Work and Pensions Committee - Youth Unemployment and the Youth Contract - Minutes of EvidenceHC 151

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House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Work and Pensions Committee

Youth Unemployment

Wednesday 27 June 2012

PETER mucklow, cOUNCIlLOr Shona Johnstone, michele roberts and judi baxter

Evidence heard in Public Questions 152 - 259

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Work and Pensions Committee

on Wednesday 27 June 2012

Members present:

Harriett Baldwin

Andrew Bingham

Karen Bradley

Sheila Gilmore

Glenda Jackson

Brandon Lewis

Stephen Lloyd

Teresa Pearce

In the absence of the Chair, Karen Bradley was called to the Chair.

________________

Examination of Witnesses

Witnesses: Peter Mucklow, National Director for Young People, Education Funding Agency, Councillor Shona Johnstone, ViceChair, Economy and Transport Programme Board, Local Government Association, Michele Roberts, Head of Apprenticeships (1624 year olds), National Apprenticeship Service, and Judi Baxter, Director of Provider Performance, Skills Funding Agency, gave evidence.

Chair: Welcome to this morning’s session. I must start by apologising on behalf of our Chair. Dame Anne Begg is unfortunately not very well at the moment and not able to be here, so I am chairing in her absence. Harriett Baldwin would like to make a declaration.

Harriett Baldwin: Thank you, Chair. As a board member of the Social Investment Business, a number of our investees will be pitching for Youth Contracts, so I would like to just put that on the record, please.

Q152 Chair: Before we start with questions, could you perhaps introduce yourselves for the record, starting with Michele?

Michele Roberts: Michele Roberts; I work for the National Apprenticeship Service and I currently head up the Apprenticeship Grant for Employers under the Youth Contract.

Judi Baxter: Good morning. I am Judi Baxter; I am the Director of Provider Performance at the Skills Funding Agency. I have responsibility for allocations, contracts and performance management.

Peter Mucklow: Peter Mucklow, National Director for Young People at the Education Funding Agency, responsible for funding 16-to-19 learning.

Shona Johnstone: Shona Johnstone. I am ViceChair of the Economy and Transport Programme Board at the Local Government Association. I am also a County Councillor in Cambridgeshire.

Q153 Chair: Thank you very much. If we could start by looking at how the Government is co-ordinating the Youth Contract measures, there seems to be confusion, particularly from small business. In the evidence that we have heard, they find the employment and skills provision confusing; they don’t know where to start and they don’t know where to go. Do you sympathise with this view?

Peter Mucklow: In terms of employers there is a range of offers that are available to them now to encourage them and to help them to recruit young people into employment or into apprenticeships. It is clear that a number of these are new and are coming on stream, and clearly the Government is committed to trying to tackle the problem of youth unemployment and there is a range of measures. It is not surprising at this particular point that employers are getting used to a number of new offers. I think it is a transitional issue; it is certainly something the Government takes seriously, and they will want to monitor the views of employers and the impact of various offers that are being made.

Shona Johnstone: I would simply say that there are 33 different schemes spanning 13 different age boundaries, covering £15 billion. If that is confusing for young people and for employers, then we are not going to get the best value out of that funding that is going in.

Q154 Chair: If a small business were to go to their MP and ask where they should go to find out about this, where would you suggest they should go? Is there a single point of contact you would recommend?

Michele Roberts: From an apprenticeships perspective, we recommend employers visit our website, where we give information, advice and guidance to all employers in terms of who to go to and where to seek further support around apprenticeships in particular. That is where we would guide them. We also have our providers, who give them that information, advice and guidance. We also have a small business team, which has just recently been set up to offer some instant information to small employers that are phoning through wanting to understand a little bit more about apprenticeships before taking the leap.

Q155 Chair: Does anyone have any other thoughts about where we should suggest we send our small businesses?

Peter Mucklow: Chair, I think it depends what small businesses are interested in. While it is beguiling to believe that there would always be a onestop shop that would help every employer with all of their needs, many employers, including small employers, have existing links, for example, with a college and they may recruit young people who have been on vocational courses. They would naturally be involved in delivery; they may be providing work experience. Many employers have existing links and we would encourage them to expand on those existing links. Many would also have links with the local Jobcentre around advertising their vacancies. I appreciate there are many small businesses that find it difficult to engage with the system, whatever the system is, and the helpline my colleague mentioned around the National Apprenticeship Service is specifically designed to encourage and assist those employers to become more involved in offering high-quality apprenticeship opportunities for young people.

Q156 Chair: Would you like to see a single place, a website or something, where everything was listed, and we could say to small businesses: "Start there and you will find all the information links to work experience schemes, to wage incentives, apprenticeships"-everything found in one place?

Peter Mucklow: In terms of a website, as my colleague has mentioned, there are existing websites. However, I don’t think that many employers, particularly small employers, necessarily find out about information in that way; it is mainly through contacts, the existence of local networks and their peers. I think is important that we build on what already exists rather than necessarily trying to create another tier.

