Examination of Witnesses (Questions 61-103)
DAVID COYNE, TONY HAWKHEAD AND JACKIE MOULD
27 OCTOBER 2010
Q61 Chair: Thank you very
much for coming along this morning to give some evidence on the
Future Jobs Fund and youth unemployment. Will you, individually,
briefly introduce yourselves for the record?
Neil Carberry: Thank you very
much. My name is Neil Carberry. I am head of employment and
pensions policy for the CBI. Our director looks after all labour
market work for the CBI.
Emma Watkins: I am Emma Watkins.
I am head of public services policy at the CBI. We are responsible
for the greater involvement of the private sector in designing
and delivering public services, particularly in the area of welfare
policy.
Professor Gregg: My name is Paul
Gregg. I am Professor of Economics at the University of Bristol.
Unemployment and unemployment policy, in particular, has been
an area of research for me dating back to the mid-1980s.
Tracy Fishwick: I am Tracy Fishwick
from the Centre for Economic and Social Inclusion. I am also
here as a practitioner, having been involved in the Future Jobs
Fund since the beginning in Greater Manchester.
Chair: Can I ask you to speak up? Although
there are microphones, they are more for recording purposes rather
than amplification for us. We sometimes find it a wee bit difficult
to hear. Harriett Baldwin has some questions.
Q62 Harriett Baldwin: Professor
Gregg, I know that you were very involved in designing the Future
Jobs Fund. I just wondered if you could talk through for the
Committee the rationale behind designing the programme and say
whether you think that, since it was designed, anything has changed
in terms of the economy, the labour market or the public finances
that would change the rationale for the design.
Professor Gregg: I was an advocate
of the Youth Guarantee before it was introduced, though I wouldn't
say I was involved in the design detail of what was put in place.
The broad rationale is that since the 1970s we have slowly learned—with
the emphasis on "slowly"—what kind of employment
policy can make a difference to people's unemployment patterns
and the longer lifetime costs associated with that. We know that
youth unemployment is associated with long-term scars in terms
of unemployment, low wages, poor mental and physical health, and
indeed early death. So there has been a history of evolution,
which has broadly occurred across many countries. We moved from
the early programmes, which were just job relief and gave people
low-paid jobs. There were benefits for people in terms of work
experience, wages, access to a decent reference and so on, but
it was found that people didn't move into work afterwards as quickly
as they would have done if they were not going on the programme.
That is because of what is called the lock-in effect. People don't
look for work when they are in a job, and that slows down the
process of moving into work. So there are two dimensions. You
want to give people work experience and the basic work skills—turning
up on time—and a good reference, but if you delay the process
of job search you actually slow the process of moving into the
next job.
Policy intervened to try to do various things.
It tried to make the jobs bloody awful—like the Community
Programme—to make people look for work, which proved unsuccessful.
In a sense, it tried to emphasise the job search, as in the Restart
Programme, and it was the logic behind Jobseeker's Allowance,
which does have some success. But, at heart, this programme was
designed to try to minimise that conflict between the positive
aspects of giving people work experience and getting in the way
of job search. So, the sectoral routes had clear job prospects
at the end. It was agreed that employers would take you on at
the end of the training programme to reduce that conflict. It
was the same with the Future Jobs Fund. The idea was that the
employer—the provider—bid with a deal that asked what
they were providing for that individual to help them move on into
work after completing the placement. That was not as intensive
as I would have liked. I would have liked active payment systems
and active requirements on people and providers helping individuals
move into work. But the logic was there. You were trying to give
work experience but reduce that lock-in effect of people not actively
seeking the next job after the placement.
I am a bit struck by the DWP evidence of likening
the Future Jobs Fund to the Community Programme. The analogous
one here is the Community Task Force, not the Future Jobs Fund.
When you are trying to do a Youth Guarantee, you are trying to
make it so that someone has to move on—they can't stay there
for ever—and you're trying to make it so that providers
have to put something on the table. It is very hard to offer a
guarantee out of only the best options.
For instance, the best deal that we have in
terms of what we can offer people is work trials—a short
programme of work experience with a regular employer. It is successful,
but there are not enough places. What you have with the Youth
Guarantee is almost a stage of options, which, to some extent,
can fit the individual, but to some extent the likelihood of being
effective is decreasing. Because of the guarantee of a job at
the end, sectoral routes are at the high end. High-quality and
long-term training for apprenticeships has good prospects. Future
Jobs Fund is somewhere in the middle. The Community Task Force
is least likely to be helpful to individuals. That is roughly
the ranking that came out of the New Deal for Young People programme,
although there were components that were very similar to these
and in a sense had many of the features of this programme. So,
we have learned a lot over the years. A youth guarantee or a guaranteed
job is an important part of it, but you have to try to avoid the
lock-in effect in those components. You have to try to motivate
and create job search.
You asked what has changed. I emphasised that
perhaps there was not enough on that job search element within
the programme. The other thing that has changed is that this recession
did not lead to as many job losses as we first feared. The labour
market and the welfare system performed well. However, the people
who have suffered intensely through this recession are young people.
The increase in unemployment is heavily focused on young people.
The first and best option is to get people into education. If
you can't do that, things such as sectoral routes and apprenticeships
are a good step, but Future Jobs Fund was sort of solid in the
middle, as the third best in the ranking of likely prospects.
Q63 Harriett Baldwin: So,
your ranking, again, was the work taster—
Professor Gregg: First, just keeping
people in education is a good start, keeping people on at 16 in
full-time education as normal, or as a lot of people do. We saw
a big rise in that. That was what was called the September guarantee—trying
to keep people in full-time regular education. The next best is
work with regular employers; even if it is temporary and unpaid
that is the next best. Then you've got training and work experience
connected to regular employers—the kind of experience that
employers are going to be looking for—and things like the
Community Task Force and the Environment Task Force. This had
lots of community programmes and there is a long history of that
kind of thing. This option is broadly making up the numbers and
is the least likely to be effective, but within it you need to
incentivise the providers to focus on helping the people get into
work. The incentives structure there is important, but that is
roughly the ranking.
