Examination of Witnesses (Questions 1-60)
DAVID COYNE, TONY HAWKHEAD AND JACKIE MOULD
27 OCTOBER 2010
Q1 Chair: I welcome our three
witnesses for this first formal evidence session of our inquiry
into the Future Jobs Fund and youth unemployment. Will you briefly
introduce yourselves for the record?
Jackie Mould: I am Jackie Mould.
I am from Be Birmingham, which is part of Birmingham City Council.
Tony Hawkhead: I am Tony Hawkhead
from Groundwork UK.
David Coyne: I am David Coyne
from Glasgow Works.
Chair: Will you speak up a bit? The
room is a bit echoey. Although the microphone picks up your voices
for broadcasts, we cannot necessarily hear you. Unfortunately,
the microphones do not help us. Harriet, you have a declaration.
Harriett Baldwin: Thank you, Chair.
I wish to declare that I am vice-chairman of the Social Investment
Business, which has a 10% stake in 3SC, which provided jobs to
the Future Jobs Fund.
Q2 Chair: Thank you. As has
been pointed out to us, the three of you have been in organisations
that have been delivering the Future Jobs Fund, so obviously you
have a vested interested in that.
Before my colleagues ask more specific questions,
may I ask you a more general question? How do you rate the Future
Jobs Fund in comparison with other schemes that have been put
in place to try to alleviate youth unemployment? This must be
the last of a number of various things that have been tried in
the past. Will you give us an historical sense of where you think
it rates against other interventions that have been used, to a
greater or lesser extent, to get young people into work?
Jackie Mould: I think it
has been very positive on a number of fronts. The big positive,
and the feedback that we have had from the young people who have
been involved, is that it's a real job. If you're an unemployed
young person and you haven't had a job, or you've been unemployed
for quite a while, to be able to have a real job that you can
put on your CV makes the difference between getting a job and
not getting a job when you are trying to move up. That's been
a big bonus.
The other positives have been the creativity
and the opportunities that the programme has created, particularly
in the voluntary and community sector. That's what we have found.
They've been able to create some innovative and interesting jobs
for people, which has helped to develop their business as well,
so that's been really positive. We are just monitoring our people
who have left the programme. So far, it's looking as though around
51% have gone into employment or full-time education. Compared
with previous programmes, that is a very good outcome for us.
On the less positive side, it is an expensive
programme, because you're essentially paying wages for the young
person for six months. However, if that person then goes into
a job, you can soon start to benefit in terms of that person coming
off benefits and paying into the system instead of taking out
of it. Also, it's not been particularly good for attracting private
sector employers. Although we have had a lot of private sector
employers locally wanting to be able to help and offer opportunities
to young people, this programme has not really been for them.
It hasn't been able to give them that opportunity.
Q3 Chair: We will have more
detailed questions on that later. You said that 51% in terms of
job outcomes was comparatively good. What were the job outcomes
for some of the other things that have been tried?
Jackie Mould: I don't have those
statistics on me, but I have a background in running these kinds
of programmes over the past 15 or 20 years. My experience is that
the rate of people going into real jobs is often a lot lower than
that.
Q4 Chair: Is it 30% or 20%?
Jackie Mould: It would be between
20% and 30%. That's what you would aim for. We haven't interviewed
everybody yet, so we haven't completed the process, but we have
been surprised by the success in terms of people going into jobs—pleasantly
surprised.
Q5 Chair: Can I ask you to
be a bit more historical about what things were in place before
and how this measures up? Just in general; as I said, we will
come to the more detailed stuff in a minute.
Tony Hawkhead: The first thing
I would like to say is that we have had only a third of our cadre
of 6,200 people, which is what we and our partner, the National
Housing Federation, are providing in placements. Only a third
have completed. It's probably too early to be truly accurate or
even to estimate how effective it's been at getting people into
jobs and further training. The numbers for us at the moment are
quite varied, ranging from about 35% in some groups up to about
60%. We are now doing a lot more work, having got the programme
up and running, in back-tracking and seeing where we are. I would
be much better able to answer the question in about six months'
time when we'll probably have two thirds of the people through.
Picking up the point about historical issues,
Groundwork has been delivering a variety of schemes aimed at tackling
unemployment right back to the mid-1980s with what was then called
the Community Programme. This scheme looks to me most like the
work we developed with our colleagues from Wise back in the late
1990s, which ran for about 10 years—the intermediate labour
market (ILM) programme. That had a very similar aim, which was
providing a job, a wage and work experience. Frankly, it was at
a similar cost. The way that Groundwork at that time was running
it was to knit together, in a classic Groundwork approach, a lot
of different funding—European, local authority and sometimes
private sector—to create the means to underpin the funding
that we could get then from what is now called the Department
for Work and Pensions. I would argue that the benefits of the
Future Jobs Fund, which you raised and with which I agree, were
similar to what is called the ILM model.
We have found it a bit easier to link to employers,
because we have been doing it for a long time. I think we will
come to this later, but there has been a problem with the community
benefit test—we need to be honest about that.
Chair: We will ask questions on that
later.
Tony Hawkhead: We have found
it particularly valuable on environmental projects. A lot of our
work is around that—both for us and for our housing association
partners—and much of it would otherwise be marginal or not
feasible. The Future Jobs Fund has allowed us, literally, to give
people a job in which they feel motivated and proud because they
have a job, and they are therefore much more productive in working
on those environmental projects.
In terms of how it feels, we are getting feedback
from people. This is now anecdotal, which I need to make clear.