Q157 Stephen Lloyd: I had a meeting on Monday, as it happens, with the local Jobcentre Plus and a local employer. He is a very patient bloke, but he was really tearing his hair out because of what Shona has indicated. The very issue that we were discussing was that there are so many different variables and so many different funding streams, he didn’t know his something from his elbow. We were discussing this at the Jobcentre Plus, which leads me neatly into the next question. Jobcentre Plus has plans for its offices to act as youth hubs, with the intention that relevant agencies colocate to Jobcentres, with JCP district managers co-ordinating services locally. Without in any way giving you a leading question, I have to tell you that by coincidence that is what we were discussing on Monday and the employer just wanted somewhere where he could phone and find out what the hell to do. Also, he was an employer who I think is similar to quite a lot of SME1 employers; he was not that computer-literate. He certainly was not someone who was going to spend ages on the internet. Bearing in mind JCP’s plans, what are your views of that possible approach? Could we start with Michele, because the NAS has a key role in this?

Michele Roberts: In terms of Jobcentre Plus and the hub, NAS are working locally with the JCP offices to ensure that the apprenticeship offer is inside of that holistic approach for small employers, so that they are able to access and understand what apprenticeships are about and what the opportunities are. From our perspective, we do try to join up as much as we possibly can with key partners. Regarding the number of SMEs, we do have a high level of smaller employers accessing our website and moving through into our small business team, where the volumes are really quite high per week. There are about 90,000 per week that move through that system. It is really having a range of different offers, as you have suggested, for different types of employers-i.e. those that are computer literate versus those that are not. I do not think one solution can act as a onestop shop for SMEs, because they all work so differently at different levels.

Q158 Stephen Lloyd: I agree with where you are coming from. I suppose one of the challenges that the Government faces with something like this is that if, as the Government is doing, we are advertising very widely and aggressively the apprenticeship scheme, the Youth Contract and all the variables out there, for most SMEs-and I had quite a lot of experience of them before I got myself elected-it takes ages for them to hear. When they finally do hear, which I think they do, certainly on apprenticeships and Youth Contracts, then they kind of want to be able to just pick up a phone or whatever and ask someone, "What do I do?" That is one of the reasons why the DWP are beginning to think quite seriously, "At least we have the Jobcentre Plus to start putting them through the hub." I know the apprenticeships are up on the website, because I am aware you get a lot of employers on that, and that is good. My concern is with a lot of the others. Anyway, on to Judi.

Judi Baxter: I have a degree of sympathy, answering your earlier question about employers understanding where to go for the market. From the Skills Funding Agency’s perspective, we have an infrastructure, as you know, that is outwardfacing. They are based in local areas; we moved away the regional structure, and so they look in on the localism agenda, networking with local Jobcentres and certainly the employers and providers.

One of the things that we were talking about yesterday at our leadership meeting internally was about how we can be stronger in terms of messaging to try to be one of those routes in for the employers. Of course, we have a network of about 1,000 providers, colleges, training providers and other types of providers, but the employers in those tend to be the large employers, not the small employers. The challenge that we realise we have is about how in that localism agenda-and we network with Jobcentre Plus, the DWP, with the local authority, and try and understand the Core Cities agenda-we can advocate and be more of the voice to make sure local employers also understand.

Q159 Stephen Lloyd: Do you think then, within that answer, that the direction of travel, looking at the JCPs being hubs, is a direction of travel that despite the complexity you would support?

Judi Baxter: I think the hubs themselves, whoever administers them, if that is a place that local employers feel they can go and get all of the information, would be a good thing.

Peter Mucklow: From the Education Funding Agency’s perspective, we are certainly all in favour of Jobcentre Plus being more effective as a source of information for employers. We also need to consider sources of information for young people too, and many Jobcentres will not necessarily have access to information about all the education and training opportunities that are available locally. We might expect young people to be approaching schools, colleges, training providers and their local authorities for information about the opportunities for them. In terms of small employers though, we are certainly all in favour of better information and signposting from local Jobcentres.

Shona Johnstone: The crucial question is ensuring that services are joined up locally. I would say that I think local authorities can often be the glue that links the providers of training and education with young people themselves. Jobcentre Plus may well be a good hub, but I think we should also ensure that, if local authorities can commission the services, as they have done through the Youth Contract in Liverpool, Leeds and NewcastleGateshead, we have a very good understanding of what the local market is.

Q160 Glenda Jackson: Taking it back a step-apologies for this-what is the definition of local? Is it distance? Is it the small and medium-sized businesses that approach some kind of local centre? We hear this all the time about local businesses. You mentioned local authorities. My constituents have two local authorities; they don’t necessarily always work together. Is there is some defined localism where the funding is meeting that kind of local need?

Shona Johnstone: I think there are a number of definitions that you could use. For example, you could use the travel-to-work area as a definition of local, but I think it is about the local authority area. I can quote an example of two towns in the north that are very close together, only a few miles apart, where youth unemployment in one is 10% but in the other it is 25%. It is about those local areas being able to respond to the local need, so it does bring it down to a very local level-the local town.

Judi Baxter: I would agree. I think there are various definitions in terms of local. Sometimes it is personal or very subjective to the individual about what they think is local to them. We are doing some work at the moment with BIS trying to understand Core Cities, and again there are lots of different cities, so we could ask the same question about trying to understand the impact of the funding in a core city and how much is actually used by the local employers and learners who live in that area. I would agree in terms of different definitions; it depends how you want to look at it.

