Youth Unemployment and the Future Jobs Fund

Written evidence submitted by Redcar & Cleveland Borough Council

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Executive Summary

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In June last year the Government announced that it had created a £1 billion Future Jobs Fund to which local authorities and other organisations could bid to create around 150,000 new jobs. This was a new approach to create jobs and provide hope for young people and jobseekers in deprived communities.

Each bid would need to demonstrate that:

- it would create extra jobs, lasting at least 6 months, either for long term unemployed young people or people in unemployment hotspots;

- the work done would benefit local communities; and

- the work would be under way quickly.

Some definitions:

- by ‘extra’ we mean that the jobs would not exist without this funding;

- by ‘job’ we mean work for at least 25 hours a week paid at least at the national minimum wage;

- by ‘long term unemployed’ we mean people who have been on Jobseeker’s Allowance (JSA) for approaching a year;

- by ‘young people’ we mean between 18 and 24;

- by ‘hotspot’ we mean areas where the rate of unemployment on the JSA measure is (using the latest seasonally unadjusted unemployment figures) more than 1.5 percentage points above the national average.

The Future Jobs Fund contribution would be a maximum of £6,500 for each job. Bids with a lower unit cost and/ or which align other funding streams to supplement Future Jobs Fund funding would be welcome. All bids were expected to demonstrate value for money by delivering maximum benefit to individuals and communities for the cost incurred.

Having submitted our bid for 145 new jobs and £942,500 from the Future Jobs Fund with the promise of extending the period to 6 months by match funding we were advised by letter dated 28 July that we had been successful. The Wise Group would act as employer and also run this programme for us.

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Introduction to Routes 2 Employment

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Routes 2 Employment works closely with colleagues in Redcar & Cleveland Borough Council and other partner organisations in the Borough to understand, support and plan for future regeneration developments and employment initiatives within the Borough.

A bid writing team made up of local authority officers, Wise Group, Coast and Country and local community group representatives met to consider our approach to this opportunity and the scale of our bid.

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Our Experience of the Future Jobs Fund Programme

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Successes

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Our original bid to the Future Jobs Fund (FJF) to create 145 jobs was submitted on the launch of the programme.

We were successful and were granted 75 jobs for the first six months. The first young person went into employment in October, followed by 15 in November, 26 in December, 15 in January, 17 in February and the final one in March.

We continued to create jobs according to our profile and because we were so successful we were offered the opportunity to submit a second bid. Our application for a further 145 jobs was successful.

We are now working towards a total of 290 jobs with funding of £1,885,000 from the FJF and match funding of £600k allocation of Working Neighbourhoods Fund (WNF). Our jobs are in both the category of aged 18-24 years and also those people suffering from long-term unemployment in Redcar and Cleveland, which is now classed as a ‘hotspot’ area.

To date we have created a total of 201 jobs (21 long-term unemployed and 180 18 - 24 year olds) These jobs are in a variety of occupations including: Sports Coaching; ‘Green’ jobs, for example Horticulture, Clean and Green operatives; various administration and youth work jobs; work in neighbourhoods and community centres.

The funding that we secured from the WNF has enabled us to extend the period in work from 26 weeks funded by FJF, up to 12 months maximum for many of the first 145 young people.

We still have another 89 opportunities available for young people and long-term unemployed and at present are in advance of our profiled targets that take us up to the end of March 2011.

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Strengths and Weaknesses of the Programme

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Strengths

The obvious major benefit from the programme has been to young unemployed people and potential employers. Many of our youngsters have never worked before but have done so well in their FJF jobs that they have dispelled the myth that the young people of this country do not want to work. They do want to work and the feedback from our host employers has been very positive.

Fifty young people started the FJF programme before Christmas 2009 and all had two weeks holiday over Christmas and returned to work. All of them. Many to outdoor horticultural jobs, in the extreme winter weather in January. We did not lose one single individual.

We were so impressed with the young people that we held a celebration event for them hosted by our Mayor.

We invited all fifty to reflect and record how it had felt when out of work and how it felt now, in employment. Although an improvement in financial circumstances was a key feature so too were improved health, self-esteem, relationships with family and peers and being more socially interactive, not isolated. Many said that they now feel of value to society and themselves.

Apart from the experience of work, the young people have benefited from vocational training offered whilst on the programme, a reference from the host employer and the Wise Group an updated CV along with improved social skills, all of which help to make the person more marketable and thus employable.

This programme has proved to be a perfect way to match the young people to future employers by allowing the employer to benefit from the talents of a young person without risk to his organisations balance sheet. All host employers have benefited greatly from the programme including the Council.

The young people have made a positive contribution to the fabric of many of our deprived communities and seen the fruits of their labour, particularly in horticultural and environmental impact jobs.

A further strength emerged from the opportunity to work closely with Jobcentre Plus locally. This has proved to be very effective within the FJF programme by removing potential duplication and the realisation that we can work together towards a common good has become very apparent.

Also, we have benefited greatly from the chance to communicate with the young people of the Borough and run a programme that is not focussed on making a profit and where all funding and effort are channelled into finding young people worthwhile work.

Most of the money paid to the young people will have gone directly into the local economy as most do not travel far to make purchases.

As an indicator of the effectiveness of the FJF we offer the following comparisons:

Weaknesses

The weakness of the programme was that it was set up so quickly that, at the start, rules were still being written. 26 weeks seemed a long time to begin with, but the time went extremely quickly and one year would have been more appropriate and beneficial. The restriction placed upon the jobs that they must be of benefit to the community made recruitment difficult and also probably restricted people moving into permanent work.

Despite the fact that the FJF programme has given many community and neighbourhood focussed organisations the chance to benefit from a wage subsidised employee, unfortunately, especially in the current economic climate, there are not the funds available to the employers in the third sector to keep these people in employment when the public funding runs out.