What we are certainly picking up is that people are much happier
on this programme than, for example, on some of the benefits-based
programmes of the past. All our experience—I suspect you
will hear this from all of us—is that the sense of being
in work and being able to put that on a CV is critically important.
Q6 Chair: We had intermediate
labour market schemes in the late '90s.
Tony Hawkhead: And they ran through
for about another 10 years.
Q7 Chair: Did they continue
all the way through until the Future Jobs Fund?
Tony Hawkhead: No.
Q8 Chair: Why did they fall
out of favour?
Tony Hawkhead: Because, under
the last Government, changes were made to the New Deal, or the
Flexible New Deal as it became, which made the starting point
of contributing for someone to be in a job for six months no longer
feasible or possible. The flexibility was good, but it could also
be damaging, because we could not get Jobcentre Plus to commit
to a six-month period of matched funding.
Q9 Chair: It was not to do
with the cost.
Tony Hawkhead: I would argue that,
if one is good at raising funding and at knitting it together,
there has always been funding. It is true that Governments of
all persuasions have tended to be sceptical of the intermediate
labour market model, because of the cost.
Q10 Chair: It is the intermediate
labour market intervention that is the expensive element to deliver?
Tony Hawkhead: Again, I would
agree that it is more costly than some schemes. The Future Jobs
Fund paid a wage, and you have to be careful if you compare it
with other programmes, which do not include the cost of benefits
or the cost to the taxpayer of not having tax paid. I do not think
the model is expensive if you see our success rates. We were running
at 60% into jobs from the intermediate labour market. That is
an enormous success—we work with very hard-to-reach people—in
comparison with, to give one example, the Environment Task Force.
This was probably peaking at about 18%, which is really quite
weak. In getting very hard-to-reach people into work, we believe
that the ILM/Future Jobs Fund model is a very good one and that
it is arguably cost-effective.
Q11 Chair: David, have you
anything else to add or do you think we have covered it, looking
at the historical side of this?
David Coyne: I would reinforce
what Tony has said. From the mid-90s for a decade, we had a comprehensive
Glasgow Works programme, which was on the ILM model, achieving
about 60% outcomes into work for long-term unemployed people.
That was successful in the context of the time—we were seeing
the beginning of a buoyant period in the labour market. The question
whether it is affordable has to be seen in that historical context.
If the alternative to an ILM scheme is that the person does not
get a job at all, it looks less expensive; if the labour market
is more buoyant and there are other, less financially expensive,
mechanisms that can be used to achieve a job outcome, you need
to move on. Effectively, that is what happened in the mid-2000s—policy
moved on from ILM schemes. Since the downturn in the labour market
in 2008, we are once again in a position where the best way of
preparing people for work in the open labour market is effectively
to simulate work in an intermediate labour market, using a mechanism
like the Future Jobs Fund.
Q12 Kate Green: You have already
touched a bit on the outcomes you have had so far from the programme.
Can you say more about the elements and components of the programme
that have helped to achieve such levels of sustainable employment
as you have seen so far?
David Coyne: The average job outcome
rate today for the Glasgow Works programme is coming in at around
30%, but within that average figure there is a huge variation.
Our best performing strand within the programme is achieving a
sustainable 62%, and the lowest performing is at 6%. We understand
the reasons why there is that variation.
One of the more strongly performing strands
is an environmental estate maintenance programme, with one of
our largest volumes. It links to housing renewal and community
regeneration and to social landlords who have an interest in improving
the quality of life for their tenants. It is the children of many
of those tenants who are taking the jobs in the estate maintenance
programmes, so you achieve a self-reinforcing programme of community
renewal and job entry. Those social landlords themselves are recruiting
young people from Future Jobs into estate management and housing
assistant-type roles within those communities. We believe that
where you link a mechanism such as Future Jobs to a process of
regeneration or renewal, which you are undertaking on a more widespread,
strategic basis, you can achieve that linkage.
In the situations where people are simply creating
temporary work for individuals and hoping that they will pick
up transferable skills in that work, and not linking it to anything
in the wider environment, we are seeing the lower outcome rates.
Tony Hawkhead: Again, it is going
to sound as though we are all in complete and violent agreement,
but I think that we need to keep emphasising the sense of it being
work. That, for me, is the single most important point.
The other thing that was powerful about the
Future Jobs Fund was that, unlike any other scheme that I have
ever seen, it—for the first time, really—allowed the
voluntary sector to get involved in a way that was not risk free,
but was much less risky than some of the other programmes with
which Groundwork has been associated in the past. That meant that
work could be created rapidly, because most charities are always
in need of people to help, particularly to do practical work on
the ground.
The other thing that really worked for us was
that Groundwork made a decision at an early stage to take only
a tiny amount of money to run the programme in our centre—to
do the admin—and passed virtually everything across to our
deliverers. That meant that they could invest heavily, right down
to an individual level, to support each person who was involved.
I do not think you can exaggerate the importance
of personal care; it is one of the things that is emphasised about
the Work Programme, which, if it can be delivered, is really important.
Jackie Mould: I agree. There have
been several successful elements: the fact that it is a job makes
the difference; it has had an impact on the voluntary and community
sector; and it is linked, as Tony said, with wider renewal, so
people are very much involved in their own communities—they
are doing useful work, so they feel valued. The scheme lasts six
months, which is a productive length of time, so the organisations
that are involved have the opportunity to get some benefit from
the person.
We have also been able to identify the transferable
skills from that. For example, we had a young person working for
a credit union who has now gone to work for a bank. So, although
we could not get the placement in the bank, we were able to make
that link. We have quite a few case studies that show where we
have been able to do that.