Q161 Glenda Jackson: This also affects the young people, doesn’t it? If I look at my constituency, what they regard as local is a very narrow area. The idea of moving out of that narrow area is something that they cannot actually get their heads around, so there seems to me to be work here in defining what is local, certainly if money is attached to it to get people into it. Are we doing enough?

Judi Baxter: As I and colleagues have said, because of the different definitions, I am sure there is always more that we can do. As I said, I think because it is subjective and, as you alluded to, some young individuals would define their own local area as how far they are prepared to travel and what they think is reasonable or unreasonable in terms of school, college or work. I am sure there is always more that we can do in terms of what that means and work across in terms of money, information, support, delivery of training and education services in those areas.

Q162 Stephen Lloyd: Because of the changes that have been taking place in Jobcentre Plus over the last couple of years-I am getting back to the hub for the Youth Contract-in your current experience do you believe that Jobcentre Plus has either the capacity to co-ordinate and manage a hub for the Youth Contract or, on current basis, the skill set?

Michele Roberts: As my colleague indicated earlier, whilst I know under the Youth Contract there have been additional resources put in place through Jobcentre Plus, I think we need to bear in mind the whole product portfolio that Jobcentre Plus members are trying to pass to individuals and to employers around what services are available to them. In terms of product knowledge, they would not necessarily have the level of product knowledge around apprenticeships, for instance, from our experience, in terms of what they would communicate to an individual or even the employer in terms of how best to move on in the apprenticeship field. It is a challenge, but I think it adds in terms of understanding how, from a co-ordination perspective, we can join forces to try to give a more enhanced or better service.

Q163 Stephen Lloyd: As a signpost, in a way.

Michele Roberts: As a mechanism for that route, yes.

Q164 Stephen Lloyd: Does anyone have anything particularly to add to that?

Judi Baxter: I find it very difficult to comment on another organisation’s structure and capacity in terms of capability of individuals because I do not know enough about that infrastructure. What I do think is that there are, as you alluded to earlier, a number of different opportunities for employers and young people in terms of the routes that they want to take. I do think it will be much more about very clever co-ordinating and making sure the right people with the information are held to account as being available to give that information.

Shona Johnstone: Overall, nationally, there is capacity, but the problem is that it is very fragmented because of the different funding streams. I would refer you to the LGA’s Hidden Talents report, which has a very good map and diagram of all the different funding streams that are coming forward. Because it is fragmented, some areas are overprovided and in other areas there is a gap, but I would say that overall if you could bring that together in narrow streams of funding then the capacity would be consistent.

Q165 Stephen Lloyd: Chair, I would be interested, as I am sure colleagues might be, if we could get a copy of that from the LGA.2

Shona Johnstone: Yes.

Q166 Stephen Lloyd: Moving on, because there are a lot of questions to get through, do you agree with the Centre for Economic and Social Inclusion that there is a strong case for a single government agency overseen by a dedicated youth employment Minister covering all the employment and skills needs of 16 to 24-year-olds? I will go to you on this one, Peter, because you did not have an opportunity on the last one.

Peter Mucklow: Over the years there have been many different government agencies working in the employment, education and skills field, and I have worked for many of them myself. I would be sceptical about the magic bullet of Whitehall reorganisation as a cure for youth unemployment. What I think is important is that the national agencies-the NAS, Jobcentre Plus, Skills Funding Agency and Education Funding Agency-are clear about their respective responsibilities and discharge them well. We think that is the priority. Clearly Whitehall reorganisation is above our pay grade to comment on substantially, but our priority is to ensure we have clear responsibilities and we get on with delivering action on the ground.

Q167 Stephen Lloyd: That is a very interesting answer and you may well be right. Could I just pin you down a wee bit, though? Obviously, a possible counterargument for what you say is that, "Ah, well, but the different groups are going to be protecting their patch-they would say that." I am not saying I agree with that. I am just saying that sometimes can then be put in the pot. How would you respond to that?

Peter Mucklow: I think that with the extent of youth unemployment currently, there is plenty of business for all of the government agencies currently with a role in this. I would say that there are structured arrangements for co-ordination. For example, I sit on the national programme board, which manages apprenticeships, although that is a NAS lead. On the Youth Contract for 16 and 17-year-olds, the DWP is represented on our commercial board; the Department for Education is represented on the board that governs the 18-plus Youth Contract. In terms of the Government’s overall strategy to improve participation, officials from DWP, BIS and DfE meet monthly to monitor the implementation of participation strategy. We believe that there are good working links there to ensure co-ordination where it is required.

Q168 Stephen Lloyd: Okay. Looking at Judi and Michele-single Minister, single Department?

Judi Baxter: Again, I agree with Peter to an extent on this. It is above my pay grade too; I am not sure about commenting on the Whitehall infrastructure. What I do know is that having been around training and enterprise councils and then the early inception of the LSC3 and survived that, and still into Agency, where we then split, it does not change the impetus or the onus on individuals working in those organisations to continually work across. Regardless of what it looks like, we as the Skills Funding Agency have to work with DWP anyway because we deliver the OLASS4 programme. But equally we work very well with the EFA because we are also custodians and deliver the 16-to-18 apprenticeships for them on their behalf. My view would be it is not necessarily about what comes through in terms of the single direction but about the individual agencies being held very closely to account.

