Youth Unemployment and the Future Jobs Fund

Written evidence submitted by The National Skills Academy for Sport & Active Leisure

1.0 Introduction

1.1 The National Skills Academy's response uses its experiences from implementing a major FJF programme engaging 120 employers in the creation of 5,500 jobs, and discusses how using wage subsidy to support job creation can form a successful part of the government’s welfare to work policies.

2 Executive Summary

2.1 The following are the main points that the National Skills Academy wishes to make about the FJF and the development of any similar initiative in the future.

2.2 The National Skills Academy supports a policy using wage subsidy to encourage the creation of jobs as an effective bridge between worklessness and employment, provided that formal training and the development of skills accompany it.

2.3 Employers must lead on the implementation of any job creation programme. This is the only way to make sure that young people gain the skills and experience to secure employment after the funded period. With support, employers should have full involvement in developing job descriptions, work with JobCentre Plus on the recruitment process, identify (and sometimes deliver) suitable training for the role, and provide mentoring and support for candidates as necessary.

2.4 It has been clear from the initial development of the programme, right through the phases of its delivery, that employers in the sector need this programme in order to provide the 'seed corn' funding necessary for them to develop their businesses and create jobs in line with their growth aspirations. Because the FJF programme allows employers to employ, train and develop new employees to the point where they make a net contribution to the business, new jobs are being created which would not exist without this programme.

2.5 While it is too early for the success of the FJF programme to be formally determined, early results for the first cohort of 280 leavers from the Academy-run project show that 43 per cent of young people have remained in employment after the funded work period.

2.6 The National Skills Academy is encouraged because FJF employees are gaining recognised NVQs as part of the initiative. The programme has acted as a catalyst, setting young people on a path of learning and opening the way for them to progress to higher-level qualifications and apprenticeships.

2.7 As a training facilitator, the National Skills Academy is also ensuring that those candidates unable to stay with their FJF employer have routes into apprenticeships or further training; or have access to other employment opportunities, wherever possible. The Academy has a service level agreement with employers, which sets an expectation that they will place 50 per cent of people into full or part-time employment that they do not retain at the end of a placement.

2.8 The National Skills Academy is concerned that the FJF initiative has ended before any sort of replacement has been fully considered.

2.9 The proposed Work Programme has the potential to improve welfare-to-work provision. However, it is essential that wage subsidy to support job creation continues as an economically viable tool for outsourced providers of the Work Programme to use in getting young people into work. This viability in part rests on an adequate settlement in the government’s proposed ‘payment-by-results’ contract with outsourced Work Programme providers.

3.0 Sector skills councils and national skills academies are an essential link between the unemployed and industry. It is essential that any Work Programme providers have strong links with both of these organisations to ensure welfare-to-work programmes develop skills and qualifications that meet the demands of the UK economy.

4.0 The extent to which the FJF has succeeded in matching new work experience opportunities to young unemployed people

4.1 Since November 2009, the National Skills Academy has placed almost 1,500 people into new employment opportunities with 46 sport and active leisure industry employers through the FJF programme.

4.2 The FJF initiative has been extremely successful at getting young people into work. The National Skills Academy’s own project will work with over 120 employers and by the end of the programme place 5500 young people. Even with delivery of new job opportunities on this scale, the demand from sector employers outreaches the availability of funding; and continues to grow.

4.3 This level of demand from employers can partly be explained by the continued growth of the sport and fitness industry throughout the recession. It is an important point for the committee to note that programmes such as FJF are most effective in industry areas or time-periods where economic growth is occurring; and where employer demand for a larger workforce with greater skills is not being met. Any judgement on the effectiveness of FJF should take this fact into consideration.

4.4 The sport and active leisure sector is particularly suitable for the development of job opportunities for unemployed young people. Employers in the sector tend to be developmental in their approach to business delivery and are able to extend into new business areas when offered incentives to do so.

4.5 In addition, work in the sector is very appealing to the target audience of 18-24 year olds because sport offers an exciting, vibrant and youth-relevant employment environment. Employers have reported that the scheme has been particularly beneficial to young people who have been put off formal education due to negative school experiences, and whose interest in training and personal development has been rekindled.