Q64 Harriett Baldwin: It sounds
as though the lessons that you say we've learned over a long period
of time are lessons that remain valid irrespective of what kind
of economic environment we're in.
Professor Gregg: If you've got
nearly full employment you don't need so much of this kind of
stuff to prevent that long-term disconnection from work. But
the ranking is broadly there. I would say one other thing about
this: there is a lesson that we consistently don't learn. We tend
to make these things up on the hoof when recession hits, rather
than having a plan in advance, which means that everything's done
as high profile and with high energy, and mistakes fall into that
process. We then try to tinker with it afterwards. It would be
much better—the OECD has said this—if we had a plan
there in advance for when the economy turns negative.
Q65 Harriett Baldwin: Does
anyone else want to come in on the design question before I move
on to other questions?
Neil Carberry: I would just like
to say that we'd associate ourselves with much of the analysis
that Paul has just given, particularly on the relation between
the different programmes and their utility. I agree very strongly
with that ranking.
Q66 Harriett Baldwin: I'd
like to move on now to ask whether any particular kinds of young
people were better helped by the Future Jobs Fund? Can you draw
any conclusions about the kinds of people who benefited most,
for example graduates, people with low-level skills and people
with vocational skills?
Tracy Fishwick: In answering that
I will refer to the Greater Manchester experience, and possibly
to knowledge I have of Merseyside and Tyne and Wear. Everyone
is broadly seeing the same kind of experience, in which the vast
majority of people who are coming forward for Future Jobs Fund
are the young people who have less than an NVQ level 2, and sometimes
no formal qualification at all. As we know, they are referred
by Jobcentre Plus, so we have to take who it refers and deems
eligible and suitable. In the early days, we were getting people
who were nine months' unemployed and getting almost into the 10
or 11-month stage of unemployment. So we have young people who
are pretty detached from work, if they have ever worked at all:
young people who might be third-generation unemployed, very often
from communities where mum and dad didn't work and grandparents
haven't worked. The culture and ethics around getting up every
day simply aren't there for a lot of young people.
The range then goes through to other young people,
a small number of whom are graduates, and those who perhaps have
higher qualifications, perhaps at NVQ level 3. But the sorts of
people we broadly get are those young people who, traditionally,
we have seen on ILM programmes and other interventions like this,
such as New Deal for Young People. Over the 12 years that I have
been doing this kind of work, I haven't seen a vast difference
in the kinds of young people. What we have seen is a huge difference
in scale and in the volume of young people wanting this opportunity.
Professor Gregg: The bulk of young
people who are facing long-term exposure to unemployment are the
less skilled. Many of those don't have the qualifications that
would be suitable for getting on to the higher-level apprenticeships—the
level 3 type apprenticeships. They are a long way away from the
high-quality skills and so on that lead to long-term attachment
to good jobs. They are, in a sense, the population that we have
come to call NEETs; the early school leavers who are often less
educated and drift between low-paid work and exposure to unemployment.
In a sense, the Future Jobs Fund is focused primarily on that
kind of population. It gives work experience to people who have
not yet got the basic qualifications and haven't worked previously.
Another area that has been contentious within
this is that it tends to focus only on the duration of current
benefit claim, rather than reflecting people's past history of
exposure. We know from research that it is the cumulative exposure
to unemployment, rather than just the duration of the current
spell, that is a good indicator of people who are in need. We
would put it slightly the other way: there is a population that
is not getting in because people are not on the right benefit
for long enough. Those people would potentially benefit from these
kinds of programmes. The net was drawn very close.
Neil Carberry: Much of the public
debate in this area in the early part of the recession focused
on graduates, and there was a lot of media debate about people
coming out of courses. In our experience, what tends to happen
during recessions is that graduates still find work, they just
find work that is different to what they would have accepted in
the good times. So someone is not on a graduate scheme with an
employer; they are doing a job that perhaps an A-level leaver
would have taken previously, and so on. It tends to be the same
low-skilled group that takes the hit in any recession. For that
reason, the right sort of active policies specifically targeting
those groups, wherever they are found, not just in particular
unemployment blackspots, will always be the most useful interventions.
Q67 Harriett Baldwin: In the
CBI submission, you argue that the Future Jobs Fund programme
was not effective in creating permanent employment outcomes. I
wanted to ask the panel what evidence there is in terms of permanent
outcomes. What does the panel suggest should be done differently
to improve on the permanent outcomes?
Neil Carberry: Let me sum up where
we came from in the written statement that we made to the Committee.
Obviously, it is early to draw conclusions from this. A lot of
data in the area will be gathered as we look at the experience
of people who have been, and are currently, on Future Jobs Fund
placements over the next few years. As Paul rightly says, it is
cumulative experience that counts.
As we say in the evidence, we were supportive
of the idea of the Future Jobs Fund because we think that that
kind of programme is important, particularly in areas where other
forms of intervention are not reaching. What worried us, and has
continued to worry us throughout the bidding process, is the speed
of thinking up and delivery of the programme—Paul alluded
to that. It was very top-down in its design. It was driven from
Whitehall on very short bidding processes. That tended to lead
to a certain type of bid being successful which was predominantly
public-sector led and did not really engage with the private sector
in a way that a more effective programme might have done. That
might be down to the fact that we left design so late. Most of
these people, if they are going to build successful lives for
themselves based on long periods of employment, will end up working
in the private sector. Therefore, the skills associated with that,
and the job experience that a well-designed programme can provide,
would be important. We are not convinced that we have seen that
being delivered through FJF. If you look through the bid details,
you see a lot of people placed into jobs that in the delivery
phase risk looking more like some of the less successful programmes
of the past than what was set out as the aim of the Future Jobs
Fund in the beginning. From our point of view it is still an early
stage to judge, but we think that there is a significant risk
that the performance of the programme will be very curate's egg-ish.