Q169 Stephen Lloyd: Do you have anything particular to add to that, Shona and Michele, or do you broadly agree? Okay, we will move on through the list of questions. Looking at the LGA, Shona, the LGA view is that the Youth Contract measures further complicate an already over-complicated policy area, which we have kind of touched on this morning. Just as a straight question, are you not persuaded by the argument that in the short term at least the Youth Contract approach of building on a range of existing support allows for swift implementation at relatively low cost?

Shona Johnstone: I think the Youth Contract does expand the opportunities for young people. From that perspective it is very welcome, but I think the key question is whether it is targeted in the right way in the right areas. Is there a risk that we are putting funding into opportunities where there is less need and not into the areas where there is the most need? Again, I come back to the role of local authorities, in terms of knowing their area, knowing their schools and knowing their providers, of being that glue in the skills mismatch between what employers need and what the providers are putting through the system in terms of young people and the skills that they are delivering.

Q170 Stephen Lloyd: On the back of that, in your view should simplification of youth employment and skills policy be a priority for central government?

Shona Johnstone: Yes.

Stephen Lloyd: Good-nice and short.

Q171 Teresa Pearce: Can I just ask what I think is quite a basic question? You have a number of young people who are not in education, employment or training (NEET) who want and need it; you have lot of employers who also don’t know how to get the funding and to engage with those young people to get them into employment. So you have these people here who need to be with these people here, and what we are hearing is both those groups of people don’t know how to get together, and yet in the middle we have all these layers. You have just nodded yes to simplification, but how do we get to all these layers that, rather than linking one set of people to another set of people, seem to be almost like walls in between. You have said you are not sure about a Minister. If there were one thing you could do to make these two groups of people know that they exist and get together, what would it be? Shona, you are waving.

Shona Johnstone: This is where the Government has given Liverpool, Leeds and the NewcastleGateshead area the contract to commission the Youth Contract. We think that could be replicated across the country, allowing the local authority to commission.

Q172 Teresa Pearce: So you think you need to give the local authority power and funding. Do you think that would bring those two groups of people together in a much more simple way?

Shona Johnstone: We would like to see local authorities being in a position where they can commission the service provision that is needed in their area.

Q173 Teresa Pearce: So the local authority would sit on the top and commission all these other people that they navigate?

Shona Johnstone: Or, at the moment, bringing partners together, because that is not in place across most of the country.

Q174 Teresa Pearce: You see our frustration.

Shona Johnstone: Yes-bringing the partners together to actually ensure that what is being delivered in the area is what is right for the area.

Teresa Pearce: Local again.

Q175 Stephen Lloyd: I am following Teresa’s direction, and I was going to ask whether either of you has any response to where the LGA are coming from. What are the dangers?

Peter Mucklow: Local authorities already have a very important role and substantial powers. For example, they have a statutory duty to encourage young people to participate in education or training; to maintain contact with young people who are not in education, employment or training, and encourage them to participate; and to monitor the numbers of those not in education, employment or training. It is fair to say that there is a big variation in the extent to which local authorities discharge those duties well, and there are big variations in the proportions of young people who are not in education, employment or training, even between areas with similar economic circumstances. However, we do think that local authorities have a very important role in the Youth Contract, in identifying groups of young people, and indeed individual young people, who would benefit from it and ensuring linkup with other provision.

I would disagree with the Councillor on the question of whether who procures the provision locally is so important and would make such a difference. I do think that where a local employer-if we take the simplest question-wants to improve their small or medium-sized business and help a young person by recruiting them into their business, then it is clear the first port of call is the Jobcentre. They can contact the Jobcentre and those links already exist. Similarly, they may well have links with a local college-again, another source of young people who are graduates-from that sort of provision.

I think that the picture that there are huge barriers in the way is perhaps an exaggeration. There are lots of forms of help, which is probably something to be welcomed-I would rather be here defending the fact there are lots of forms of help and how we can join them up than that there are not sufficient forms of help in the first place-but I think that there are mechanisms and relationships locally that can put together young people and employers who want to get together.

Chair: That leads very neatly on to the next set of questions we have on regional variations in responding to local labour markets.

Q176 Glenda Jackson: Essentially, it is the variations at a regional and subregional level. How do Youth Contract measures take account of this to ensure that funding is targeted at youth unemployment and NEETs?

Peter Mucklow: Can I answer first in relation to the Youth Contract for 16- and 17-year-olds? That is aimed at all 16- and 17-year-olds who are not in education, employment or training and have no GCSEs at grade A* to C. If you are in that category, you are most likely to have long periods not in education, employment or training, and have long periods of unemployment as an adult, and all the scarring effects. The distribution of those young people is very varied. You may be one of a handful in your town; there may be strong concentrations in particular areas.

If you are in that position, wherever you are you are still not in education, employment or training, and by a payment-by-results approach, we hope to incentivise providers to seek out and find those young people with the help of local authorities, who should know them and where they are, and to ensure that they are provided for. The nature of that provision will be different in different areas according to different needs. With a payment-by-results system, the incentives are there for providers to find young people, to innovate and find the right ways to get them into an education course, a training programme or a job with training.