4.6 While it could be said that the FJF initiative has been successful at matching young people to work experience opportunities, the real measurement of success sits with the proportion of people who then enter permanent employment when the wage subsidy ends. From the National Skills Academy’s programme, it is still too early to be able to prove conclusively the full extent of permanency of job creation. This is because not enough young people have gone through the programme or time elapsed after placement to assess the proportion in permanent employment. However, of the 280 young people to go through the programme so far, 120 are now in permanent employment (43 per cent). This represents a very positive indication of the scheme's ability to propagate long-term improvements in the job landscape.

4.7 Long periods of unemployment for a young person can have a continued negative impact on their earning potential, sometimes for their entire working life. Swift action to reduce worklessness can therefore have a significant, although hard to measure, long-term benefit on an individual’s increased earnings and tax contributions. In the short to medium term, young people who successfully stay in permanent work will reduce their claims for welfare benefits. As a statistically significant number of young people complete the National Skills Academy's FJF programme, research will be conducted to determine the returns made by the government's investment of £6,500 per person who participate in the FJF.

4.8Lastly, the National Skills Academy believes that the FJF programme should not be considered as a work experience programme. The intention from the outset was to use the programme to create job opportunities and the sector's employers responded positively to this. Additionally, the Department of Work and Pensions required these jobs to be new opportunities, rather than seasonal or previously existing roles. This approach means that young people are filling a genuine and sustainable need in organisations. We would therefore ask the committee to be clear in its mind the difference between work experience and the FJF.

5.0 Strength and weaknesses of the FJF programme from the perspective of providers (including in the third sector), employers and young people, and particularly to the long-term sustainability of employment opportunities

STRENGTH: The FJF is led by the needs of employers

5.1 The National Skills Academy programme is employer-led and this is a great strength in maximising the chance for sustainable long-term employment following any wage subsidy. Employers define job descriptions, the pre-requisite skills needed to start work, as well as the skills to be learnt over the funded period. They also interview applicants in the same fashion as for any other job. All this ensures that any use of the FJF remains firmly anchored to employer need and not any government target. The National Skills Academy believes that such an approach is essential because if the FJF does not develop people to have the skills and experience that are needed in the workforce, then the chances of permanent employment are that much reduced.

5.2 Many participating employers in the Academy’s FJF programme are small organisations, so the potential impact of gaining even one or two new members of staff can be significant. There is anecdotal evidence to suggest that this has helped the economic growth of employers who were previously not able to risk an initial outlay of costs to hire new staff. For example, Charlton Athletic Community Trust (CACT), a small community organisation linked to Charlton Athletic FC, took on 12 FJF employees, 5 of whom were placed into permanent roles with CACT even before they had completed their funded placement. CACT has been so pleased with the impact of FJF that it is now looking to staff a new community project with a further 3 FJF employees. While not the primary purpose of the Future Job Fund, its impact on smaller organisations cannot be ignored or understated.

5.3 However, the need for bids to DWP to be for over 30 jobs, while understandable from a desire to reduce bureaucracy, limited the opportunity for these smaller enterprises to participate in the scheme. To reduce the impact of this high participation threshold, DWP allowed consortia bids. Through this facility, the National Skills Academy programme was able to bring together over 120 employers from across the sector – many of whom would have been otherwise ineligible to take part. The sport and active leisure sector, which the National Skills Academy serves, is over 90 per cent made up from micro and SME-sized organisations. Without the work of the National Skills Academy, the sector would have been largely excluded from the FJF initiative.

5.4 The National Skills Academy is therefore concerned that, as the new government develops its welfare-to-work policies, similar opportunities should be available to ensure that SMEs are included, either directly, or through organisations such as the National Skills Academy taking a similar bid management approach as it has with the FJF.

5.5 It is essential for the FJF programme that it creates actual jobs and not simply ‘work experience’. It is the performing of a specific role within an organisation that gives a young person the skills and experience that they need to enter sustainable employment. An important element in achieving this has been that there is no direct payment to employers to participate. This has encouraged them to make sure that any placed young people are in roles that give maximum benefit to their organisation. If there were no organisational need or benefit to an employer’s business then there would be no demand for the Fund. If they had received payment for just taking someone on then there is less of an incentive to engage the young person in profitable work because the employer benefits from just having them turn up to work. Therefore a lack of direct payment to employers encourages the establishment of roles that have a long-term future.