There are some very good programmes.
Q68 Harriett Baldwin: Do you
have any specific statistics?
Neil Carberry: Statistics are
very light in this area at the moment, to say the least. It is
very early.
Professor Gregg: I want to just
echo that. We don't really know, because the evidence base has
not yet been produced on the effectiveness. As an academic, I
feel that culling this element of the programme so early is anti-scientific,
because we will not ever learn how good or bad it was and which
design features were good or bad. That is a shame, although it
is perhaps not the Government's main priority here.
As the CBI has said, you would want to build
two features to make it as close to a regular job as possible.
If it can be with the private sector or the near charitable sector,
that is good. You want to get that organisation focused on getting
that person into work afterwards. The employer is part of the
deal, if you like, putting on the table the contacts, the networks
and so on. I agree that the rapidity of the design meant that
some of these features were not put in place on day one, but I
suspect that you would rationalise that given time. You would
try to move to the private sector more and you would try to involve
employers more. That is part of the problem of trying to set up
something in an emergency.
Q69 Richard Graham: Can I
come in on that? If we look at the Future Jobs Fund and its impact
constituency by constituency—where we all live and work—I
know that in my constituency there is not a single job in the
Future Jobs Fund that is being created by the private sector.
Everything is public sector, quango or charity. This is an era
where we know that the public sector, after a massive rate of
expansion, will have to contract pretty sharply. We know that
if growth is to start again then it needs to be led by business
and the private sector. Given that, the whole concept of creating
a six-month job will be fundamentally unattractive, particularly
to smaller and medium-sized enterprises, which will just see someone
coming in for a short space of time, with no real sustainability
to it over a longer period.
Do you agree that that is the case, and that
it is likely to be the case if you carry on with something like
the Future Jobs Fund. Do you agree that pound for pound, the better
investment would be in ways of freeing up bureaucracy and making
it more attractive for private sector employers to take somebody
on in the longer term? That might be through the apprenticeship
scheme, or it might be through changing how people can take on
additional young employees. What would your views on that be?
Tracy Fishwick: The restrictions
around the kinds of jobs that could be legitimately created through
the Future Jobs Fund, such as the state aid rules around not being
able to create jobs in the private sector to scale, have posed
problems for the people delivering it. The FJF can do that in
small numbers and there have been creative examples of where that
has happened. For example, you may see a job where the person
is employed in the voluntary sector in a social enterprise, but
is actually working with a construction company that is building
a new school. That is a legitimate role to create through the
Future Jobs Fund and we have examples of that across the country.
In Manchester, for example, we have people employed working at
Manchester airport, which is a private sector environment, but
the airport is 51% owned by the public sector. Again, we can be
creative around those rules, provided that we keep within some
parameters. That has been helpful for us, but overall it has been
quite restrictive.
How we morph the programme as it moves to the
latter six months and beyond, to enable us to do more of that,
would be a really interesting thing for us to debate. We could
try to link jobs to apprenticeships in a structured way, so that
people who start on the Future Jobs Fund move into apprenticeships,
and do not dip in between. There are examples emerging of people
moving into the private sector to do that.
Q70 Chair:
May I ask Richard's question, but in a slightly different way,
to the CBI? If it had not been for the state aid rules, which
seem to have been an incredible block on getting the private sector
involved, would small and medium-sized companies have been happy
to get involved in the Future Jobs Fund—had the state aid
rules not existed or had a way around them been found?
Neil Carberry: I think there is
more to it than just the state aid rules. The best example is
probably on the apprenticeship side, but most private sector employers,
and especially small and medium-sized enterprises, don't really
speak fluent public sector, in terms of bidding for state funding.
The complexity of skills-support funding streams in particular
has been significant over the years, with a number of bodies offering
different support for different things. That has been an issue.
The Future Jobs Fund has suffered in a similar
way. So, you had local authority-led partnerships, which were
looking for input on the local employment partnerships basis from
the private sector, but the complexity of what the scheme was
and, in particular, the additionality rule caused significant
problems. I think that, for employers, the idea of bringing someone
into your business to do something that is not in the normal course
of your business feels a little odd. You want to give someone
a proper job—we have discussed the importance of giving
someone a job that is a real job. That was a drawback in the Future
Jobs Fund.
Q71 Harriett Baldwin: I want
to conclude this line of questioning by looking at value for money
and, obviously, scarce public money. How would the panel suggest
that the money be spent more effectively? We have heard some suggestions
in terms of alternative interventions.
In answering that, can you also talk about this
particular category of people? You articulated very well, Professor
Gregg, why it is so important to look at youth unemployment, but
it would be helpful if you articulated the particular interventions
that are most valuable and best value for money for this group
of people.
Professor Gregg: What was the
first bit of the question?
Harriett Baldwin: The first bit was about
value for money and what would be the best use of scarce public
funds.
Professor Gregg: Broadly, the
best first step is trying to support people in active and productive
job search. That is the cheapest and most effective way of support,
but it doesn't work for everyone. This has been done—it
is kind of the logic of the Work Programme and, indeed, of the
old New Deal programme, which had this kind of gateway phase of
intensive job search. What you are trying to do there is get people
out through the low-cost route rather than spend big money on
everyone. So, in a sense, you are focusing the money on the most
needy by trying to reduce the population of need.
However, you cannot run with that model for
ever, because you get the people into the scarring zone, if you
like—the longer they are in unemployment, the chances of
getting them out through just supporting job search diminish essentially.
