Examination of Witnesses (Questions 1-19)
Department for Work & Pensions, Learning &
Skills Council and Jobcentre Plus
26 November 2007
Q1 Chairman: I apologise to our witnesses
for starting a few minutes late. We try to avoid that. Today,
we are considering the Comptroller and Auditor General's Report,
"Sustainable employment: supporting people to stay in work
and advance". We welcome Mark Haysom, Chief Executive of
the Learning and Skills Council, Lesley Strathie, Chief Executive
of Jobcentre Plus, Adam Sharples, Director General of the further
education and skills group at the Department for Work and Pensions,
and Stephen Marston, Director General of Further Education and
Skills Group at the Department for Innovation, Universities and
Skills.
I want to start with the Departments for Work
and Pensions, and for Innovation, Universities and Skills. We
had a statement this afternoon, and I deprecate the fact that
we were not given more warning of it. It was relevant to what
we are discussing this afternoon, and if we had had it last week,
it might have influenced our questions. I, for one, could not
hear the statement because I had to be briefed by Sir John Bourn
at 3.30 pm, so I have no idea of what was in it, apart from the
fact that it took place. It is unusual to have a statement on
the same day as a PAC inquiry, so will you please tell us how
it affects our inquiry?
Adam Sharples: Perhaps I can comment
on that. The background is that the Prime Minister made a speech
today at the Confederation of British Industry, which was developing
the theme that we need to do better with skills and to link employment
and skills much more closely than in the past. Linked to that
speech, the two Departments, DIUS and the DWP, published a joint
document on opportunity, employment and progression, which develops
that theme. Our Secretary of State made a written statement, and
the DIUS Secretary of State made an oral statement this afternoon.
It is important to stress that the content of
those statements is very much in tune with the analysis in the
National Audit Office Report. We welcome the Report, which is
excellent. The argument is that it is not enough just to get people
into jobs, and that we must think about giving them the skills
to progress in work. That argument was powerfully made in the
NAO Report, and was strongly echoed in the statements today.
I recognise, Chairman, that from the Committee's
point of view, the coincidence of timing was not ideal, and that
you would have preferred to see the content of the statements
before today, but I hope that I can reassure you that the content
is very much in tune with the content of the Report.
Q2 Chairman: So, basically, we have
had a National Audit Office Report, you have accepted its recommendation,
and this hearing is redundant. Is that right?
Adam Sharples: Not at all, Chairman.
We have seen the Report, and worked with the National Audit Office
on it, so we have been aware for some time that its content is
very much in line with the way in which thinking in the Departments
has developed. It seems to me that that is good news, rather than
something we should worry about. We are delighted to have the
opportunity this afternoon to respond to questions on the NAO
Report.
Q3 Chairman: Some 40% of people who
leave Jobseeker's Allowance to enter employment are back on benefits
within six months. Obviously, it is good that people get short-term
jobs, but it is more important to get people jobs with a sustainable
future. How are we going to stop that merry-go-round? It may be
an impossible job and an impossible question, but I had to ask.
Adam Sharples: As you say, it
is a complex matter, and the Report brings out well the complexity
of the issues. There are a number of reasons why people leave
a job after only a short period. Sometimes, the job is temporary—there
are almost 1.5 million temporary jobs in the economy. In those
cases, the reason why people come back on to benefit has nothing
to do with choice; it is simply that the job has come to an end.
In other cases, there might be an element of choice involved.
We need to recognise that, within a healthy
labour market, there is a lot of turnover, which tends to be highest
in lower-skilled occupations and among younger people. Therefore,
it is a common pattern for younger people to go through a series
of relatively short-term jobs before they settle down and find
something that suits them. Clearly, we have a strong interest
in getting people into sustained jobs, which is why the Departments
have been working closely together to ensure that, as people look
for work, they get the skills not only to get into work, but to
progress to higher-skilled and more long-term jobs. Many of today's
announcements relate precisely to that objective.