5.6 There is always a need to balance Government investment in skills development, particularly when it is seeking to achieve social objectives, against the needs of employers and their drive to meet business objectives. It is important therefore that the FJF programme, or whatever replaces it, fulfils this balance and truly meets employers' requirements. In the current economic climate, it is essential that any future welfare-to-work programme includes both wage subsidy and training elements, to ensure that employers' work to create new jobs, and invest in the candidates' long term future.

STRENGTH: The FJF includes both employment and training

5.7 FJF jobs include both formal and informal training and the gaining of qualifications for participants. The National Skills Academy believes that this will significantly improve the success of the programme than if the Fund had only involved funding for wage subsidy. Such an approach would also not have met employer demand – who as well as trying to attract new people to work for them, also need higher levels of skills than is currently available within the sport and active leisure sector. Employers are able to shape training and this means young people are therefore getting skills that employers want them to have. This increases their future employability even in the cases where an employer does not retain them after their FJF placement.

5.8 All young people employed through the National Skills Academy’s FJF programme are given the opportunity to undertake a nationally recognised qualification including an NVQ or a National Governing Body coaching or fitness instructor qualification. They also receive an employability skills training package (if their personal circumstances require it); and those with hands-on jobs (for example as a coach or gym instructor) are provided with first aid and health and safety instruction. Any that work with children also receive safeguarding training.

5.9 The development of qualifications and skills as part of the FJF contributes to the progression of young people gaining level 2 qualifications and progressing to higher levels through the use of apprenticeships. Unemployed young people often do not have the basic numeracy or literacy skills needed to start an apprenticeship. However, through the FJF they can get those skills and become ready to start an apprenticeship on completion of the FJF funded period. Achieving such a progression is a stated objective of the new coalition government’s skills policies. The National Skills Academy has just received additional funding from the Skills Funding Agency for 545 apprenticeship places to encourage this progression of FJF employees to higher levels of skills and qualifications.

5.10 A great advantage of the FJF is that it recognises that the development of highly necessary, but basic, soft skills can only really be embedded at work. These are as much behavioural habits as any formal skills – such as punctuality, a proactive nature, team work or communicating effectively with colleagues – all of which can only really be learnt through experience. There is also a big boost to young people’s confidence. Many people who are out of work for a long period of time lose their confidence and face mental health challenges – often building bigger barriers to return to work. It is the development of these 'soft' but vital skills, confidence, gaining the habit of work while also learning formal skills and qualifications, that makes the funded job creation proposition such a powerful one.

5.11 There are many young people who get locked into a cycle of short-term and low-skilled employment followed by extended periods with no work. To get more stable employment individuals need to get more skills and experience. The National Skills Academy believes that wage subsidy, accompanied by training, breaks the cycle because it provides both work and training at the same time.

5.12 Many employing organisations utilise sport and active leisure as a vehicle for achieving social and community goals and the sector can offer a significant number of attractive entry-level job opportunities. In many cases however, the employers cannot afford to invest the initial salary and training costs needed to develop young people to the point where they are contributing to the delivery of business or income objectives. The FJF scheme has offered the support where it is needed, allowing candidates to become fully work ready, and making a net contribution to the business.

STRENGTH: The FJF benefits the wider community

5.13 The Academy’s FJF programme has also brought significant community benefits. A key criterion of the FJF programme was that participating employers needed to demonstrate the wider benefit to the community of any placement. Sport and active leisure as a sector has plenty of scope in this regard. Community sports clubs exist across the country and provide the foundation for national sporting excellence. The programme will, on completion, have placed a significant number of young people in such community organisations. Increasing and improving the number of people working in leisure centres and fitness clubs impacts the health and wellbeing of communities. Also, a number of organisations that participated are charities that use sport and fitness to give young people a second chance to learn new skills and to get them into work. Using sport and fitness careers as a way to give purpose to young people who may not have achieved at school has a powerful track record.