Q177 Glenda Jackson: Isn’t that two separate actions? I am using "actions" in a very minimalist way. Is there funding available for local authorities and the regional authorities to try to find these young people? Is there then another funding stream if they do find them that is actively attempting to attract them into the system? We know the most difficult to reach are not being attracted into the system.

Peter Mucklow: Indeed. The purpose of the Youth Contract is to provide that additional support to attract into the system young people who are not in the system. There is funding for local authorities to maintain contact with young people and to monitor those who are not in education, employment or training through the Early Intervention Grant, so there is funding available for local authorities to support that statutory function.

Q178 Glenda Jackson: How is that divvied up? Is it a numerical decision? Who gets what?

Peter Mucklow: In terms of the Early Intervention Grant, that is distributed to local authorities on the basis of a formula around population and needs. In relation to the Youth Contract, the Youth Contract has been divided, as I think the note that was provided to the Committee set out, into 12 regions of the country and distributed according to the analysis of the numbers of young people who are NEET in each of those regions. There is money available for the successful providers for the Youth Contract to seek out and help the young people who are NEET and do not have good GCSEs in that region, wherever they may be.

Q179 Glenda Jackson: Across the whole region?

Peter Mucklow: Across the whole region.

Q180 Glenda Jackson: How is that then divided down? There will be huge variations within rural areas and even within cities. I know in London there are huge variations between wards in boroughs. How is that dealt with?

Peter Mucklow: Indeed. The way the Youth Contract works is that a lead contractor or prime provider at regional level will have responsibility for managing a supply chain, which will include many smaller, more local and localist agencies. This is a black box approach; it is not one where Government has said, "This is how you must do it." It has set the objectives. The local agencies’ responsibility is to find young people who are not in education, employment or training and get them into education, employment or training, and they are paid by results. It is for the supply chain within each contract to work out how they are going to work with local authorities and others to identify the young people to contact them and reengage them.

Q181 Glenda Jackson: We have heard evidence that that supply chain is not necessarily getting all the way down to those smaller agencies that specialise, for example, in working with young people who may have special educational needs and may have other difficulties. What is the watch on that? Young people are not homogenous in that sense. Earlier, you were talking about employers putting up for employees; they are not going to put up for young employees that they think might be difficult, so there is already that division. How is it going to work as far as the regional shape is concerned? It sounds as though it is a vast number of people looking at it but not actually delivering anything at the end.

Peter Mucklow: There is a significant proportion of young people in this population group who will have a learning difficulty or a disability of some nature. That is absolutely right. What we have expected in the procurement process is that the successful providers will have expertise in meeting the needs of those young people because they are within the client group. Although we have not yet finalised the awards to the bidders, I can say that, having seen some of the bids, a number of them include specialist providers that would have expertise in helping young people with learning difficulties and disabilities of a more severe type. We would expect many of the agencies who would be successful in the Youth Contract already to be providing services to young people with learning difficulties and disabilities, who, as you say, are significantly overrepresented in those not in education, employment or training, and with no GCSEs at grade C and above.

Glenda Jackson: How is that funding going to kick off this process? That is what I am not quite clear on.

Chair: We have quite a lot of questions coming later on the 16 to 17-year-olds.

Glenda Jackson: Have we? Sorry.

Chair: It’s okay, Glenda, don’t worry. Perhaps we can leave that for then.

Q182 Glenda Jackson: I will move on then. This is directly to Michele: you may have said it already, but what is actually happening to encourage the apprenticeships for young people in these schemes, youth unemployment and NEETs?

Michele Roberts: We operate the Apprenticeship Grant for Employers, which is a programme aimed at 16 to 24-year-olds under the Youth Contract. We are working locally with local authorities, with the Local Enterprise Partnerships as well as the Core Cities to try to join forces where they have funding and we have funding as well to try to ensure that employers can access a whole package. What we are doing through the Apprenticeship Grant for Employers is offering a £1,500 incentive payment to the employer in terms of taking on that first apprentice, and particularly if they are a new employer. Under the Youth Contract we are encouraging 20,000 young people to take up an apprenticeship opportunity.

Q183 Chair: Could I just ask something here, if you don’t mind, Glenda?

Glenda Jackson: Not at all.

Chair: What are you doing locally? Clearly, each area has its own difficulties. Are you making active contact with local chambers of commerce, with schools and MPs, for example? Are you actively contacting the MPs, asking for a meeting and whether you can talk about what you have picked up are the issues in your area?

Michele Roberts: From the NAS perspective, we are split what we term divisionally. We have resources out across England, where our colleagues will be contacting local MPs to encourage them to participate in the apprenticeship programmes locally. More importantly, divisional colleagues are working proactively with local newspapers and radio to try to encourage young people to come in and get information, advice and guidance around apprenticeships, as well as working with ambassadors. We have a network of employer ambassadors as well in each of the divisions. What they try to do is try to encourage young people by going back into schools to encourage them to move into an apprenticeship by giving them experience from an employer’s perspective of the benefit it could bring to that particular individual. We also have apprentices themselves that are going back into schools to try to encourage young people to consider an apprenticeship as a viable option as well when they leave school.