Damage is being done by the long exposure, so the Youth Guarantee
offers a way of trying to break that scarring-type process. As
we have discussed, you want to make the thing have features that
are as close as possible to a regular job and to give the person
the experience that future potential employers will find invaluable—and
you need to maintain the job search. Those are the kind of features
of a system that you would like—in a sense, a deflection
strategy first, to try and reduce the total cost spend, then a
focus on what is left, but keeping the focus on keeping the motivation
to look for work. That is, broadly, the model that works.
Now, the issue for the Work Programme and the
future of where we are likely to be going is that the former feature
is there, but it is not clear that providers will be using work
experience as that kind of break within the system from the scarring-type
effects, if they are just left to their own black-box devices.
The incentives for them are just to work on what's right for them,
not necessarily what's right for the individual, and certainly
not what's right for the state.
Creaming or skimming—focusing on the easiest
to help; the ones, in a sense, you're going to get the payment
from—is the risk, and these guarantees put a brake in there
and force providers to focus on everybody, and they force the
individual to behave. They have to turn up; there's some discipline
within the system, so you can't stay on unemployment benefits
without activity for a long period. Those properties are the
good design properties, as far as we know.
Tracy Fishwick: I'd like to just
say a couple of things on that. One is I think it would be really
helpful to have a proper cost-benefit analysis done of the Future
Jobs Fund anyway, so when we look at the cost and see £6,500,
we know that that isn't the case for every single person, because
not everybody stays for 26 weeks. It's not always the case that
everybody has cost £6,500, and also most of that goes into
their wage packet, so they spend that money back in the economy—going
shopping, using public transport and so on—so there's a
recycling effect there, involving that money, that wouldn't have
existed previously.
Professor Gregg: And they are
off benefits. Some of the cost is actually lower benefits.
Q72 Sajid Javid: If I can
just stop you, that would have existed anyway, because if the
Government had not given it to them, they would have spent it
somewhere else or given it back to taxpayers. It's not fresh money.
Professor Gregg: Some of the money
is actually what would have been spent on benefits—
Q73 Sajid Javid: I just think
your point is not quite accurate.
Tracy Fishwick: I think the point
is, if we could look at what the true cost is and what the wider
benefits are of actually having a job—in terms of the economic
benefit of that, and for communities—that would be something
that was quite helpful for us to understand in terms of planning
future policy and seeing what is worth spending on this kind of
intervention. I think that in the broad range of interventions
for young people there's always a place for this kind of thing.
The scale may have to be different, obviously, but the kind of
intervention where you get young people in work, every day, doing
something constructive, doesn't really exist in most of the other
kinds of intervention.
Q74 Harriett Baldwin: Neither
of you has mentioned apprenticeships yet, in this context.
Tracy Fishwick: That was going
to be my last point, which is, we recognise the move to apprenticeships,
and I think that's a really strong way forward. How we look at
who gets those apprenticeships, moving forward, would be something
to consider. Would employers normally recruit into those apprenticeships
young people who'd been out of work for some time? They might
not do. They might recruit from a different pool of people—maybe
those leaving college, for example. So can we look at how those
apprenticeships could be tailored or even ring-fenced in some
way for young people who might have gone on the Future Jobs Fund,
but could equally go on an apprenticeship?
Professor Gregg: Apprenticeships
are fine. The problems, in a sense, are, can you get enough volume
and are some of the people far enough advanced in their skills,
in a sense, to get on to serious two or three-year apprenticeships
for level 2 or level 3-type qualifications? There's a sort of
a shortfall there, in that you need some basic qualifications
to get on to these—you know, to do a plumbing qualification
you need basic GCSEs and a lot of the kids are a long way from
that.
Q75 Richard Graham: One of
the great things about apprenticeships is that they are as wide
as any employer wants them to be. You don't have to have any
qualifications at all to do an apprenticeship in hairdressing,
which is one of the best routes to setting up your own business.
Do you think the question is more whether employers out there
need to be, in a sense, encouraged to think more broadly about
what training course they might want to help to create, in order
to attract an entry-level employee under the apprenticeship scheme?
Professor Gregg: The description
of apprenticeships depends heavily on what level of qualification
you are describing. The stuff that leads to good employment and
decent wages is level 3 and some level 2. Level 1-type stuff
really isn't worth a biscuit in terms of employment or wages.
There are issues here about what you're putting people on to.
We want to get people on to some quality stuff. That can be
done. We've a long history, dating way back, of not being able
to generate enough of those higher-quality things. Now, this
is all broadening out to a different debate about how we manage
the school-to-work transition and how we get enough people into
higher level or level 3-type apprenticeships, which we systematically
failed to do—
Q76 Richard Graham: The other
question is one of the things that has been completely forgotten,
which is the whole business of work experience. If you talk to
employers, the vast majority of them will say that they choose
their apprentices and people they take on later based on their
experience with people who have done work experience with them.
In your experience, is there more that could be done with schools,
especially schools in deprived areas and with difficult children,
to set up links with employers, so that they get more people on
to work experience earlier and therefore create more opportunities
for those people to get known by a company and to start a relationship
that leads on to a job? That would not or should not cost a shilling
of Government money, but could more be done to help to create
links between schools and employers?
Professor Gregg: I would have
no problem with that—it seems a sensible strategy. In a
sense, you are articulating what, to some extent, the Future Jobs
Fund is trying to do a bit later, which is give people work experience
and contact with employers. Obviously, if you do that earlier,
you are doing it for everybody rather than the targeted few, who
we are talking about here—the people at risk of serious,
long-term exposure to unemployment. You won't get all the people
who would be going into that kind of category deflected by earlier
intervention. We are talking about the most deprived, and it would
be hard to get most of them into contact with employers who might
take them on in advance of their entry to the labour market. But
as a way of trying to improve the functioning of the school-to-work
transition—fine, what you say is right.
Emma Watkins: Can I come back
on the value for money point—how we ensure value for money
moving forward—and on the apprenticeships point, as well?
