaluation of Employment Zones, and the development of the Cities Strategy pilots in London. We recommend that the DWP also consider offering enhanced incentives to work to lone parents in London, and ask it to set out how it intends to improve its performance in helping lone parents in London overcome the particular difficulties they face. As we have already recommended, the DWP should move towards a more flexible menu of provision for all. (Paragraph 270)

38.  Because the allocation of DAF funding has been delayed, we recommend that areas should be allowed to roll this year's allocation over into the next financial year, rather than being required to spend it by the end of the current financial year. (Paragraph 278)

39.  We hope that the end of the Ethnic Minority Outreach programme does not demonstrate a reduced commitment on the part of the DWP to improving employment opportunities for this group. (Paragraph 280)

40.  Evidence suggests that the Ethnic Minority Outreach programme was working well at improving employment opportunities for people from ethnic minorities, using small local organisations. Since this is to be replaced by the Deprived Areas Fund, we will want to see evidence that organisations contracted to administer the Deprived Areas Fund are working with small local groups to reach the same clientele as the Ethnic Minority Outreach programme did. It is important that the focus on offering employment services to people from ethnic minorities should not be lost, either in Cities Strategy areas or other areas. We recommend that Cities Strategy consortia, or, in those areas receiving DAF which are not Cities Strategy pathfinder areas, Jobcentre Plus District Managers be given control of DAF funding, so that they can contract directly with local organisations, instead of having to go through centralised procurement. (Paragraph 281)

41.  We expect to see that those of the 15 Cities Strategy pilot areas which have significant ethnic minority populations have given a high priority to addressing ethnic minority unemployment in their plans; the DWP should monitor this, and report back to the Committee on this point in six and twelve months' time. The Department should also, in its response to this report, set out its plans to ensure that the focus of, and lessons learned from, the EMO are taken forward outside the Cities Strategy areas. (Paragraph 283)

42.  We recommend that a higher priority be given to making ESOL training available to those people from ethnic minorities for whom it would increase their chances of finding work, and that the Government monitor the success of this provision. (Paragraph 292)

43.  We conclude that the DWP and the DTI should work with businesses to promote the advantages of a diverse workforce, and to encourage them to review their recruitment policies to ensure that they offer equal opportunities. The Government should also charge the new CEHR with providing clear guidance to employers on their responsibilities. (Paragraph 301)

44.  As well as working to improve the employment of people from ethnic minorities, we think Jobcentre Plus should promote self-employment as an option to people from these groups. (Paragraph 302)

45.  We recommend that the DWP publish an updated strategy, underpinned by evidence of the costs and effectiveness of its proposals, setting out how it plans to reduce discrimination of all types. (Paragraph 306)

46.  The Government should make clear in what circumstances it would consider extending to the private sector the duty to promote racial equality. (Paragraph 307)

47.  We recommend that the DWP ensure that its own procurement sets an example to other public bodies in setting high standards for equal opportunities policies in the firms with which it contracts. Promoting racial equality should be one of the priorities of the new "centre of excellence" in procurement. We recommend that if public procurement proves to be a useful tool in improving racial equality, all public bodies should adopt a similar approach to procurement. We also recommend that the DWP set out what "further" approaches it would consider to promote racial equality. (Paragraph 315)

48.  If the DWP is to obtain the best value from PVS providers, it needs clear evidence on their comparative performance levels in different fields. We recommend that the DWP continue with its assessments of the relative performance of PVS providers and Jobcentre Plus, and provide us with details of their findings. (Paragraph 329)

49.  We repeat our previous recommendation that DWP needs to "consider carefully how best to progress with [outcome-based] funding to ensure that all providers - private and voluntary sector - do not skew their focus towards helping into work those who are already closer to the labour market". Providers for all groups should receive payments that recognise the ongoing support needed, not only to move a person into work, but also to ensure that their jobs are sustained. The need for the system to be improved to reflect these objectives is becoming more acute as the level of private and voluntary sector provision increases. (Paragraph 334)

50.  Prime contractors must not be allowed to become sole contractors, or valuable local expertise will be lost, reducing the opportunities to engage with those far from the labour market. We recommend that the DWP should publish data on how many organisations prime contractors are, in fact, contracting with, and the value of these contracts. We also recommend that the DWP should clarify what its response would be if a prime contractor was found to be consistently underperforming. (Paragraph 338)

51.  Given the importance of welfare to work policy, we are concerned at the lack of clarity around the timetable for the review (which is not mentioned in the press notice) and the fact that there seem to be no formal consultation arrangements. Such a crucial process must not be rushed and should be - and be seen to be - transparent and actively engaging all those who have an interest. We expect DWP to ensure that this takes place. (Paragraph 342)

52.  We recommend that any changes to the system of benefits for lone parents take account of the fact that paid work may not be the best option for a lone parent, even if they have children of secondary school age. There may be a range of reasons why a lone parent does not wish to work. We recommend that the DWP concentrate its efforts on providing better support for the majority of lone parents who do want to work, as discussed in the chapter on lone parents above. (Paragraph 345)

53.  We recommend that the Government continue to improve the provision of suitable, affordable childcare in all areas, which will be essential in order to improve the ability of lone parents to enter and keep paid work. (Paragraph 346)

54.   We conclude that the effects of complex benefits are potentially significant, and we intend to inquire into benefit simplification in the near future. (Paragraph 347)

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