I agree with what Tony and David have said.
Quite often we are dealing with people who have complex and chaotic
lives, who might have other problems that they need to sort out—they
might have debt or housing problems. Because the scheme is six
months, and because pastoral care is built in, those things can
be sorted out while they are on the programme, so they get their
life in order before they move on.
One of the case studies that we were looking
at the other day was of a young woman of 21. She became pregnant
at the age of 13, had a baby, dropped out of school and did not
get any qualifications. Then she joined this programme. She had
never been to college or had a job or anything, but in those six
months she was able to sort her life out, sort out what she wanted
to do and get her child care sorted, and now she has a job. Her
life has completely changed. That combination of pastoral care,
real job experience and having that routine and discipline has
made a big difference.
Q13 Kate Green: From what
you say, I am wondering whether it is intrinsically difficult
for this six-month process to work with a private sector employer,
given the emphasis that all of you have placed on pastoral support
and how hard these people are to reach, with a complexity of problems
and the need for the process to be reinforced by community need
and engagement.
David Coyne: I am not so sure
that it is intrinsically difficult. We have had some small-scale
private sector involvement from the Marriott Hotels Group, which
has taken on some trainee chefs. The community benefit angle on
that was that they were not only learning their trade in commercial
kitchens, but were working with a homeless project in the city,
assisting with the soup kitchen and various other things, as well
as rehabilitating service users of a homelessness project. There
were enormous benefits for that third sector organisation. The
Marriott Group believes that it is grooming the next generation
of young chefs as part of the process. For the young people, it
is an opportunity not only to get into an industry with a career
structure at an unqualified level, but to make them much more
socially aware and much more rounded.
The real commercial environment is key. Whether
it is in a private business or in a voluntary organisation does
not matter. The fact that that person has a job and is being paid
to do it fundamentally alters the transaction or the relationship
between them and their employer. They are not the recipients of
policy. They are not the recipients of a training programme. They
are working and earning a wage. That makes for a very different
learning environment for the individual compared with a training
course.
Tony Hawkhead: May I say one other
thing? It depends on the economic cycle. In our experience, when
we had a buoyant economy, when businesses were desperately trying
to recruit people, they were much more prepared to go the extra
mile—for obvious reasons, because it then becomes part of
their commercial success. At the moment, in what is a very difficult
economic climate, the evidence that we have—with one or
two exceptions that I will come to later, such as British Gas—suggests
that people are inevitably saying, "Well, I might as well
take people who were recently employed, because that is a much
easier thing for me to manage." That is where people like
us come in to do the persuasion job.
Q14 Harriett Baldwin: I want
to ask a question about the sustainability of the jobs and the
range that you have seen, from 6% to 61% of people moving into
sustainable employment. Presumably those jobs are all against
a fairly similar background economically, because we are talking
about a finite period. You have mentioned some of the characteristics
of the jobs that have led to sustainable employment, but were
there any characteristics of the young people in the programme
that you could draw conclusions from?
Jackie Mould: The thing with the
programme is that it depends, because you have such a wide range
of people. At one end of the scale, we have had graduates coming
on to the programme who are very capable, but who do not have
any work experience. Those people could go to a private sector
employer and move into a sustainable job. At the other end of
the spectrum, you have people doing landscaping and construction
work, and you also have many in between the two. One thing that
would be worth looking at is an analysis of the different groups
of people that have been involved and what is most appropriate
for them. It is very varied, and you could probably design something
quite specific for those different groups, from the experience
we've had.
Q15 Harriett
Baldwin: Different types of intervention might work for different
types of people?
Jackie Mould: They probably could.
Tony Hawkhead:
I would argue that the Future Jobs Fund was a child of its time.
We must remember that it was set up and announced as a temporary
scheme. It was at a time when there was an unprecedented—in
our history—rise in youth unemployment that concerned everyone,
and it's strongly arguable that the scheme did a very good job
in making sure that a large number of young people had opportunities
to experience work that they would not otherwise have had. That
should be praised.
I think that the fund is most successful in
working with the kind of people we—most of us here, I think—specialise
in, which is those who are very far from the labour market and
would otherwise have no hope of getting any form of work experience,
and therefore no access to a job. I don't think that the Future
Jobs Fund or anything like it, or an ILM, would work well or cost-effectively
for people who were close to the job market. It would be too expensive.
Q16 Kate Green:
Can we look now at the reactions of the young people who have
been through the programme? I know that Be Birmingham has been
surveying young people's experiences. What benefits and drawbacks
have they themselves identified?
Jackie Mould: The benefits that
they have identified are about the fact that they've had a job.
I can't say that enough; it's come out in every interview that
we've done, with every single person. Some of them didn't even
know they were on a programme; they just thought they'd got a
job. The other benefits have been the confidence and self-esteem
that people get from having a job, from feeling valued—that
they've got something to offer and that they can do it. Yes, the
skills element is in there and most of them have developed new
skills and gained qualifications, but it's really the self-esteem
and the self-worth that have given people the confidence to think,
"Yes, I can get a job. I can sort my life out. I can sort
some of my other problems out." Those are the main things
that people have said are benefits.
Q17 Kate Green:
What drawbacks, if any, have they mentioned?
Jackie Mould: The main drawback
is if there's nothing at the end of it. Obviously, people want
a job. All the people who see the programme through want to work.
So, not getting the job at the end is the biggest disappointment.