The Work Programme, as envisaged at the moment, is being designed
and delivered so that it has outcomes-based commissioning at its
heart and so that a provider will gain the money only if it has
ensured sustainable employment for an individual over two to three
years. You may want to come on to the Work Programme later; I
know that you have a separate inquiry into that. We feel that
the outcomes-based commissioning and the way the Work Programme
is designed to involve both the private and the third sector together—allowing
for more innovation and tailored support, and hence more sustainable
employment—will hopefully prove more effective in the future.
Q77 Harriett Baldwin: But
you would accept that there might need to be a variation in the
payments—given how far some people might be from the labour
market, while others might be very near to it—to tackle
the issue that Professor Gregg raised about skimming?
Emma Watkins: Potentially.
Neil Carberry: On the apprenticeships
point, we have made it very clear in our evidence that we regard
paths to apprenticeships as very important. The point that has
been raised about what happens in schools is absolutely vital.
It is vital to a range of issues about the paths that we steer
our young people on to when they think about work. For instance,
if we have a discussion about a gender pay gap, better careers
advice for girls at 14 and 15 would be a key part of addressing
that issue. We are strongly supportive of businesses becoming
more involved with schools, schools opening themselves up a bit
more to businesses for careers advice and work experience—hopefully,
that will lead people down the route of thinking about apprenticeships—and
a simpler funding stream, with more money in it. We saw the announcement
last week on adult apprenticeships, of which we are very supportive,
although in our policy proposal we wanted that money to be made
available from 16 rather than from 19 to help people who maybe
don't see A-levels or post-16 education as being for them to make
that transition into the work force.
I think Paul is absolutely right—what
we are dealing with here is a tricky transitional labour market,
where people are coming to work for the first time. If they make
that jump successfully, once they are in that first job, a range
of life outcomes for the next 30 or 40 years takes a significant
uptick.
Q78 Harriett Baldwin: Can
I ask one final question? Could the panel explain a Future Jobs
Fund job compared with a level 1, level 2 or level 3 apprenticeship?
Would you put it on that scale or are they such different things
that you can't really compare them to each other?
Tracy Fishwick: I think there
will be some examples of Future Jobs Fund jobs that bear some
resemblance to an apprenticeship. That is where you have a structured
programme of skills development and qualifications that might
be involved in a job, and such jobs do exist, but to confine a
job to six months and to try to achieve a number of stages of
qualification is quite difficult for most people, given that they
might not have had a qualification before or if learning is a
new thing for them. So, they are quite different in lots of respects.
We see more that the Future Jobs Fund is leading into, or is a
gateway into, that longer term.
Q79 Harriett Baldwin: Is it
before a level 1?
Professor Gregg: It isn't a qualification.
What employers want is people with skills. They also look at other
basic skills such as the ability to turn up on time and your attitude
while you are at work. They want signals from other employers
that this person is a good bet. It is giving you, in a sense,
a different set of skills that employers really want and look
for, but it is not an accredited level 1, level 2 or level 3.
It is the kind of stuff that we all have in our reference that
says that we are the good citizen who will be good as an employee.
These kids don't have that, and have little way of getting it.
Q80 Harriett Baldwin: So,
it's before a level 1?
Professor Gregg: It's almost on
a different scale. It's a non-qualification-based skill that employers
value and want positive signals of. They want people with positive
work attitudes, who turn up on time and aren't pissing about.
It is trying to give the sort of work experience that employers
look for before necessarily taking people on and offering the
career-type training and development that is good for them in
the long term.
Neil Carberry: Essentially, employer-led
apprenticeships tend to be about competency. Picking up on that
point, Future Jobs Fund is about workplace behaviours and attitudes
and about someone being ready for the workplace. I agree that
it is still a skills set; it's just an attitude skills set.
Professor Gregg: It's an accreditation
as well. It is just an accreditation in a different way. You have
an employer who says, "This person is all right." That
is gold dust.
Chair: It's often what the employers
want.
Professor Gregg: And it should
matter whether you get the incentives right. If they are just
going to say that everyone is wonderful, it loses credibility
very rapidly.
Q81 Karen Bradley: I want
to turn now to look more at the implementation of the Future Jobs
Fund and the lessons that we can learn from it. We have touched
on several of those points already, but it will be useful for
us if we drill down and summarise the specific points. The first
point was about the lessons from the bidding process. You talked
about it being very top-down, but perhaps you could expand on
what you have seen so that we can learn from the bidding process.
Tracy Fishwick: I was involved
in writing a bid in Greater Manchester. I had a month to do it.
The whole experience of Future Jobs Fund has been a rapid one
from the day it was announced. If we'd had longer—we would
have liked longer—we could have engaged more with employers
and figured out how we could do this kind of demand-led employment
pathway that really would be the ideal scenario to deliver the
Future Jobs Fund through. The speed with which we had to respond
was unprecedented. Nevertheless, it galvanised everybody's thoughts
at a local level. The public and the voluntary and community sectors
came together to figure out how they could do shared bids—collaborate
and develop one bid for a sub-region—rather than run lots
of separate bids in neighbouring boroughs and then waste lots
of money on admin. That is what we have seen with Future Jobs
Fund that we have not seen with other big programmes where lots
of councils work together to create economies of scale.
Neil Carberry: When we looked
at your call for evidence before the summer, we went away and
talked to our members. What surprised us, although we were already
beginning to be a little sceptical about the impact of the Future
Jobs Fund in the private sector, was how few of them had had much
to do with it. Essentially, if you have a month to prepare a bid,
it is hard for our members because they have businesses to run
and clearly that has to come first. I suspect that the speed of
the timetable greatly restricted the number of private sector
companies that could get involved, and that includes even those
who were already involved in local employment partnerships, of
which there were some really good examples in some of the key
areas of the country for the Future Jobs Fund. Beyond that, we
have discussed the additionality requirement, particularly among
the national firms, which have a bit more capability to think
about taking part in this and some idea of where they might be
able to base a dozen or more people. Some of the geographical
controls, based on the 1.5%, were further pull-back factors. I
think that that's what lay behind the lack of engagement on the
private sector side.