More importantly, around marketing for Apprenticeship Grant for Employers, we do have what we call "100 in 100 campaigns" taking place across the country and I think a number of MPs have been involved in that. What that will do is try to seek 100 apprentices in 100 days. That is where we do involve local newspapers-and when I say local, I mean very local-in terms of publicising those events and encouraging individuals to come down as well as creating those employer opportunities around apprenticeships, because it is a balancing act, particularly with apprenticeships, because it is a job with training. We need to ensure that we are creating the apprenticeship opportunities from employers into which young people can then move. There is a range of different ways in which we are trying to engage with both individuals and employers to acknowledge takeup and understand how they can be part of that process.

Q184 Glenda Jackson: How does that approach tackle the most difficult young people either as far as the Youth Contract is concerned or in NEETs? I don’t just mean difficult in the sense of the initial difficulties-we all know what they are-but to go back to my point, young people are not a homogenous group and there are huge variations within that. Does it all come down to the employer saying, "Oh, yes. I’ll take that one but I won’t take that one"?

Michele Roberts: It is down to employer choice. At the end of the day, the apprenticeship is defined by the employer in terms of how the employer wants to see that individual progress inside of their own organisation. We do have a number of other programmes, which I do not know whether you will come on to later, that try to help support individuals in terms of getting those qualifications and skills. It is also about understanding those individuals that do have learning difficulties and disabilities in terms of how we target those more specifically in terms of encouraging them to be more skilled and to take up opportunities in that respect.

Chair: You are quite right. We do have detailed questions on that coming up, so perhaps we can just carry on with the local labour market and the concerns with that, Glenda.

Q185 Glenda Jackson: Essentially, this is for Judi. Some witnesses have told us that skills provision is not sufficiently aligned with the requirements of local labour markets. I will go back to my definition for localism in a minute. What steps is the Skills Funding Agency taking to ensure that skills training provision is matched with local job vacancies?

Judi Baxter: As an agency, we are responsible for about £3.5 billion worth of adult learning, training and education funds. They are split across a number of different funding streams that have different purposes. The bulk of the money is actually for the target group of 19 to 24, particularly NEET groups. The way in which the process works in terms of procurement and actually working with the training provider network is that, of the just over 1,000 providers we work with, it is done on the basis that some of them are national and have a number of centres across different localities. I say training provider network in its broadest sense, so I mean further education colleges where there might be some local authority who delivers for those as well, independent training providers, large employers, etc. Some, like further education colleges, are right in the heart of that local agenda. The way that the allocations methodology works is based on the fact that 19 to 24 is the target market of the young people that have to be recruited. We also do other incentives and other initiatives on the back of that, very specifically targeting NEETs. For example, we have just done a NEET procurement round, so people had to specifically bid and say on their bid how they would target that local market of NEET 19 to 24-year-olds.

The way that it works at the moment is that we have within England just over 1,000 providers who are all servicing their definition of the community to ensure that the target market of 19 to 24 is their priority. The funding flows are based on the learners that they recruit. In either the funding rules or the terms and conditions, absolutely paramount to the provider is that they have the business development role, the sales force role or whatever role you call it and have to engage with the local employers. They have to understand the local employers; they have to understand the demographics of the young people and of the employers. They have to understand the skill set-i.e. different regions and different subregions have different occupations and different sectors that are growing. It is for them to do that with that money to be able to target and respond to the employers.

The idea is that targets funds on the 19 to 24-year-olds, and we say it over and over again. Our local people, as I said, who work out the relationship teams, are constantly giving the message to providers, "That’s your target market." We are monitoring; we have a look at the individualised learner record in terms of the numbers of people that are coming through. We can track how they are doing to say, "Absolutely, you must have another push. You have to keep doing that." Linking up with employers, and remember we contract directly with some of the larger employers, is about understanding their sector; it is about understanding what it is they are looking for to match the individual for them.

Q186 Glenda Jackson: And again-you say what you want to say, and I will think of another question while you are doing it.

Peter Mucklow: I just want to add something from a 16 to 18-year-old funding perspective. We fund further education colleges through the Skills Funding Agency, with quite a lot of vocational and occupational provision for 16 to 18-year-olds, and we trust those colleges to put on provision that has a link with the local labour market and to build up links with employers. We would be concerned if the suggestion were that they ought to be slavishly aligning their provision with whatever the local job vacancies happened to be. If we take construction as an example, the construction sector is having a difficult time; there are not many vacancies. If we saw every college in the country shutting down its construction provision, that would be short term and would look a pretty poor decision in a few years’ time.

In relation to 16 to 18-year-olds as well, even those who are following vocational programmes, as part of their initial education and training they are doing qualifications that involve transferrable skills. Many of them are doing English and maths, and it is getting them to a level of employability and we should look at that around a range of economic sectors, not solely in the sector in which they happen to be training. We think that initial education and training-and, yes, vocational training-in 16 to 18-year-olds is really important, but there is a value in that training even if there is not a vacancy for all those young people at the end of that course in the local labour market.

Q187 Glenda Jackson: Sorry, could you give me a bit more detail? You say you are very concerned that colleges, for example, because the local job market does not have any construction jobs at the moment, should not take that out of their syllabuses because of the future. What are they taking out now and what would you encourage them to take out? Is that part and parcel of your brief when you do all this?