Q18 Kate Green:
Have you any experience of what's happened to people who have
not moved on into sustainable employment or education?
Jackie Mould: Not in detail. They've
gone back into the system and are signing on. The worry is whether
those people will keep that self-esteem and get the support they
need to apply for other jobs in the future. The positive side
is that at least they have something to put on their CV that perhaps
they didn't have before, and that should improve their chances
of getting employment. But it's early days yet to see whether
that has made an impact.
Q19 Kate Green:
We're asking about this later, but one of the things that we're
interested in is the transition from the Future Jobs Fund to the
Work Programme, which is coming. Picking up that point about people
potentially just going back into the system after their six months,
have you any advice about how the Work Programme might build on
what's been done for those young people?
David Coyne: We packaged the model
in Glasgow in such a way that there was quite a lot of employability
support for the participants—throughout the experience,
but intensively from week 18 onwards. That seems to have had an
impact on the individuals in their starting and maintaining an
active job search, building on the confidence that they've gained
through successfully executing a job for four months or so. Capitalising
on their increased confidence about the world of work—having
been in it once—and having dispelled their own self-limiting
beliefs and the myths that they held about what work was like,
they were applying for a wider variety of types of job.
Currently, the labour market is not great for
young people. Many of them are not successful in making the transition,
so we intend to support them over an extended period, post-Future
Jobs Fund. Except in the projects that are linked directly to
recruitment opportunities, they will not make an immediate transition
at the end of week 26 and will require support over an extended
period, and that confidence and capacity need to be capitalised
on.
Tony Hawkhead: I would say two
things. First, we must bear in mind that one of the weaknesses
of the Future Jobs Fund was that the only outcome required was
a temporary job. There was no necessity to have tracking from
the start. That is a critical challenge for the future. We are
the only voluntary sector prime contractor on the Community Task
Force, for example. That had a tracking record from the start
and, as a result, I have excellent data on it.
The second thing is about links to jobs. We
recruit, so our aim from the start has been to recruit people
from the Future Jobs Fund as much as we possibly can, but also
to set up links to other employers, such as our housing association
partners. We have a very exciting scheme linked to British Gas
apprenticeships where we are basically providing a six-month pre-apprenticeship
scheme, linked to 1,000 posts that it is creating. It is linking
things to jobs. The more people feel that they have a chance
at something real at the end, the better.
Q20 Stephen Lloyd: Excuse
me, Chair. Can I ask a question specifically about British Gas?
As we know, one of the challenges with the Future Jobs Fund was
that a vast majority of temporary jobs were in the public sector
and that added issues of stickability. The British Gas thing
does look very impressive. Why do you think you managed to get
that agreement with British Gas? Why thus far have you been unable
to persuade any of the other major private sector employers to
come on board in the same way that British Gas did? I like the
idea of the pre-apprenticeship. I can imagine a number of major
utilities and those across the board which would like that. Why
work with British Gas and not the broad sector?
Tony Hawkhead: The simple answer
is that the community benefit test made it fantastically difficult
to get the private sector involved. If there is a commercial benefit
to the company concerned to be gained from taking part in the
Future Jobs Fund, we cannot do it—that would be the definition.
The reason why we were able to get around that with British Gas
was that it was setting up a whole new business in home insulation,
for which it committed itself to set up apprenticeships. All
we did with British Gas—a very big "all"—was
to agree to provide an effective pre-apprenticeship, and it would
take people on at the end of it. Jobcentre Plus and the Department
for Work and Pensions deemed that there was no commercial advantage
for British Gas in doing it.
Q21 Kate Green: A last quick
question from me. You have all mentioned that the Future Jobs
Fund programme benefited the third sector, and specifically that
it stimulated creativity and ways in which employers could think
of creating jobs that benefited themselves as well as the young
people and the community. Can you talk about any of the specific
positive outcomes for both employers and the voluntary sector?
How sustainable do you think the outcomes might be?
Jackie Mould: We have had some
examples of voluntary sector organisations that have used this
programme to create jobs. They have brought people into their
organisation and essentially developed new services and markets
for them. That has been really interesting. We have had a couple
of organisations that have actually employed people as fundraisers
for the organisations. They have then been able to bring in resources
and create new activities from those resources. They have kind
of made the job self-sustaining. That is something that we could
learn a lot from in the future.
There is a lot of creativity out there. The
ideas are out there, but sometimes organisations just need that
input of an extra person or some cash to help them to develop
an idea. It has helped to do that, especially for quite small
organisations. Some of the organisations involved in social care,
particularly with the agenda around personalisation, have been
able to use the Future Jobs Fund to really develop their capacity
to offer social care and personal assistance services to the local
authority and to health organisations and actually bid for contracts.
Some of those things have been quite innovative.
David Coyne: Some voluntary organisations
have used it, similar to the way British Gas have, as a kind of
pre-recruitment exercise where they are expanding into a new service
area or trying to extend their reach, and doing so on the basis
of testing out both the new service model and new employees. They
have taken people on into permanent positions, allowing that expansion
of services to go more smoothly and to be better resourced. They
are now coming back and effectively saying, "Can we have
another one of those nice Future Jobs people?" "Sorry,
no, you can't." As a growth mechanism, it was starting to
show some potential for a small third sector.
Chair: We are going to move on because
we've only got through one set of questions and we are more than
halfway through your time.
Q22 Sajid Javid: Thank you
all for coming. I want to focus on the issue of value for money.