Professor Gregg: I agree with
everything that was said there. There was a sense of doing things
at such incredible speed. There was a deliberate push towards
sectors they felt they could get to respond quickly.
Richard Graham: A bit of national service.
Professor Gregg: It was in their
control in a sense; they could get people to jump who could jump,
and the private sector wasn't part of that group. I always expected
that that would be changed and that there would be a deliberate
outreach to private sector employers after the first stage. This
is very early in the cycle of a recession, relative to previous
interventions, which have often come one, two or three years afterwards.
That lack of disaster planning is being discussed. There wasn't
a plan there to be wheeled out. When we worked out that we were
in recession, things were done through emergency planning, which
is not the best way, but the view shouldn't necessarily be that
the first product is the end product. You would expect to evolve
such a programme. They clearly wanted numbers very quickly, and
that meant getting the people who were used to jumping to public
sector calls to jump.
Q82 Karen Bradley: That was
very helpful, thank you. We talked about state aid rules and additionality.
Were there any other restrictions that prevented the private sector
from being involved? I cite the example of my local citizens advice
bureau, which managed to get the Future Jobs Fund to cover a maternity
leave. I question the additionality there. What have you seen
in practice?
Neil Carberry: From our experience—Emma
might want to add to this—there has been so little engagement
that what we have said so far is about the sum of it. Most businesses
just haven't been engaged in the FJF. Indeed, looking to the provider
side, people are engaged in things like the Flexible New Deal.
Even there, there wasn't a lot of engagement among firms in making
use of the Future Jobs Fund as part of the mix of tools that they
were using to deliver. In particular, there is the issue of the
relative strength of the funding stream behind the Flexible New
Deal, which is about £1,500 on average, targeted at 50% of
people still in a job six months on. Pound for pound, by comparison
with the Future Jobs Fund, that is a significantly lower amount
of funding for a not much higher target rate of retention of employment.
Even on the provider side, where you would expect more engagement,
it's been quite limited.
Emma Watkins: I would just echo
Neil's point. Within our welfare-to-work grouping of members providing
these services in the CBI—it has been a very active group
in putting together our original evidence and, just over the past
couple of days, trying to gather anecdotal evidence—so few
providers are used to the market and involved in the process that
it is hard to gather evidence.
Tracy Fishwick: I come back to
the points that I have made already. State aid is the biggest
barrier, coupled with the community benefit criteria. While we
understand where those things come from, and we have had to work
within them, they have been a huge obstacle, which we have not
been able to overcome, unless we have been able to be quite creative
and track jobs back to public spend through things such as construction
works.
Q83 Karen Bradley: What I'm
taking from this is that the barriers included speed of delivery,
state aid and additionality issues, and the lack of evolution
in the programme because it was such early days.
Professor Gregg: Can I just say
one thing? There is an interesting contrast with what was done
under the New Deal for Young People, where the employer option
was almost entirely private sector, with very little public sector.
This is completely the reverse. That makes a point about some
of the rules. I don't know whether the rules have changed in the
meantime. It isn't impossible to get private sector involvement.
The old programme in '98 did it, but this one didn't. I think
it's not because it's impossible, but because the kind of stuff
we're describing was, in a sense, designed to get a rapid response
from the people who could do it very rapidly and not a lot of
thought was put into how to get the private sector engaged.
Q84 Mr Heald: I don't know
whether Professor Gregg would agree, but I think the problem may
be this: if you have an intervention that comes in at 12 months
and is to help somebody who is long-term unemployed with barriers
to employment, I think you can offer them a subsidised job, but
if it's six months and there isn't that history, the state aid
rules make that impossible in the private sector, or difficult
anyway.
Professor Gregg: I was trying
to articulate that you probably want an intensive deflection process
first, before you deliver something like this, in terms of getting
the numbers down and raising the case of targeting on the most
needy.
Mr Heald: I fully agree.
Q85 Karen Bradley: I have
a final point on implementation. I would be interested to hear
about the experiences you and your members have had of interaction
with Jobcentre Plus and how useful that has been.
Neil Carberry: It's very interesting.
In the past, our members have been somewhat cynical, to be honest,
about Jobcentre Plus, but many of them had very good experiences
during the recession. It's on a patchy basis, but there are good
examples from certain areas of the country. The collapse of Woolworths
is a classic example. Certain parts of Jobcentre Plus got into
Woolworths stores very quickly and did a lot of real "action
this day" work to try to get people into other retailers
in the local area, and very successfully. A lot of it seems to
be driven by the management structure of Jobcentre Plus at local
level. People may be fostering good links with local employers
and helping with the understanding of local labour markets. There
was a strong streak of very good performance during the recession.
In some areas, it was still a case of going to Jobcentre Plus
with a job and getting 60 applications, 45 of which were not appropriate,
but that was less prevalent than maybe it was in the previous
decade.
Tracy Fishwick: I really felt
for Jobcentre Plus in the early days, because it had a lot on
its plate at that time, a year or so ago, with increased volumes
of customers coming in and people trying to get up to capacity
in their own offices. Also, it seemed to be a while before it
got its guidance on the rules about how it could engage with the
Future Jobs Fund, what "eligibility", "suitable"
and so on meant, how you physically refer a person sat in front
of you, how you use the system and how they then end up going
for an interview. All those things needed to be worked out and,
as it happened, most organisations that were running the Future
Jobs Fund worked it out together with Jobcentre Plus. That's partly
why you end up with slightly different versions of what's happening
across the country. Different partnerships agreed on different
mechanisms to do things, but once we got over that, the process
was fairly good.