Peter Mucklow: It is their role. They have to recruit young people; they have to publish information about the destinations of their young people; and they have to show young people and parents what the destinations are and illustrate the likelihood of further education, higher education, and employment in other sectors or employment in the sector in which they are providing that training. Since they are businesses, they have to attract young people and have credibility in the local labour market. It is their role to make those decisions. The Education Funding Agency is not a planning agency in the sense of: "Less hairdressing, more engineering." We would not say that to a college.

Q188 Glenda Jackson: Why? Why wouldn’t you say it? The whole thrust of what is happening at the moment is for changes across the whole range of education and qualification.

Peter Mucklow: The approach, certainly of the current Government, is to devolve more responsibility for planning the pattern of provision to providers themselves, who know young people and the labour markets best, and to provide incentives through the funding system. If you are a college that is providing high-quality education and training that leads to good destinations for young people, you will attract more young people. If you are not, then you will attract fewer. The number of places follows the pattern of recruitment and takes into account retention. We are trying to set up a system whereby there are incentives for providers and colleges to succeed, but the judgments, as independent autonomous institutions, are left to them.

Judi Baxter: It is the same for us as an agency. Before we were split as agencies, the remit of the Learning and Skills Council was as a planning body. Of course, when the agency split and created the Education Funding Agency and Skills Funding Agency, our remit was no longer that of a planning body. We are a funding body. Actually, as part of the ministerial steer, which I believe is right, the onus is put much more on to the providers that are delivering in those local areas to understand the marketplace. We set out which qualifications are eligible; we set out the funding rules; we set out the terms and conditions in terms of what we expect contractually. But under the freedoms and flexibilities, particularly around an Adult Skills Budget, we say, "You should know your marketplace; you should know the demographics of young people; you should know the employers; you should know what the future is in terms of what you want to offer, and you should be matching that."

Q189 Glenda Jackson: Do you monitor that?

Judi Baxter: Yes, absolutely.

Q190 Glenda Jackson: What are the regional variations in that, or do you not yet have enough stats to be able to come up with a figure?

Judi Baxter: It is a different way of spinning the information. We can do it, but we also moved away from being a regional structure to a national structure with a local presence. But we have the data, so if you want me to I can provide that. As a matter of course in terms of monitoring, we have different monitoring arrangements for different types of sector. For GFEs, further education colleges and some local authorities, we will monitor what they do each month but not necessarily change the pattern of what they are trying to do, because they are big institutions with infrastructure and staff. For private training organisations, who tend to be much smaller and fleet of foot, we can resolve to adjust their money in year. What we are constantly trying to do is move money around where we can see there is demand. Our job as a funding body is to recognise what is happening in terms of delivery for the target market and keep moving the money around within the budget to make sure it is reflected wherever it is most needed.

Q191 Glenda Jackson: You have talked about large bodies-local authorities-or smaller agencies, and within the 19 to 24-year-old target area, which is the one they like best? Which is the one they find it easiest to say, "Yes, I want to be part of this," to?

Judi Baxter: In terms of the type of individual, do you mean?

Glenda Jackson: Yes. I can imagine a 24-year-old being told that they should be going to some kind of college saying, "No, I’m 24; I’ve got kids. I’ve got a family. I’m not going into that."

Judi Baxter: It depends on what provider type you are, as well, as to what cohort or what type of individual you are used to dealing with. Again, like Peter was alluding to, we have different providers: some who specialise in additional learning and learning support-a very specialist market. We have some who focus on what they would call the elite market of the returners who might have the right capability, the right attitude and the right skills, and they just want to place them very quickly. It depends on whom you talk to. We would not have a NEET problem if everybody was easy, so I suppose the easiest type of individual would be as I set out: those who have the right skills, the right attitude and are actively looking for either an apprenticeship or at least to get back into adult learning to then use it as career progression.

Q192 Teresa Pearce: One of my local colleges has a construction arm. I met a number of young people who have been there to do the first two years in bricklaying, carpentry or whatever, but in the third year part of their qualification is they have to get an apprenticeship, and if they don’t, then the whole thing falls. It is very hard for them to get an apprenticeship. In that circumstance would that college still have got full funding for the first two years even though the end result was not a qualification or a job?

Judi Baxter: Yes, in that if the individuals are eligible-i.e. they don’t already have a Level 2-under the Adult Skills Budget we give money to those providers who have gone through the process and are approved training organisations. It is for them to administer and use their Adult Skills Budget-to determine how to spend it. Don’t forget, we set out the eligibility. Without getting too technical, within the Adult Skills Budget there are different types of provision that they could offer. There is a classroomtype provision; there is an other-workplace type of provision, which is kind of the hybrid; and then you have apprenticeships. The reason we do that is because not everyone from day one is going to be an apprenticeship-not ever. It is not right for everybody.

What we are trying to do in the adult market is cater for those individuals who absolutely want to come back to college or a training provider and do some classroombased activity before they are then ready for the world of work. They might do the classroom activity to get them to a Level 2 and to get them used to turning up, getting in, and to understand better the occupation and the sector that they want to work in. At the point at which they are employmentready-because of the employment requirements around an apprenticeship-we could say, "Actually, there you could be in an apprenticeship."

A lot of the vocational qualifications traditionally still veer to aspirations around apprenticeships, but the apprenticeship rules are you have to be employed. They would not have been funded as an apprentice before that.