A few of you have already mentioned or used that phrase. A couple
of points have already been made about sustainability. I just
want to understand one thing, because it goes to the heart of
value for money. In your submissions, each of you has given percentages
of what you think were the number of sustainable jobs that were
created—I think an average of about 35%. Just so we fully
understand what you mean by a sustainable job, does that mean
someone who has completed their six months and then moved to a
fully paid job with a full contract and no subsidies?
David Coyne: Yes. It is determined
by the DWP claims and monitoring process and the outcome being
moving into paid employment.
Q23 Sajid Javid: So that is
about a third. From a pure objective of helping young people find
sustainable jobs, you would agree that it has a success rate of
about one third.
Tony Hawkhead: I would argue that
it's far too early to tell. Across the whole country, we have
had only a third of the cadre through. Our rates are too varied
to try to draw conclusions at this stage, particularly given the
lack of comparison with the programmes, and also taking people
through during the deepest recession in this country for 70 years.
It's too early to try to draw conclusions and say that in some
ways it's either better or worse.
Q24 Sajid Javid: I think your
number was about 30% in the first phase. How many people is that
based on in terms of people having gone through the programme?
Tony Hawkhead: We have done a
third, so that's 2,000. The 30% figure has a big health warning
around it. We know for certain that 30% have gone into sustainable
jobs and training. We know for certain that 33% have gone back
on to benefits. We are now retrospectively tracking the other
35% or 40% of people. It is extremely difficult to do that unless
you have tracking measures built in from the start. We have now
put those in. Before you ask why we didn't do that from the start,
the fact is that we were being pushed very hard to deliver Future
Jobs Fund at an enormous rate, faster than any programme I've
ever seen. That is what we focused on doing.
Q25 Sajid Javid: As you all
know, the contribution for each job is £6,500. When we look
at value for money, that's the key number we need to look at and
the results that that money might bring. Compared to your knowledge
of other programmes that have attempted similar things in the
past, albeit in different ways, is this a good use of £6,500
or are there more effective ways to do it and perhaps have an
impact on a greater number of people?
Jackie Mould: It depends on the
client group. If you're talking about people who have recently
left the job market, it is not value for money. But if you're
talking about people who have been unemployed for longer and have
multiple complex issues, then it probably is. We have started
to do some cost-benefit analysis models, which we are working
through at the moment. I'm looking at some real case studies.
It depends what you mean by value for money. I have some examples
here that we are working through. We have one person who was unemployed
for 25 years, for example. We can work out how much that actually
costs the state to keep that person on all the benefits that they
claim. That person now has a job. If they can keep that job and
keep on that positive path, you can start to see the benefits,
because there will be a saving from them not claiming benefits
any more. They will start to earn money and they will start to
pay back into the system.
It would be interesting to look at those in
a bit more detail to enable us to really assess whether this is
value for money. For those people with complex problems, people
who are claiming a wide variety of benefits or people who may
be ex-offenders who have been in prison, you start to see that
from investing that £6,000 you could get a pretty good return
within 12 months, if that person stays in a job. That is the thinking
that we are trying to work through at the moment.
Q26 Sajid Javid: Do you think
that for some people—by definition people are typically
on out-of-work benefits prior to joining the programme—the
current system of benefits and the disincentives that it creates
to take work is having an impact?
Jackie Mould: I think that people
are fearful sometimes of moving into a paid job, because they
think that they will lose their benefits and be worse off, which
is crazy.
Q27 Sajid Javid: The Government's
proposals to create a universal benefit with a single taper relief
will cost more money in the short term to put in place. Relative
to value for money and getting people back into work, would you
say that the universal benefit would be a value-for-money way
of giving people incentives?
Jackie Mould: I would say so,
yes. If that person changes their lifestyle and gets into employment
as a result, the figures that we are looking at suggest that within
12 to 18 months you would start to make a saving.
Q28 Sajid Javid: So in terms
of getting young people back into work, do the other two witnesses
agree that the universal credit system is a valuable way to incentivise
that?
David Coyne: Yes. I think that
there are a lot of positives about having higher earnings disregards
and a universal and lower taper rate to incentivise work. By getting
people into work—even short-hours work—and making
them financially better off, you put them in the position of learning
how to work while in a job, like the FJF participants did.
Tony Hawkhead: The single biggest
and fastest way to transform the poorest communities is to get
people into jobs. You can stimulate community activity all you
like, but jobs are the key. I think that one of the problems with
the system at the moment is not a lack of will to support people,
it is just that it is too complex and difficult to understand.
Something that is simplified, quick and in real time—which
is where I think that the universal credits concept is very important—is
to be welcomed. It is a bit early, however, to make a judgment
on it. We will have to wait to see it up and running.
Q29 Kate Green: Is that an
alternative to, or as well as, the kind of interventions that
the Future Jobs Fund has provided? I am particularly interested
in pastoral support, which you mentioned earlier.
David Coyne: I would say as well
as, because the Future Jobs Fund as designed works well for young
people. For older people who have family responsibilities and
who are on higher levels of benefit, you would need the disregards
and the tapers to make it work financially.
Q30 Sajid Javid: I want to
go back to value for money. Hypothetically, if these no state
aid rules had not existed, so that there was greater flexibility
to offer jobs in the private sector, assuming there was greater
willingness as well—going back to your British Gas example,
it did not have to create completely new jobs—do you think
that the programme would have been more effective?
Jackie Mould: I think that it
would have really added to it, because in Birmingham we certainly
had a lot of interest from private sector employers.
Q31 Sajid Javid: So, very
quickly, do you all think it would have been more effective if
these rules had not existed?