If we're talking about the volume of people
who are being referred in some areas, we can take the Greater
Manchester experience, which involves 8,000 jobs in total, or
that's what it will be. The number of people who end up being
referred every day and every week is in the hundreds all the time.
It is quite a mammoth task if you just break it down to that one
area. Then you get people not knowing quite what the job is that
they've come for, or people being referred who are probably not
that suitable for the job that they've come for. Keeping employers
on board in those situations can be difficult, but mostly everybody
understands that scale and volume will create these things. Overall,
I would say Jobcentre Plus has done a very good job.
Q86 Karen Bradley: In Greater
Manchester, you went for 35-hour jobs. Is that right?
Tracy Fishwick: Yes.
Q87 Karen Bradley: Was there
a reason why you went for 35 hours rather than the minimum?
Tracy Fishwick: Yes. The bid was
developed at the highest level in Greater Manchester. It involved
the chief executives of all 10 councils. It was a very strategic
decision to get involved on that scale. It sat alongside the other
efforts on how we tackle worklessness, how we look at getting
people out of the poverty trap and how we got as much as possible
of the six and a half grand into their pockets to spend, rather
than being tied up in administration and other things. It was
a deliberate strategy, which has proved challenging to manage
financially—but, yes, it was very deliberate.
Q88 Chair: The bell is ringing
and we are not quite finished. Perhaps we can roll up the last
set of questions into one question with a few parts, because I
am conscious of the time.
We know that Future Jobs Fund is coming to an
end—there will be no new entrants from March 2011. It was
mentioned in the earlier session that the Work Programme does
not come into place until next summer at the earliest. There is
clearly a gap, so is there room for evolution or can that not
happen because the programme will come to an end? Is there room
for some evolution because some of the lessons that have been
learned from Future Jobs Fund could sit easily within the Work
Programme?
The Government say that they will fill that
gap because of the increasing number of apprenticeships, but those
are for 19-plus, so is that a different cohort from those who
have benefited from Future Jobs Fund? We know that the apprenticeship
guarantee applies only to England anyway, because that is a devolved
issue in Scotland and Wales, so are there gaps there?
To roll all that into one question, what advice
should our Committee be giving to the Government? If they are
not going to continue with Future Jobs Fund, what should they
be doing to fill that gap, to make the transition, and to keep
the good stuff that is already happening in Future Jobs Fund?
What should they be wary of to make sure that they do not make
any mistakes as they introduce the new programmes? That is quite
a lot in one question, but hopefully you get the gist of what
I have asked.
Tracy Fishwick: Youth unemployment
is still with us—a third of all Jobseeker's Allowance claimants
are aged 18-24, and in some areas it is getting into 40%. It is
still a huge issue. There will be a significant gap in many areas,
especially in the north and in areas where the impact of public
sector job cuts will be bigger, and so on, bearing in mind the
readiness of the private sector to fill that void in terms of
creating new jobs. People are worried about what is likely to
happen to a large group of young people.
I would like there to be some kind of temporary
extension to Future Jobs Fund, even if it is sat within the Work
Programme, ultimately. There might also be a way of looking at
some of the unused, what is called rolled-up, weeks. While we
create jobs for 26 weeks, not everybody stays for that long, so
there is some money, potentially, still in DWP that is not being
drawn down for every single person. Is there a way of using that
to subsidise other jobs in that gap period? That would be a request,
or something that DWP could look at.
Ultimately, how will the lessons that we can
learn from Future Jobs Fund be morphed into Work Programme? A
huge infrastructure has been created just around work placements;
around managers who are turned on to the idea of having young
people in their offices, their businesses, and their social enterprises;
and around the voluntary and community sectors, and so on. It
is a huge infrastructure and there is a willingness and an appetite
for this, so how do we get that lasting legacy into the Work Programme?
Can we make sure that the Work Programme providers talk to the
big LABs—Lead Accountable Bodies—which have been running
Future Jobs Fund, so that we can join all that up where possible?
Q89 Richard Graham: We have
talked a lot about Future Jobs Fund and different programmes.
From all the evidence that we have heard, it sounds as if Future
Jobs Fund was a well-intentioned, spur-of-the-moment, desperate
attempt to try to get young people off the unemployment register,
with mixed results and not much involvement from the private sector.
The bottom-line question to all this is why are there so many
young people who are NEETs in this recession? Why is the number
so much bigger than in previous recessions?
Professor Gregg: It's not. It
is not bigger than in previous recessions.
Q90 Richard Graham: Yes it
is. We have record young unemployment at the moment, whereas
employment figures were much higher in the early '90s.
Professor Gregg: The gap relative
to older people is higher, but the number of NEETs is not.
Q91 Richard Graham: But the
percentage is much higher. Is there not a wider question in there?
Why is it that employers are not taking on young people? Is
it that they have lost confidence in what people are coming out
of school with? Are they preferring to take on someone who has
had a job already—almost whatever job—because, as
a point of reference, it is something that shows that they are
capable of doing a job? What do you all think? Or do you think
that this is all perfectly normal, and that we should expect to
have record youth unemployment?
Professor Gregg: Young people
always suffer more in recessions. Firms do not shed labour that
they have got, which is valuable, experienced and trained, unless
they are desperate. In this particular recession, what has been
very successful is that firms have not done as much of that emergency
shedding of labour—the panic stuff—because they are
going out of business. They have done shrinkage by not recruiting,
a recruitment-freeze type of shrinking.
Q92 Stephen Lloyd: Also wage
cuts. Everyone has taken wage cuts.
Professor Gregg: Yes, I'll accept
wages. All that means is that the people who bear the brunt are
those trying to enter the labour market rather than those who
are there already, suffering large-scale displacement. That is
why it falls on the young. This time, the gap between the older
and the young is more acute than in previous recessions, but it
is slightly less as a share of the young person's population.
More are in education now. Far more young people are staying
on in education, so the share is of those who are not staying
on in education. That is where the unemployment rates are high.
