4 Effectiveness and value for money
Cost comparison with other recent
programmes
43. The Department for Work and Pensions explained
that the Government decided to end the Future Jobs Fund to reduce
expenditure in light of the public spending deficit and on the
grounds that they believed it was not cost-effective:
Faced with the largest public spending deficit in
the UK's history, it was imperative that the Coalition Government
identified areas to reduce expenditure. The Future Jobs Fund was
identified as an area where savings could be made, whilst maintaining
the support available to young people. Closing the Future Jobs
Fund to new bids is justified because the programme is an expensive,
short-term response to the recession and the Government is confident
that similar results can be achieved through better value for
money interventions.[44]
44. The DWP's written evidence stated that, at
£6,500 per participant, the scheme is expensive relative
to the other elements of the Young Person's Guarantee as shown
below:
Young Person's Guarantee Unit Costs[45]
| Future Jobs Fund | £6,500
|
| Routes into Work | £1,200
|
| Work Focussed Training |
£2,310 |
| Community Task Force[46]
| £1,200 |
| Care First Careers |
£1,500 |
The Department argues that the Future Jobs Fund "does
not compare favourably with programme costs of other employment
programmes", noting that the average cost for finding an
individual work under the New Deal For Young People was £3,480.[47]
45. In his oral evidence, the Minister used early
DWP analysis of the FJF to press further the case that the programme
did not represent value for money (although this analysis was
not available when Ministers made the decision to terminate the
programme). It showed that, of the participants starting FJF posts
in the first two months of the programme, 50% were in receipt
of working age benefit payments six months later.[48]
On the basis that the maximum government contribution to
each FJF post was £6,500, the Minister concluded that, if
50% of participants ended up in permanent employment, this could
represent a cost to the taxpayer of up to £13,000 per permanent
employment outcome.[49]
46. Some qualification of these figures is necessary.
Firstly, there are significant limitations to the reliability
of the early DWP analysis, as explored in Chapter 2 and highlighted
in the analysis itself. Secondly, FJF posts are funded at a maximum
of £6,500, but not all FJF posts will have cost this amount;
some providers may not have claimed the full amount as some participants
would have left their FJF posts early (as indicated in paragraph
18). DWP has not provided a figure for the average cost of an
FJF job. Also, to assess the cost-effectiveness of the FJF and
how it compares to other programmes requires an estimate of its
impact—something that is currently unavailable.
47. Participants in the Future Jobs Fund do not
receive Jobseeker's Allowance for the duration of their FJF post,
whereas participants on the other programmes may still be in receipt
of a range of benefits. Groundwork UK stated that these could
amount to a "minimum of £1,800" for a young person
on the programme.[50]
Deducting the amount that the Government no longer paid on working
age benefits from the £6,500 figure would have offered a
fairer representation of the true cost of the Future Jobs Fund.
The Coalition Government has already accepted this concept in
principle by stating that the Work Programme model will reflect
the fact that initial investment delivers savings through lower
benefit expenditure.[51]
48. A robust evaluation of the
FJF has yet to be undertaken. While we accept the Government's
need to make savings to address the public spending deficit, it
is our view that insufficient information was available to allow
the Department to make a decision to terminate the FJF if this
decision was based on its relative cost-effectiveness. It is important
that DWP carries out cost comparisons for welfare-to-work programmes
on a like-for-like basis. In particular, statistics should clearly
show what payments, including benefit payments, individuals on
each programme are receiving, to reflect the full cost to government.
The cost of reaching those most
at risk of long-term unemployment
49. The Future Jobs Fund may appear relatively
expensive in relation to other programmes, even when the figures
are adjusted to reflect savings in benefit payments. However,
this higher cost may be warranted for individuals who face the
most severe obstacles to finding employment. Tony Hawkhead of
Groundwork UK accepted that a programme such as the FJF would
not be cost-effective for all unemployed persons, but argued that
it was more appropriate for people needing more intensive support:
I think that the fund is most successful in working
with the kind of people we [...] 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.[52]
The National Skills Academy for Sport and Active
Leisure described the particular need for intensive support for
young unemployed people:
Getting a young person into sustained permanent employment
is an involved process that does not end when someone first starts
work. A flexible approach is needed, with tailored mentoring support
provided before, during and after a person successfully gets a
job in order to keep them on track.[53]
50. The Future Jobs Fund was designed as a programme
to support primarily those young people who were at significant
risk of long-term unemployment and for whom lighter-touch methods
of support, such as support with searching for jobs, had not been
successful. These people would generally be those without employment
experience or qualifications. However, it is important to note
that in many areas the FJF programme was used to support more
qualified young people such as graduates, who arguably did not
face significant personal barriers to employment. Evidence from
some witnesses showed that university graduates were placed in
Future Jobs Fund opportunities across the programme.[54]
Some members of the Association of Learning Providers even noted
that in the early stages of the programme, "many of the jobs
on offer tended to be 'swept up' by unemployed graduates, although
over time this tendency was replaced by more success for more
disadvantaged and/or under-qualified groups".[55]
Birmingham City Council suggested that around 20% of their FJF
participants were educated to first degree level.[56]
51. The extensive inclusion of graduates in the
Future Jobs Fund was not necessarily the programme's intention
at the outset, particularly as the Government also introduced
a separate Graduate Guarantee in 2009 offering all new graduates
still unemployed at six months access to an internship, training
or help to become self-employed.[57]
52. While many graduates gained
valuable experience through participating in the Future Jobs Fund,
it is not clear to us that such an intervention is as cost-effective
for this client group as it might be for those facing significant
personal barriers to finding work.