Tony Hawkhead: The community benefit
test was one of the big weaknesses.
Q32 Sajid Javid: There was
also a requirement that 10,000 of the 150,000 places had to be
environmentally related jobs—I think that that figure is
correct. If that requirement was not there either, do you think
that it would have been more effective?
Tony Hawkhead: I don't think so
at all. Time will tell, but I think that you will find that that
10,000 figure will have been considerably exceeded. We are a federation
of environmental charities, as it happens, and we do a huge amount
of work around green space. It is a brilliant way to get people
into work experience and jobs very quickly. With relatively little
training, it allows people to access the work experience. So I
think quite the opposite. Anything that allows people to get into
work relatively quickly and gives them the rewards of working
and achieving, of seeing things change before their eyes, is something
to support.
Q33 Sajid Javid: But why do
you think that the environmental target helped? I think that that
was a minimum not a maximum, so presumably if there were 30,000
such places—
Tony Hawkhead: Did the target
matter? I don't know.
Q34 Sajid
Javid: Right. So you're saying that it made no difference.
Tony Hawkhead: I'm saying that
I think it was good to encourage the idea of thinking around environmental
projects, but whether we needed a 10,000 target is open to question.
I don't think we did.
Jackie Mould: It didn't make a
difference to us.
Sajid Javid: It didn't make a difference.
Okay.
Q35 Chair: Can I clarify something
you said, Tony? You said that with the Future Jobs Fund, the £6,500
for six months was the whole amount that it cost the Government
for a young person, but that other schemes didn't include the
cost of benefits. When we see that the New Deal for Young People
cost £3,480, those young people would have still been receiving
benefits so would that have gone on top? The Community Task Force
was saying £1,200 per person, but those people would have
still been on benefits and therefore that amount is not in the
equation. Is that a fair summation, or not?
Tony Hawkhead: I don't recognise
your Flexible New Deal figures, so I can't comment on those. I
can certainly tell you that your Community Task Force figure of
£1,200 does not include benefits. You would have to add a
minimum of £1,800.
Q36 Chair:
So, we're not quite comparing like with like. You'd have to put
all the benefits—the housing benefit and everything—plus
all the cost to the state of that person into it.
Tony Hawkhead: Yes.
Chair: Thanks. That's
helpful.
Q37 Harriett Baldwin: Yesterday we
did some fieldwork at Centrepoint in Denmark Hill and we heard
about the Future Jobs Fund there, but we also heard about a Workwise
training programme that they were doing. That programme was two
weeks of training those young people up in terms of what to expect
from work, what kind of behaviour to have at work and how to talk
to their manager—fundamental principles. They were saying
how successful that had been. They thought that they could scale
that up at about £500 per person for a two-week course.
Chair: Yes, but it cost £35,000
and they've got six job outcomes, so I'm not sure—
Q38 Harriett Baldwin: No,
no. They were talking about how they could scale it up if they
could run it over a year. I just wondered whether you thought
that a training programme of that nature for two weeks, before
going on to a Future Jobs Fund, would improve the outcomes.
Tony Hawkhead: I am not sure that
those two things fit together. The Future Jobs Fund should do
that anyway.
Q39 Harriett Baldwin: So,
you'd get that during the Future Jobs Fund.
Tony Hawkhead: Yes. I fundamentally
disagree with any notion that you can get the kind of people we're
working with ready for work in two weeks. There is absolutely
no evidence that you can do that. What you could do is prepare
them so that they don't fail at their work placement on day one.
We have on placement in my office someone who defines himself
as being on the Asperger's-autism spectrum. He has worked all
the time for short periods of months and weeks, but because his
workmates perceive him as "strange", perhaps, it is
very easy when times are hard for people to say, "He's the
first out the door." The most important thing that we can
do for him is to give him a period of time when he learns a set
of behaviours that allow him to function as if he were a "normal"
worker. I am not saying what I think; that is what he says. He
was ready for being with us because people had briefed him, but
he couldn't do that in two weeks.
Q40 Harriett Baldwin: But
was there a large number of people who joined the programme but
didn't make it through to the end?
David Coyne: Not a large number,
but those who didn't stick to it lost the opportunity to participate.
Had we had the opportunity to design the front end of the initiative
a bit differently, I think that we could have reduced the drop-out
rate. The matching process could, I think, have been done a lot
better. We could have had inductions, open days and more informed
choices being made.
Jackie Mould: I would endorse
that. The idea of having the two weeks would be useful to prepare
people for, essentially, a job interview. That was the other thing
about the programme: people had to go through an interview to
get the job, which was quite challenging for some of the people
whom we were working with. Getting that support to do an interview,
and learning how to sell yourself in an interview to get the placement,
would be a good use of that time.
Q41 Harriett
Baldwin: Was the drop-out rate less than 10%?
Tony Hawkhead: I can give you
our exact figures: we lost 5% in the first six weeks; three quarters
of people completed 24 weeks; and just under 70%—69.6%—did
the full programme. So you can assume that 24 weeks is a really
good slug at that—and three quarters of people got to that
point.
Chair: I realise that we are running
out of time rapidly, so all our questions must be short and sharp.
Q42 Mr Heald:
May I ask you about the construction of the programme as a whole?
You talked, Tony, about the sort of people whom you normally work
with. Normally, with an intermediate labour market intervention,
you are talking about people who have been out of work for a very
long time, who are difficult to place—people of the sort
that you have described. The difference with this programme is
that you are providing that sort of intervention for youngsters
who have only been out of work for six months, who are very different.