That is high, relative to previous recessions.
Let us take the young person population. Because
there are more in school, what you are dealing with is a more
acutely deprived group than was previously the case. It echoes
a deeper point, which has been made once or twice. The school-to-work
transition isn't working well. For many people leaving school
with low qualifications, the transition into work, which is important
in respect of getting on that ladder, isn't working well.
Q93 Richard Graham: So that's
where the departure is.
Professor Gregg: Connexions and
that kind of stuff need to be looked at. The Connexions service
isn't working well in terms of getting people from deprived backgrounds
into work at the first stage. As the economy picks up, some of
that will be solved. The deepest problem has been gathering pace
prior to the recession since about 2004, but I would like to make
the split between that deeper problem with the school-to-work
transition that is not working well, and how to deal with the
people who fall through—there will always be some—and
who end up at risk of long-term exposure to unemployment.
You can't catch everybody with the first net
in this case. The lives of some people go wrong afterwards.
You need something built within the welfare system, and I advise
that some form of requirement for work experience—maybe
not six months, but much shorter—is embedded within things
like the Work Programme. As we discussed before, you may use
Work Programme first—it's low cost—to get people out.
But at some categorisation of people in the most needy group,
you must get some kind of work experience embedded within the
programme, not pure black box.
Q94 Chair: I am very keen
on the CBI speaking, and that we don't lose track. We need points
made about what needs to be in the future in terms of what the
Government will do, either to carry on what was good about the
Future Jobs Fund or make sure that it is more effective.
Neil Carberry: One of the advantages
of the early proposals for the Work Programme is that they are
a bit more bottom up. There is a lot more of sitting with someone,
thinking about what interventions they need and at what point
the practical work experience that Paul has identified is useful.
I also echo the point made about labour conservation. There has
been a strong stream across the private sector— probably
based on the experience of the '90s recession when some executives
felt that the axe was taken a bit far, a bit early and the firm
was not then prepared for the recovery—to control wages
as the method to cope with conserving labour. That means that
there is quite a lot of excess capacity in terms of human resources
within members. That is one of the factors that is driving lower
hiring. As Paul says, lower hiring does affect the issue.
Q95 Chair: If that's the case,
and there is less hiring, will there be a problem with employers
taking on apprentices, which is clearly the new Government's preferred
route?
Neil Carberry: It takes a long
time for employment to recover from a recession, but we are now
beginning to see some of that apprentice spend returning. Apprenticeship
programmes seem to be somewhat more resilient to recessions than
less formal arrangements. If you as a firm take in two or three
A-level leavers every year for a more on-the-job approach, that
is more open to being cut back than if you are engaging in a two
or three-year apprenticeship programme. Therefore, we hope that
apprenticeship numbers are more resilient on that basis, and that
funding can be used to encourage apprenticeship development in
key areas, and particularly at younger levels than 19.
Q96 Chair: There's going to
be a four to six-month cohort who will not get on the Future Jobs
Fund from March and won't get into the Work Programme until it
is up and running at some time in the summer. That is key to us
as a Committee, and you have the chance to give us suggestions
for what we should recommend.
Emma Watkins: It's probably not
entirely our place to comment on the transitional arrangements.
Q97 Chair: Please do.
Emma Watkins: There obviously
need to be some to avoid a substantial gap. We hope that some
of those people might be picked up through existing Flexible New
Deal contracts to bridge the gap.
Q98 Chair: But they'll have
gone by then, will they not?
Emma Watkins: We're not entirely
clear.
Q99 Chair: It doesn't cover
Aberdeen, for instance. I know that it is only partial across
the country.
Neil Carberry: Certainly, there
is a range of tools that will remain in place. The question is
whether they will be resourced in a way that helps that particular
cohort.
Q100 Chair: Is there a danger
that that won't happen, because all the energy and focus is going
into the Work Programme?
Professor Gregg: There is a big
risk. It is very hard to get the capacity. When developing a whole
new system, a lot of energy will be focused in that area by central
Government and Jobcentre Plus. It will be hard to maintain or
catch the people who are in that kind of gap. We have seen it
every time there is a new programme. The old staff diminish in
quality and volume ahead of the arrival of the new programme.
Q101 Chair:
But some kind of carry on, whether it's Flexible New Deal or Future
Jobs Fund.
Professor Gregg: If it's an apprenticeship
guarantee and if you have enough places and can make it stick,
fine. But some kind of guaranteed option place is—
Q102 Chair: On apprenticeships,
could someone answer my question about whether it is the same
cohort getting apprenticeships? I think you mentioned that before,
but perhaps a different cohort might get the apprenticeships as
opposed to the Future Jobs Fund, and what happens to the guarantee
in Scotland and Wales?
Tracy Fishwick: In terms of cohort,
I think there is a really big risk of young people not getting
into an apprenticeship either because they won't see themselves
as being able to get one, so they select out, or they won't have
the prerequisite basic level of education—five GCSEs or
similar. That is where the Future Jobs Fund and other things in
the past filled the void.
The other thing I would like to add, which does
not necessarily help, is that other local funding is about to
stop, such as the Working Neighbourhoods Fund and Objective 1
areas in Liverpool, and other places in the country where the
European Social Fund will stop. A lot of that added capacity locally
for this kind of programme delivery—ILMs or other kinds
of employment support with mentoring and coaching and that really
intensive stuff that you don't see with the broad brush Jobcentre
Plus interventions, and the £1,000 interventions. You don't
see that level of input, so there is a building gap that isn't
just about the Future Jobs Fund.
Q103 Chair: When will ESF
stop completely?
Tracy Fishwick: Some of it will
have gone, some of it will go in December and some of it will
be some time next year—the same time scales.
Chair: Any other questions? Well thank
you very much for coming along, and thanks for your evidence,
which will be really useful when we come to write our report.
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