Q4 Chairman: If we look at paragraph
1.1 of the Report, which leads to paragraph 1.3, we will see that
repeat claims have not gone down since the 1980s, despite the
£5,350 million spent on new deal programmes. Why is that?
Why are we in the same situation as in the 1980s, despite all
the money that is being spent?
Adam Sharples: It is important
to understand that statistic. The Report says that the proportion
of repeat claims has not changed, but the number of people who
are suffering a spell of unemployment has come down dramatically.
In the 1990s, in the five-year period that the NAO looked at,
around 10.5 million people suffered a spell of unemployment; in
the equivalent period between 2002 and 2006, that dropped to about
6.4 million. The number of people flowing through the system,
therefore, is falling quite dramatically, which is welcome. The
proportion of people who have repeat spells has stayed the same,
but the numbers going through the system have fallen dramatically.
Q5 Chairman: I do not know whether
there was a statement—perhaps you will tell us—but
if we read paragraph 18, we see that in 2004, it was recommended
that you develop a shared target for skills and employment. In
July 2007 and again in October 2007, you announced that you planned
to develop one. This is addressed to both Mr. Haysom and Mr. Sharples.
You are supposed to have a shared target for skills and employment,
so why is it taking so long? Perhaps the House was enlightened
on the matter this afternoon, or you could perhaps enlighten us
now.
Adam Sharples: Perhaps I could
begin to answer that point and then hand over to Stephen Marston,
who is my opposite number on the skills side.
The answer is that we have been working extremely
closely together on aligning the targets that we adopt for employment
and skills. We would like to get a measure of how people progress
through the system, so we can find out how far a person who is
out of work and looking for work progresses through skill levels
to acquire qualifications that help them move into work and to
increase their income. In a perfect world, we would have the data
to allow us to follow that chain through. Unfortunately, we do
not have those data sets at the moment. As an interim measure,
we have adopted a measure of retention—how long people stay
in jobs. To measure that, we use the inverse, which is to say
the amount of time that people stay on benefits. From next April,
we will publish an indicator of that measure of retention. On
the skills side, we will use a measure of progression from skills
into employment that is based on the new survey—the framework
for excellence destinations survey—which will produce results
from October 2008. For the interim we will have those two measures,
but what we would like to do is establish gateways for data sharing
between the Departments, which will allow us to move towards a
more integrated target in the longer term.
Q6 Chairman: If we look at appendix
3, we see that you have got more than 25 programmes in this area.
Is not that very expensive—to run so many programmes? Could
you not simplify matters, or simplify your approach, to reduce
transaction costs?
Adam Sharples: We think there
are too many programmes, and that is why the Government proposed
in the Green Paper, published in July, In work, better off:
next steps to full employment a fairly radical simplification
and rationalisation of the employment programmes. The particular
proposition on which we have been consulting, about the various
programmes for the long-term unemployed—at the moment, there
are four or five of those: the new deal 25-plus, the new deal
for young people, employment zones and private sector-led new
deals—is that we should take those four variants of support
for the long-term unemployed and put them into a single package,
which we have called the flexible new deal. Consultation closed
at the end of October, and the Government will be publishing their
response to that consultation shortly, but the thrust of what
we are trying to do is very much to simplify that. There is simplification
going on in other areas as well, but that is the main one.
Q7 Chairman: Okay. I have got a couple
more questions, before I let other members of the Committee come
in. If you read paragraph 4.10, it says: "Evaluation of the
first year of the programme"—that is Train to Gain—"estimated
that only about 10-15% of the training would not have taken place
without the programme, and that it was reaching relatively few
employers who would not normally provide training." Are you
not paying employers to do something they would do anyway?
Stephen Marston: We very much
hope not. That evaluation related to the employer training pilots,
when we first started. A major part of what we were trying to
do was evaluate carefully year by year how the pilots worked.
It is true that in the pilots we found quite a high level of dead
weight. When we rolled out the national programme from last year
we precisely and deliberately took account of that so that there
is a target within the brokerage system that focuses on hard-to-reach
employers. Currently we are exceeding the target that we set for
working with hard-to-reach employers.