In many cases, as previously mentioned, this has been the first taste of full time work that the young people have experienced. Now that they have had this experience it is a blow to them to withdraw the job after just six months. After experiencing the euphoria of getting the job and being in employment they are left with no alternative but to re-enter the dreaded double sliding doors of the local jobcentre. We do of course work with the people over the final months of the programme to try and find them a job, with varying success.

At this stage of the project 12% of our starters to date have already moved into sustainable work. We hope that by extending the period of employment in appropriate cases we can make the young people indispensable to the host employers and therefore increase this percentage in the future.

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Likely Impact of the Decision to end the Future Jobs Fund Programme in March 2011 rather than March 2012

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The impact of moving the closure forward has removed this opportunity for many young people that are not yet eligible to benefit from this very worthwhile programme.

We had become very adept, through our relationships and partnership working, at delivering the programme and when the closure announcement was made we were in the process of submitting a further bid for an additional 50 jobs. This will not happen now, thus removing an opportunity for 50 of our young people.

We have also been informed that we will no longer be able to ‘carry over’ our unused weeks, left after someone leaves the programme. This could have benefited another 15 young people. Another opportunity lost.

This was a local programme for the benefit of local, and particularly young, people many of whom have never experienced work, or have been out of work for long periods of time.

Those working with the Future Jobs Fund clients have seen the personal impact on the young people, the positive impact it has had on them, their confidence, motivation, willingness to learn and share ideas with hosts and employers. This has been the feedback we have had from most of the employers. Indeed many of the employers have benefited from the input of the young people. They had previously been an untapped resource unable to make any significant contribution to society.

The programme has made a significant contribution in reducing out NEET figures to the lowest figure ever recorded.

The risk now, with the mothballing of large parts of our steelmaking in Redcar and the closure of local chemical plants, is the impact on the local supply chain. Opportunities for young people, particularly those most removed from the labour market, with no employment experience are few and far between.

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How the Transition from the Future Jobs Fund to the Work Programme will be managed, including the part to be played by the Government’s proposal to fund new apprenticeships.

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At this stage we still have very little detail about the new Work Programme and how it will be managed but we are concerned that the large size of contract areas will move the focus away from local support for local people.

Our community groups are particularly concerned that, having built up excellent working relations with the local authority, the opportunity to build on good practice and effective co-working will be lost.

Many current programmes offer training for jobs, often when there are no jobs at the end of the training. What we have found with the FJF is that, once in a job, the young people are very enthusiastic about vocational training related to that job. They actually undertake training in something that will enhance their future prospects, in a job they have applied for, and have secured by going through an interview process. Not filling empty seats on pre-booked, inappropriate, training programmes.

Our concern is that traditional apprentice programmes will offer opportunities for those best qualified for the opportunity, for example those young people with good A Level results who failed to get into university (an increasing number). This being the case, the bar will be too high for most of the young people who have, and could have, benefited from the FJF programme. This will inevitably result in a large pool of unengaged, disaffected young people and the consequent impact of increased vandalism, crime, drugs and alcohol abuse and mental health issues.

This may seem like a simplistic prediction but it is an informed one. Redcar and Cleveland wards are among the most deprived nationally so we are well experienced in dealing with such issues. When something as successful and effective as the FJF programme is withdrawn the consequences can be dire.

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Recommendations for Action and Other Considerations

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Alongside the new Work Programme we would like to see a substantial allocation of money made available to local authorities and their community groups to offer targeted, flexible support to enable them to respond to local issues for example transport in rural areas.

A recent government survey has indicated that Young people not in education, employment or training (NEET) at 16 -18 have poorer life chances than their peers and are more likely to be a long-term cost to the public purse. National figures for 2009 show 9.2 per cent (183,200) of young people aged 16-18 were NEET.

The 2008 NEET cohort will cost an estimated £13 billion from the public purse and £22 billion in opportunity costs over their lifetimes.

Young men who were NEET are three times more likely to suffer from depression, and five times more likely to have a criminal record, than their peers.

Evidence suggests better targeting and collaborative work can reduce lifetime cost and increase wellbeing. Early prevention through low-cost interventions can bring large savings: £4,000 of short-term support to a single teenage mother can be repaid twenty times over through net lifetime tax contributions. The same successful intervention can reduce public service costs by nearly £200,000 over a lifetime.

In Redcar and Cleveland, to complement the Future Jobs Fund, the local authority has piloted an apprentice wage subsidy, offering employers up to 12 months subsidy of £95 a week.

In the current economic climate many businesses do not have the wherewithal to take on a trainee and this is a missed opportunity in terms of young peoples’ training and experience. Over 90 young people, all of who were NEET, have taken up the opportunity of an apprenticeship through this programme.

Currently colleges are offering apprentice places to young people but they are tasked with finding their own company placement. There is a distinct risk that those with the best educational attainment, the best contacts through parents, or the most confidence will secure these limited opportunities.

Funding of places at college should be balanced with funding to employers to support apprentice placements. The local authority is best placed to deliver such programmes through its partnership and collaborative working arrangements with Connexions, their regeneration teams, business development teams and local colleges and employers.

In conclusion, from our experience, if the Future Jobs Fund is to be cut it must be replaced with a programme that offers better or more opportunities than FJF offered. In terms of added value it is obvious that this programme has worked in our Borough. If FJF is to go, then at least give us the opportunity to replace it with an allocation of ring-fenced funding for NEET and long term unemployed that we can use in the most effective and efficient manner to address the specific problems in our area. We are certain that other authorities will agree given that there is no ‘one size fits all’ answer to the NEET problem.