5.14 Many of our employers work within schools and youth groups through School Sports Partnerships and the Youth Sports Trust. They have found that well-trained, enthusiastic and motivated FJF employees make excellent role models for children and young people. A significant number of FJF employees have also been placed with community outreach charities who work with disadvantaged groups - particularly young people, those with disabilities and ethnic minority groups - to engage them in sport and active leisure activities that meet their diverse needs. Community sports clubs such as County Football Associations have been able to increase the use of public spaces and promote community cohesion through participation and attendance at sports events.

5.15 The government’s public health agenda including Change4Life has also been supported by the National Skills Academy’s Programme. FJF Employees in the private sector (primarily leisure centres and fitness clubs) have become trained in health and wellbeing skills, which they are now able to pass on to others in their communities as part of their work.

5.16 The FJF programme is supporting entry and career progression in the third sector and social enterprises. At a time when government is encouraging greater use of community groups to lead in the delivery of public services, growing the available workforce in this area converges the policy objectives of tackling worklessness and making the Big Society a reality.

WEAKNESSES: The FJF can be improved

5.17 The Future Job Fund, however, is not without weaknesses. These fallings rest not with the principle of wage subsidy as a way of getting people back into work, but with limitations in its integration with broader welfare-to-work support; and certain policy restrictions on who is eligible to participate in the scheme.

5.18 The National Skills Academy, in its successful bid, has the responsibility for monitoring what happens to candidates at the end of the funded period, and for facilitating their route either a) into long-term employment with that employer, b) employment with another organisation, or c) into an apprenticeship or other further training. The National Skills Academy has in place a mentoring package for candidates to support this, which is provided from existing FJF funding.

5.19 However, support for young people, both during the initial six-month placement and after, needs to be far more integrated with both the JobCentre Plus and the National Apprenticeship Service than it currently is. The National Skills Academy alone lacks the broader awareness and access to interventions available to JobCentre Plus advisors so there is a lack of integration with wider welfare-to-work initiatives. A further option would be for organisations such as the National Skills Academy to have a wider capability to deliver other welfare-to-work schemes. This would allow individual young people working with the Academy to get better access to the full remit of support that is available to them to help them into work.

5.20 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. Such an approach increases the chances of any intervention being successful – including schemes like the FJF. An integrated approach also allows for any issues, such as a need for more intensive training for someone to be work ready, to be flagged up. This reduces the chances of a problem that could be quite easily overcome with the right intervention from de-railing an entire welfare-to-work programme for an individual.

5.21 A further issue is that if an FJF employee leaves work and goes back into unemployment, they enter as if they have only just become unemployed and cannot access any FJF or similar scheme until they have been unemployed for a further six months. Such a situation halts any momentum created through their original employment with FJF. If an integrated approach was taken with other interventions then such a situation could be avoided.

5.22 The 18 – 24 age restrictions applied to whom is eligible to enter the FJF are too prescriptive. Age does not determine the success of job creation. Older people and returners to work have additional skills which many employers find valuable. The age restriction, whilst understandable, is essentially a political decision and, in our view, consideration should be given to removing this restriction in any future scheme.

5.23 As already highlighted the FJF can be a successful way to break the cycle of low-skilled, short-term work followed by long periods of unemployment. However, the wage restriction of 25 hours per week at minimum wage poses a challenge for individuals to stay for the entire investment period. Young people often have to earn a basic wage because they have to support themselves or only get limited help from family members. So the offer of a job elsewhere at a 35-hour working week at minimum wage can seem more attractive than what the FJF can offer.

5.24 While on the surface this may seem like a good thing for the government as it gets someone into full-time paid employment, this is often in fact a false economy. Many of these jobs are low skilled and in effect keep the young person within the low-skilled/unemployment cycle. Desirably, any funded programme should be for a 35-hour working week, set at minimum wage. While a young person may still receive other job offers, these would need to be above the minimum wage they currently earn for them to be attractive. Many 'dead-end' jobs do not pay higher than minimum wage so by raising the hours worked to a standard working week, the risk of a young person going back into low-skilled short-term work followed by unemployment is reduced.

