Youth Unemployment and the Future Jobs Fund - Work and Pensions Committee Contents

Examination of Witnesses (Questions 1-60)


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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