Q8 Chairman: Well, the statement
this afternoon, as I understand it, and the Report, are about
improving skills. That is all fine, but there is another side
to the coin. If you lessened the regulation burdens on employers,
would that not give them more scope to improve training on the
job? The burden of regulation might militate against this process.
Stephen Marston: One part of today's
statement is the further development of Train to Gain to try to
make it a single coherent programme, which supports employers.
It is a very important part of what we are trying to do to shift
the whole system to a demand-led principle that takes what employers
see as their priorities and responds to that.
Chairman: Thank you very much.
Q9 Mr. Touhig: The Comptroller and
Auditor General's Report confirms a view I have long held, that
the best way to help low-skilled people to upskill, gain qualifications,
earn more money, and become more productive is workplace training.
Why do so few British companies recognise that?
Stephen Marston: We think from
the data we have that about one third of employers do not train,
and about two thirds do train. The majority of employers recognise
exactly the point that you are making, but there is an issue about
whether an employer who wants to train finds the publicly-funded
service helpful and responsive, or not. What we have been trying
to do over several years now—and today is a further big
step—is make sure that where an employer wants to train,
it is easy, straightforward and convenient to secure that training
in the workplace. That is the fundamental principle of the Train
to Gain programme.
Q10 Mr. Touhig: Two thirds of companies,
you say, engage in training, but the Report also confirms that
low-skilled, low-qualified people are much less likely to be trained
by their employers.
Stephen Marston: Yes. Hence the
focus of what we are doing, which is in effect to prioritise public
funding into those areas of low skill. That is the top priority
for the investment of public funds, so that we are removing at
least a significant part of the financial barrier for employers
to invest in those low-skilled employees.
Q11 Mr. Touhig: A few years ago,
I remember seeing a Report that said that in the United States
about 80% of people in work had been back in a learning situation
since they left school; 56% had done so in Germany and Japan;
and 30% had done so in the United Kingdom. Has that improved,
do you think? Are we getting better?
Stephen Marston: We are certainly
getting better. Year by year, the number of adults with qualifications
is going up—at levels 2 and 3 and in higher education—and,
year by year, the investment made by employers in training increases
steadily.
Q12 Mr. Touhig: A full-page advert
in tonight's Evening Standard—maybe you have seen
it—for Skills for Business states that "by 2020, over
40% of UK jobs will need to be degree-equivalent and above",
that "one in four employers can't move upmarket because of
skills issues", and that "companies which don't train
staff are twice as likely to go out of business as those which
do". Do we need to focus hugely on upskilling and retraining?
Stephen Marston: Absolutely. That
was the key message in Sandy Leitch's Report last year, which
we picked up on and responded to in our July Report, and today's
statement is another big move on.
Q13 Mr. Touhig: Do you think that
it is a big move on? I appreciate what you have done, but it seems
that you are just tinkering around the edges.
Stephen Marston: The scale of
our ambition represents a lot more than just tinkering around
the edges. The targets set for 2020 are benchmarked against the
Organisation for Economic Co-operation and Development upper quartile,
which would mean, for example, 95% of adults securing literacy
and numeracy skills and equivalents at levels 2, 3 and 4, which
is very ambitious. Similarly ambitious is the shift in effort
and money going into the Train to Gain programme, which, by the
end of this CSR period, in 2010-11, will account for more than
£1 billion. This is a major and ambitious reform programme.
Q14 Mr. Touhig: Have you looked at
what the Irish did with their objective 1 money, which we are
not doing quite as well in Wales unfortunately. They upskilled
people for jobs that they did not have, but when they got that
skills base, they could attract companies. Has the Department
considered such long-term investment in upskilling, even though
the jobs are not there yet?
Stephen Marston: The balance between
demand and supply is one of the hardest things to gauge accurately.
We could take a supply-push agenda, which would mean securing
more skills in the hope that employers would draw on them productively.