The likely impact of the decision to end the FJF in March 2011 rather than March 2012

5.25 The National Skills Academy FJF programme is not directly impacted by the decision to end the initiative a year earlier than originally planned because it has always intended to complete its programme by the March 2011 date. However, the Academy is concerned about the potential ongoing impact on reducing unemployment if no job placement programme replaces it. The Academy strongly supports the use of seed corn funding for wages and training and would like to see this continue, in whatever form the new government’s welfare-to work programme takes in future.

6.0 How the transition from FJF to the Work Programme will be managed, including the part to be played by the government’s proposals to fund new apprenticeships

Transition from FJF to the Work Programme

6.1 The NSA is concerned that the FJF will end before any other initiative replaces it. The use of subsidised job creation schemes is an excellent way to bridge young people from worklessness into employment and needs to be an option for those people that are ready and able to complete a placement.

6.2 The establishment of a single Work Programme has the potential to overcome the weaknesses of the FJF outlined in this submission. It should be up to a person's advisor to take a holistic view of what interventions will work best with an individual, regardless of age or any other limit that is not based on their abilities. The Work Programme, in giving freedom to external providers, has the potential to achieve this.

6.3 Work Programme providers will be paid by results in getting people back into work. Ensuring the appropriate level of remuneration for them from government for achieving this will be a critical factor on whether schemes such as paid wage subsidy are used as a welfare-to-work tool. If remuneration is too low then this will financially restrict the options available to Work Programme providers to use to get people back into work and limit their chances of achieving a successful intervention.

6.4 The National Skills Academy is keen to ensure that a strong link to skills and qualification development is maintained as part of welfare-to-work programmes. Sector skills councils and national skills academies have been established to ensure an employer-led system in the development of vocational skills, work relevant competencies and qualifications. It will be important that Work Programme deliverers work within this employer-led principle and use the knowledge and experience gained by sector skills councils and national skills academies to do this. If employers’ needs are not being met through a welfare to-work initiative (such as being able to ensure someone gets the relevant training) then the chances of achieving sustained permanent work is that much reduced.

The Government’s proposals to fund new apprenticeships

6.5 Apprenticeships have been shown to be an effective way to build vocational qualifications and the National Skills Academy welcomes the Government’s increase in provision in this area. However, it is important to note that not all people in welfare-to-work programmes are ready for an apprenticeship and employers do not always require staff trained to that level. Many employers prefer shorter periods of training on specific skills for their staff.

6.6 As with the use of wage subsidy, apprenticeships should be undertaken by people who are ready and would benefit from them. In deciding the value of training it is important that employers lead the agenda by indicating the skills that they need from their staff.

6.7 There is a risk that the use of apprentice training becomes supply driven rather than needs led by either employers or individuals. By stating a specific number of apprenticeships that will be delivered within a time period the government risks developing a system that will deliver this target – regardless of whether that piece of training is of value to individuals or employers. Apprenticeships should be just one government-funded option with an unemployed person’s advisor free to decide what training is most appropriate in consultation with employers. The government’s recognition of this issue in its recent consultations on the development of a new strategy for skills, due to be published in autumn 2010, is viewed as a positive sign by the National Skills Academy.

7.0 Conclusion

7.1 The early figures from the National Skills Academy’s FJF programme are extremely positive in the proportion of young people staying in permanent employment following an FJF placement. However, the Academy accepts it is still too early to give conclusive figures on the success of the initiative or its return on investment. The Academy would like to offer the committee more conclusive evidence as its programme progresses.

7.2 There has been a view promoted that the FJF is a false economy and only serves to mask unemployment figures and places young people in ‘non-jobs’. The National Skills Academy disagrees with this view. The jobs that are being created in the sport and active leisure sector are real jobs. They have been developed in most cases for the long-term, deliver business growth and contribute to the national economy and enhanced GDP. There is also significant benefit to social enterprises and the third sector in delivering community services; and in establishing a workforce for the future in this important area of society.

7.3 While the National Skills Academy accepts the ending of the FJF, it is equally concerned that the successful combination of work-subsidy and training is not lost in future welfare-to-work initiatives.

14 September 2010