So it is an unusual programme in that way, isn't it?
Tony Hawkhead: That is a really
good question. We work heavily with—I hate this phrase—the
NEETs group, people who are not in education, employment, or training.
Those people are effectively NEETs from the moment that they leave
school. All our experience demonstrates that the longer they stay
out of work, without ever having the experience of having a job,
the harder it becomes to get them into jobs—and that happens
very quickly.
Although, as you were right to say, ILMs tended
to focus on people who had been out of work for a year—it
was not a lot more—we strongly supported the move to a six-month
start point simply because of the damage that is done in that
time.
Q43 Mr Heald: This is the
best client group that you have ever had isn't it?
Tony Hawkhead: We have only had
5% of people who are graduates into our schemes; the vast majority
have been people who present us with some serious challenges.
Q44 Mr Heald: But you would
agree, Jackie, wouldn't you, that this is the best client group
that you have ever had? You have even had graduates on it this
time.
Jackie Mould: They were a very
small percentage, though. On the question of six months, that
is quite a long time for a young person; to me, it flies by—it
seems to go quicker as you get older.
Q45 Mr Heald: But do you take
the point that this intervention is normally used for people who
have been out of work for a long time and who have real barriers
to employment? Here we are using it for a group that includes
all sorts of people who do not have those barriers, who are relatively
close to the labour market when you start, so you ought to have
fantastic figures of success for this group.
David Coyne: We found that 75%
of our referrals were males with low or no qualifications, who
were looking for basic, manual occupations. The critical point
is that six months' unemployment is much more damaging if you
are under 25 than if you are over 25. You would want to use this
kind of policy precisely, and on those who need it most—there
are many more of those in the under-25 group and, particularly,
in the under-20s.
Q46 Mr Heald: But of course
a lot of the things that we have been talking about, such as explaining
to young people how to do a job search effectively, are measures
that work, and which you would often try with someone who had
been out of work for only six months. To use the really top-of-the-range
model so early will always be expensive, won't it?
Jackie Mould: Some of the reason
for it—and I suppose there are arguments about how you do
it—is prevention, if I can use that word. It is a question
of how you prevent a young person of 23 or 24 years old from getting
into that lifestyle of being on benefits and being unemployed.
There is an attempt to get young people on the right path while
they still have some drive and some belief in themselves—before
it becomes a way of life. That has been quite important.
Q47 Mr Heald: The other problem
with it is that it is really directing young people into the public
sector, rather than the private sector. There is no way around
that, is there? The state aid rules, which we have to work on
within the EU, mean that you can't put somebody into a commercial
enterprise and pay their wages as a government.
Tony Hawkhead: First, I think
it was not just the public sector. It did a hell of a lot of good
for the charitable sector and that benefited very poor communities
in a way that would not otherwise have happened. We need to recognise
that, but you're right: the community benefit problem got in the
way. We really worked hard to try and get around that and, if
we had had more time—it was announced in June and we had
our first client in October—it would have been possible
to find smarter, legal ways of getting around that. I really do
believe that. We modelled the work with British Gas specifically
to try to find a way that was not getting around the system, but
that actually took advantage of what could be done. The direct
answer to your question is that we must find a way around it,
because if we can't involve the private sector in a scheme like
this, it is going to fail. It is just not good enough.
Jackie Mould: We had similar discussions
with Jaguar—Jaguar Rover—as well. It has been very
frustrating not being able to pursue those. But what we have been
able to do is link people through the apprenticeship programmes,
so maybe that is a way of doing it.
David Coyne: Where a private sector
employer has a genuine vacancy that they are recruiting for, it
is legal to offer a wage subsidy under the general block exemption
regulation for recruiting disadvantaged workers. There are ways
of working with the state aid regulations in a more creative way.
Q48 Mr Heald: Do you agree
overall that if you look at the British economy, we've got a situation
where gradually some jobs will sadly no longer be there in the
public sector and we are looking for more jobs in the private
sector? Yet this was a scheme that was directing young people
into the public sector. Apprenticeships, which you mentioned,
provide a much better focus, because they mean you can help young
people into private sector jobs, which is the future.
Tony Hawkhead: Put very simply,
because I know we are short of time, the Future Jobs Fund was
set up to do a very specific job for a temporary period of time:
to create 150,000 jobs in a hurry—let's be honest.
Q49 Mr Heald: Ahead of the
election.
Tony Hawkhead: I am not going
to comment on that. There is a nervousness in Departments—perhaps
too much nervousness—about state aid. Because of that nervousness,
it was set up in a particular way. I do not think that the Department
for Work and Pensions would have set it up and excluded the private
sector without the state aid rules—it would have been crazy
to do that. Perhaps the question is, in future schemes, if we
do things around creating work opportunities and work experience,
to make sure that we build in the best way of engaging all the
sectors from the start.
Q50 Mr Heald: There are lessons
for the Work Programme there, aren't there? Finally, the other
question I want to ask you is about Jobcentre Plus and how good
it was at matching and referring unemployed young people to Future
Jobs Fund opportunities. Crisis UK has said that there was a lack
of clarity and understanding in Jobcentres. The National Young
Volunteers Service was critical, as was Oxford County Council
and so on. What's your view?
David Coyne: We had a very positive
experience. The district team in Glasgow responded early and robustly
to the launch of the Future Jobs Fund and worked well with both
us and the other national voluntary sector bids that were operating
in the city. We had some technical difficulties early on, with
the eligibility criteria relating to whether someone was only
eligible between week 39 and week 42, or something. But we worked
around that and the Jobcentre response was good. We were very
pleased with the relationship.