However, that has not always worked in other countries. Our goal
is to boost demand, particularly from employers and learners,
through a range of interventions. We want employers to call for
higher skill levels, and for us to manage the further education
service to respond to that.
Q15 Mr. Touhig: Do you not have to
make your support as simple as possible? As I know well, about
97% of companies in Wales are small and medium-sized enterprises.
I ran a number of small companies before coming to the Commons,
but had very limited time in which to consider new initiatives
for publicly-funded training.
Stephen Marston: You are right.
It has been a long-standing concern that the system is complicated
to understand. A major part of the Train to Gain programme is
to ensure that the employer only needs to know that they can work
with a skills broker who understands where the company is trying
to get to and the skills needs involved in getting there, and
who can source and organise the training programme to support
it.
Q16 Mr. Touhig: Paragraph 5.5 on
page 29 highlights the problem of people who start training in
order to improve their skills, but then often have to choose between
ongoing training and a job. Is there a way in which we could have
more out-of-hours study, or flexible working hours, so that people
can continue their training and get a job?
Stephen Marston: Yes there is,
and again today is an important step on that journey. In particular
we want to support those without a job so that they can gain at
least the initial skills for effective job entry, and then to
place them with employers, which can be supported through the
Train to Gain programme, and to take them on to full qualifications.
That integration is at the heart of what we are trying to do.
Mark Haysom: The other dimension
to that is the need to ensure that our providers of the Train
to Gain service—colleges and others—work as flexibly
as employers need. That is crucial.
Q17 Mr. Touhig: Very often, however,
people have their own ideas and ambitions for upskilling, and
it does not matter what the employer has. The Report mentions
a marker whereby those looking for jobs will know what jobs will
add to their skills base and value as an employee. Should you
be doing more of that? Should you be signposting it effectively
in order to make it clear that there is upskilling in a job—that
people will be able to train and reskill?
Adam Sharples: I think that the
reference in the Report is to a marker in the Jobcentre Plus system.
When vacancies are taken, a marker is now put on them to indicate
that training will be available with that employer. It is helpful
for jobseekers to see where there are links between a job opportunity
and a training opportunity.[1]
One other strand of the announcements today
is a flexing of what is commonly known as the 16-hour rule. At
the moment, the rule states that a jobseeker on Jobseeker's Allowance
cannot train for more than 16 hours a week for longer than a very
short period. We are broadening the opportunities there so that
longer-term unemployed people will be able to do full-time training,
if it is geared to specific job opportunities. We are trying to
flex that regime so that we can steer people into training opportunities
that are clearly linked to a job opportunity at the end.
Q18 Mr. Touhig: That is interesting,
and I noted that little bit in the statement. I have a lady in
my constituency—I have known the family for years—who
has not worked until the past few years, because she has been
caring for elderly parents. She now has a job as a lollipop lady,
seeing children safely across the road. She enjoys it very much
indeed but, because of the hours that she is working, she is now
going to have her benefits reduced because she is earning too
much money on this little lollipop lady's job to qualify for the
benefit. Having had the benefit reduced, the job itself is not
sufficient to keep her. What incentive is that to keep that woman
in work?
Adam Sharples: I would point there
to another element of the announcements today. I apologise, because
there is lot of material that is relevant to the Report and has
only today been made available. Another important strand of what
the Prime Minister and our Secretary of State announced was that
we will introduce a guarantee that anyone moving from benefit
into work will have a higher income; not just higher, but higher
by at least £25 a week. There will be a commitment that anyone
moving into full-time work will be—
Q19 Mr. Touhig: But the lollipop
lady doing a few hours a day would not qualify as being in a full-time
job, I take it.
Adam Sharples: No. Under 16 hours,
she would not qualify.
1 Correction by witness: We are in the process
of introducing a marker on our computer systems to indicate job
vacancies when training is available with the employer. My answer
to the Committee implied that this marker had already been introduced.
I apologise for any confusion. Back
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