House of Commons - Public Accounts - Thirty-Fourth Report

Select Committee on Public Accounts Thirty-Fourth Report

1 The Department's strategy for increasing ethnic minority employment

1. Although the United Kingdom is experiencing high employment levels, there is a significant gap of 14.2% between the employment rate of ethnic minorities (59.9%) and that of the overall population (74.1%)—a gap that is only 1.3% lower than it was in 1987. The Department for Work and Pensions (the Department), has estimated that this employment gap costs the economy some £8.6 billion annually.[2]

2. The ethnic minority population in the UK is increasing, and now accounts for 10% of the working age population.[3] Mainstream services offered by Jobcentre Plus are the principal vehicle for helping ethnic minorities into employment. In addition, since 2002, Jobcentre Plus has run pilot projects aimed specifically at ethnic minorities.[4] Without increased effort, the Department estimates that it could take 30 years to eliminate the gap, but the limited progress over the last 10 years suggests that it could take even longer (Figure 1).

Figure 1: The employment gap between ethnic minorities and the overall population shown against the Department's targeted initiatives

Source: C&AG's Report, Figure 1

3. Reducing the unemployment gap between ethnic minorities and the overall population is a challenging and multi-faceted issue, and the United Kingdom is not unique in having this problem. The Department has made some progress in reducing the employment gap. Over the last ten years there has been a slow but steady reduction of 2.8% in the gap.[5]

4. Until spring 2008, the Department had a Public Service Agreement target to reduce significantly the ethnic minority employment gap, after taking account of the economic cycle. This target was taken to mean a reduction in the employment gap of at least 1% over the three year period. The Department met this modest target for 2003-2006, and is likely to do so also for 2005-2008, but accepts that this is partly due to the strong economy, which has seen ethnic minority employment rising disproportionately, as well as to the Department's mainstream and targeted initiatives.[6]

5. For the Spending Review period 2008-11, the Government decided to reduce the overall number of Public Service Agreement targets. As a result, the Department now has a performance indicator of narrowing the employment gap between several disadvantaged groups, including ethnic minorities, and the overall rate.[7] In the absence of a specific target for ethnic minorities, the Department aims to achieve a narrowing of 1% in the gap over the three year period. Even if this is achieved, at this rate of progress it could take more than 40 years for the Department to eliminate the employment gap of 14.2% between ethnic minorities and the overall population.

6. From 2002, the Department piloted a number of initiatives, targeted specifically to help ethnic minorities into work. From mid-2006, the Department shifted its focus to area-based initiatives aimed at disadvantaged groups generally.[8] Whilst the Department has given a high priority to reducing the employment gap for ethnic minorities and has had some success, its strategy has lacked continuity.[9] This has had an adverse impact on the effectiveness of the efforts by Jobcentre Plus to increase ethnic minority employment. The Department acknowledges that there were transitional difficulties in the period up to 2006, but considers that for the last three years it has been following a consistent policy.[10]

7. Pilot schemes run between 2002 and 2006 aimed specifically at ethnic minorities cost the Department around £40 million and achieved some success (Figure 2). The purpose of the pilot schemes was to identify whether such targeting could achieve a step-change in the employment gap, and to learn real lessons which could be incorporated in future strategies. These pilot schemes varied in their success rate and the cost per job, and may not have achieved their full potential, either because they got off to a slow start, or because they were not of sufficient duration.[11] Whilst acknowledging that the pilots were small scale and unlikely to make much impact on the employment gap, the Department considers it has learned lessons from each of the pilots and incorporated them into its re-focussed strategy on disadvantaged areas.[12]Figure 2: The Department's targeted initiatives

TITLE AND DESCRIPTION	SPEND AND DURATION	ACHIEVEMENT AGAINST TARGETS (1)
AIMED AT ETHNIC MINORITIES
Ethnic Minority Outreach	£31.5 million April 2002-September 2006	Target: 25% of starters into work Achieved: 32% of starters into work (over 13,000 job entries). Cost (to the programme) per job £2,400
Ethnic Minority Flexible Fund	£6.8 million April 2004-March 2006	"Planning assumption": 500 jobs Achieved: Over 2,500 job entries Cost (to the programme)per job £2,700
Specialist employment advisers	£1.5 million 2004-2006	No job entry targets
Fair Cities	£8.34 million April 2005-March 2008	Target: 15,000 sustainable jobs Achieved: 248 jobs after first 10 months Cost (to the programme)per job £12,715 after first ten months (likely to reduce as numbers build and start-up costs are spread)
Partners Outreach	£7.5 million January 2007-Mar 2008	Targets: 5,000 starts and 1,000 jobs Results not yet available
AREA BASED INITIATIVES
Deprived Areas Fund	2006-2009 £111.3 million of which…	No mandatory targets for ethnic minority employment.
City Strategy	…£65 million (58%) will be under the control of City Strategy consortia	Just over half of consortia with large ethnic minority populations have targets for ethnic minority employment

Note: For comparison purposes, calculations of cost per job make no attempt to take account of those who would have got a job without the programmes

Source: C&AG's Report, Figure 15

8. The aim of the Department's present strategy of area based initiatives is to focus effort, resources and commitment on those areas where worklessness and unemployment are highest and also where disproportionately larger numbers of deprived groups live and work. The strategy is delivered principally through the Working Neighbourhoods Fund (incorporating the Deprived Areas Fund) and the City Strategy (Figure 2). The present strategy provides opportunities to concentrate help on those who are most disadvantaged, but carries the risk—which the Department accepts—that ethnic minorities may not receive the help they need to gain employment.[13]

9. The City Strategy aims to tackle worklessness in the most disadvantaged areas across the United Kingdom by combining the work of government agencies, local government and the private and voluntary sectors in a local partnership (Pathfinders). Fifteen such Pathfinders cover 10% of the working age population, but over 40% of the ethnic minority working age population. The Department is negotiating with the Pathfinders to encourage them to set targets for helping ethnic minorities into employment and claims that 13 of the 15 have now agreed to do so.[14] So far, however, only seven of the 13 Pathfinders in areas where there are significant ethnic minority populations have set measurable targets. The City Strategy was never intended to be a national programme and the Department has no plans to change this. Those disadvantaged groups not living in an area covered by a City Strategy Pathfinder are covered by the Department's mainstream services.[15]

10. In establishing its pilot projects and developing its strategy to increase ethnic minority employment, the Department encourages learning from the experiences of other countries with ethnic minority populations which can be applied in the UK. For example, the Department has recently visited Canada to look at the Service Canada Organisation and the way it provides services to the citizen. The Department sees such visits as a two-way interchange, with others coming from abroad to learn from the Department and Jobcentre Plus.[16]



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