Q51 Mr Heald: What about you,
Tony, were you happy with that?
Tony Hawkhead: If you'd asked
me in the first six weeks, I'd have probably said what you just
read out. But, we have to be honest and recognise what the situation
was. I have never seen any Government programme in any Department
set up at the speed this was set up. Let's not worry about why
that happened—the fact is it did. On that basis, one has
to judge it a success in terms of its implementation.
The other problem for Jobcentre Plus colleagues
at that time was that they were clearly recruiting very large
numbers of people to cope with a large number of unemployed people
suddenly appearing on their books. They were trying to run a whole
new scheme, as well as deal with their own capacity. Once that
had happened, our experience was, very much like David's experience,
that they were very good partners. They did a number of things—for
example, having somebody we could contact if there was a problem,
so that we could resolve such issues very quickly. And if they
could not be resolved quickly, an escalation allowed that to happen.
There are lessons for that in the Work Programme.
Q52 Mr Heald: Jackie, are
you happy with that?
Jackie Mould: Positive, yes. We
had very good working relationships with the manager in Birmingham,
and it was all about solving problems as we went along. If you
have that attitude and you have the right people working with
you to make it work, it will work; the problem is if you don't
have the flexibility locally to do that. So, on the whole—positive.
Q53 Chair: Can I just pick
up something you said, David? Obviously, the state aid rules were
a huge barrier to—in fact, a complete block on—getting
the private sector involved. But you said that it is acceptable
to have a job subsidy. If the private sector had been willing
to put up, say, £2,000 of the £6,500 and had paid it
directly to the young person, with the state paying £4,500,
would that have been acceptable?
David Coyne: My understanding
of the regulation is that if the private sector employer is recruiting
for a real, existing job in their organisation—in other
words, not an additional one—it is legal for the public
sector to offer a wage subsidy of up to 50% for up to 12 months
for the recruitment of disadvantaged workers, with "disadvantaged"
being defined as long-term unemployed.
Q54 Chair: So, if there had
not been the hurry to get the whole thing set up, there might
have been a way of working around to getting the private sector
more involved—there is a solution there.
David Coyne: I believe so.
Mr Heald: Possibly it was too early.
Q55 Stephen Lloyd: We are
running slightly out of time, so I will drill down to two important,
final questions. First, the Future Jobs Fund, as we know, is running
until March 2011, and the Government have indicated that the Work
Programme will be up and running from summer 2011. How can the
transition period be managed effectively to minimise any negative
impact on young unemployed people? In other words, I understand
where you are coming from in saying that there is real concern
about that lag, but from what you have learned how can the Government
manage that better?
Tony Hawkhead: I am happy to have
a go first. The straight and honest answer is that that is a very
unfortunate gap. The ideal solution would probably be to make
sure that that gap does not exist. That would potentially mean
extending the Future Jobs Fund by four months. Otherwise, there
is a hole and it is difficult to see how it is going to get filled.
Q56 Sajid Javid: Or start
the Work Programme earlier?
Tony Hawkhead: Yes, you could
try to start the Work Programme earlier. Bearing in mind how fast
the Future Jobs Fund was got up and running, that is a good question
to ask.
Q57 Stephen Lloyd: What about
you, Jackie?
Jackie Mould: Coming at it from
a slightly different angle, I agree with what Tony said, but one
of the things that could be done is to make links locally with
existing organisations and partnerships that are in place, so
that we can try to join things up locally. It will be important
for those organisations that win the contracts to be part of what
is happening at a local level, because we can then learn the lessons
and make linkages with the employers and, hopefully, with the
young people who we are already working with. My plea would be
for trying to get that connectivity at a local level—talk
to us and we can help to make it work.
Q58 Stephen Lloyd: You have
prepared a lot of the groundwork, so it would make sense.
Jackie Mould: Exactly.
Q59 Stephen Lloyd: David,
do you want to add anything particular?
David Coyne: I have nothing to
add, other than that it would be useful to get some of the potential
primes on the framework involved in detailed discussions with
us locally about how it is intended to get the Work Programme
up and running.
Q60 Stephen Lloyd: Okay. Secondly,
Groundwork's evidence highlighted how the Future Jobs Fund had
been used to provide pre-apprenticeship training. You have already
talked about that with British Gas. What lessons might we learn
from the FJF as the Government increase the funding available
for apprenticeships? We all agree that the increase of funding
for apprenticeships is a good thing but, given your experience
of the Future Jobs Fund, some lessons can perhaps be fed into
the DWP. What would they particularly be?
Tony Hawkhead: The first thing
is to emphasise that reaching the hardest-to-reach costs money.
The second thing is that at the time of a less than buoyant economy
there is no great incentive for private companies to be involved
with the public sector in recruiting and organising state-sponsored
apprenticeships. The fact that we took all that off the hands
of British Gas—we effectively acted as the intermediary—made
an enormous difference to its willingness to get involved.
The lesson for apprenticeships is twofold: first,
to keep the bureaucracy and demands on a private sector company
to the minimum possible; and, secondly, when working with the
hardest-to-reach, which is not a client group that most companies
are necessarily going to charge towards, you make sure that the
support for those people is provided outside the company so that
they are then getting work-ready people—even from very difficult
client groups.
Stephen Lloyd: I am fine with that.
Chair: Okay. I do not think that my
colleagues have any more questions, so thank you very much for
coming along. Your evidence will be very useful when we come
to write to our report. Thanks again.
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