53. We accept that interventions
like the FJF represent a more expensive option, even when adjusted
to take account of the fact that Jobseeker's Allowance is not
paid to FJF workers. However, despite the relatively high cost,
programmes such as the FJF may still be a cost-effective option
for young unemployed people who are furthest from the labour market,
and who are less likely to benefit from other less intensive approaches.
Comparison with wider programmes
to tackle youth unemployment
54. Professor Gregg considered that Intermediate
Labour Market programmes that most closely resemble unsupported
employment, such as the Future Jobs Fund, were more likely to
bring positive outcomes than unpaid work experience or programmes
that require individuals to undertake unpaid community work.[58]
Witnesses such as the Wales Council for Voluntary Action
also emphasised that one of the benefits of the Future Jobs Fund
was that it offered real paid work and gave participants the sense
that they were doing a real job.[59]
55. Professor Gregg also highlighted how providing
support for young people in searching for jobs ("job search")
can be the cheapest and most effective method. However, he noted
that support with job search does not work for everyone, particular
the long term unemployed.[60]
He pointed out that the experience of New Deal for Young
People (NDYP) provided a useful insight into the effectiveness
of policies to tackle youth unemployment. NDYP began in April
1998, and aimed to help young people to find lasting jobs and
to increase their long-term employability. Unemployed young people
were provided with an intensive support process to find a job,
known as the "Gateway", which was intended to continue
for up to four months. If they remained in the programme beyond
this period they were then required to enter one of four options:
- Employment Option, offering
subsidised employment
- Full-time Education and Training
- Voluntary Sector Option
- Environment Task Force Option[61]
56. An evaluation of the NDYP showed that those
taking the Employment Option outperformed those taking other options.
Overall, those taking the Employment Option spent longer in employment
than those who took up any of the other options.[62]
A separate evaluation of the NDYP showed the impact on "employability".
The Employment Option performed strongly in this regard, and
was most effective in terms of "access to training, attachment
to the labour market and self-efficacy". Unpaid work placements
in the voluntary sector also performed well on the employability
measures, although less highly than the employment option in terms
of self-efficacy and willingness to move area in search of work.
The Full-time Education and Training Option performed poorly
in relation to work-based training outcomes but its participants
gained the highest level of qualifications.[63]
57. Direct comparisons between the Employment
Option in the NDYP and the Future Jobs Fund must however be treated
with caution as the programmes differ in some respects. While
the Employment Option represented a similar six-month paid post,
these posts were created through a wage subsidy to employers,
principally in the private sector, to recruit unemployed young
people. Unlike the Future Jobs Fund, they were not being recruited
into temporary jobs specifically created for the purpose of the
programme, and young people arguably had a greater chance of being
employed on a regular basis by the employer. Also, the FJF was
set up in a period of major economic downturn, whereas the labour
market was more buoyant when the NDYP was established.
58. Another point of comparison is the StepUP
programme, piloted in 2002, which provided subsidies to private,
public or voluntary employers taking on people who were still
unemployed six months after completing their New Deal option.
There were positive impacts for some people, but no significant
benefits for those under the age of 25.[64]
However, it should be noted that that the young people
entering StepUp had been out of work for close to two years despite
previous New Deal attempts to help. Such cases, by definition,
constitute a significantly hard-to-help group who may have faced
even more obstacles to employment than FJF participants.
59. Comparing the effectiveness
of welfare-to-work programmes is complex, given the differences
in approach, funding, labour market circumstances and the characteristics
of previous programmes. The evidence is limited and does not offer
a clear consensus. We expect the Government to use the findings
from the Future Jobs Fund evaluation to contribute to the wider
evidence base used to assess which types of programmes are most
effective in tackling youth unemployment.
44 Ev 49 Back
45
Ev 49 Back
46
Average cost, including cost of those failing to complete Young
Person's Guarantee options making up the remainder of time on
the Community Task Force. Back
47
Ev 49 Back
48
Department for Work and Pensions, Early analysis of Future
Jobs Fund participant outcomes, November 2010 Back
49
Q 106 Back
50
Q 35 Back
51
HM Government, The Coalition: our programme for Government,
2010, p 23 Back
52
Q 15 Back
53
Ev w193 Back
54
For example, Scottish Council for Voluntary Organisations, Ev
w44; Oxfordshire County Council, Ev w56; Portsmouth City Council,
Ev w73, and Barnsley Metropolitan Borough Council, Ev w107 Back
55
Ev w182 Back
56
Ev 42 Back
57
HM Government, Building Britain's Recovery: Achieving Full
Employment, Cm 7751, December 2009 Back
58
Q 62 and Q 63 Back
59
Ev w13 Back
60
Q 71 Back
61
Michael White and Rebecca Riley, Findings from the macro evaluation
of the New Deal for Young People, 2002, Department for Work
and Pensions research report 168 Back
62
Ian Beale, Claire Bloss and Andrew Thomas, The Longer Term
Impact Of The New Deal for Young People, 2008, Department
for Work and Pensions Working Paper No 23 Back
63
Bonjour, D., Dorsett, R., Knight, G., Lissenburgh, S., Mukherjee,
A., Payne, J., Range, M., Urwin, P., & White, M., New Deal
for Young People: National Survey of Participants: Stage 2,
2001, Employment Service Research and Development Report ESR67,
Employment Service, Sheffield, UK. Executive Summary. Back
64
Paul Bivand, Bee Brooke, Sarah Jenkins and Dave Simmonds, Evaluation
of StepUp pilot: final report, 2006, Department of Work and
Pensions research report 337 Back
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