Q193 Teresa Pearce: I met a number of young men, in particular, who just felt that they had done what they were meant to do; they had done these two years and they had tried, and now there was no employer that would take them on as an apprentice and it was all a waste of time. It turned them off rather than brought them forward. In fact, they were more disgruntled at the end of two years than at the beginning. I just don’t know where the lever is to join that up.

Judi Baxter: I can imagine the frustration from an individual’s perspective, but that goes to what Peter and I were saying about the responsibility of the provider being about understanding that cohort and understanding the labour market. They should have been networking and working with employers ready to receive the people coming through if ultimately apprenticeships are where they want to be.

Q194 Teresa Pearce: It seemed to me that the college had felt, "Oh, well. We’ve done our bit. They need to find this apprenticeship and they haven’t managed to find it; it’s terrible, isn’t it?" and I thought, "Well, you’ve had your money. What about the end result? What about the outcome?" Like other MPs with similar experiences, I found myself trying to link them up with people I knew were looking. I am acting there and no one is paying me to do that; it is part of my overall job of looking after constituents. It seemed to me a failing in the college.

Michele Roberts: What we do as well with colleges and providers is try to promote the apprenticeship vacancy website, so that will help individuals to seek apprenticeship opportunities. Whether it is local or perhaps a little bit more distance that they need to travel in terms of getting those employment opportunities, then that is a source of information that we try to encourage providers and colleges to use, to access and to pass on to their learners.

Chair: That leads very neatly into a question about careers advice.

Q195 Glenda Jackson: Absolutely. The CBI’s view is that careers advice provided by schools is "often outdated, unpersuasive and sometimes just plain wrong". In your experience, is this a fair reflection? What steps could be taken to ensure that young people receive good quality careers advice that takes account of local labour markets?

Peter Mucklow: From this September the Government is introducing a new statutory requirement on schools that they must secure independent and impartial careers advice for all young people in years 9 to 11-i.e. the 14 to 16-year-old group. I think that is a key measure because schools will need to secure that careers advice from a source other than the school. That will be important in terms of impartiality. The Government is also consulting on extending that requirement to year 8s, the 13-year-olds, and also to years 12 to 13, i.e. sixth formers, in schools and in colleges, so there are significant measures being taken.

Ofsted is also carrying out a thematic review of careers guidance and reporting that in 2013. Of course, local authorities, as I mentioned earlier, do retain the duty to encourage participation, to assist vulnerable young people, to ensure all young people aged 16 to 17 do get an offer of a place and to monitor their participation. They may, and indeed many do, secure careers information, advice and guidance as part of that.

Q196 Glenda Jackson: Does anybody else want to come in on that before I ask a couple of other questions?

Michele Roberts: In terms of NAS, we have been engaged with Connexions previously and now we are engaging with the National Careers Service. We have developed resources for teachers and careers advisers to use, and we have toolkits and resources, both through our website and looking to link up to others, to ensure that there is appropriate information and advice around apprenticeships so that we can signpost better. Really, we are trying to have a presence around locally how we build that picture up around information, advice and guidance. This is as well where the ambassadors and the apprentices going back into schools can help build that picture for those young people that are currently in schools, to offer further information about what an apprenticeship is about, how they can benefit from it and whether it is a viable route for them.

Judi Baxter: As an agency we run the National Careers Service for adults and we run the helpline. So there is an awful lot of marketing and wiring behind the scenes about the information that is available to individuals. I think it would be worth looking in from the outside at the new statutory requirement and the new youth help desk response, with the outlooks, and what is similar and what is working.

Shona Johnstone: I would simply support what is being said about the new duty and that councils still have a role in supporting vulnerable young people and those who do not get school support. Councils are supporting schools in developing that independent advice.

Q197 Glenda Jackson: Someone said to me that we start much too late with careers advice for young people. Do you have any opinions on that? I can remember when I was still at junior school being taken on a day trip to see a local factory or a local brewery, or some form of local industry. All that has gone now, as indeed the industries have from where I was brought up. On that idea of linking earlier, if we are still looking at this local element, do you have any opinions or ideas whether it could or should work?

Peter Mucklow: I support the idea of earlier exposure to the world of work for young people. However, with the current youth labour market, many fewer young people are going into jobs at 16 and 17. Many more are waiting until 18 or subsequently, or having to wait until 18 or subsequently.

Q198 Glenda Jackson: They are all going to, aren’t they, in a couple of years’ time?

Peter Mucklow: Therefore, I think there is particular value when young people are a little older, and nearer the point at which they would be entering the labour market, in having more structured exposure through work experience as part of post16 provision. That was one of the recommendations of Professor Alison Wolf’s report into vocational education for 16 to 19-year-olds. The Government is currently consulting on how best to take that forward. I think there is a role for it being earlier; however, there is also an argument for something more structured at a time when young people are closer to making the actual choices around jobs and careers that they are going to make.

Q199 Glenda Jackson: But do you think schools are the best place for this? The CBI is very critical of schools, and you have told us that they are going to have to offer independent careers advice. I would like to know who will qualify as independent as part of that. Is there not a dichotomy between the purpose of a school and the world of work? They don’t necessarily match, do they?

Shona Johnstone: The crucial issue is that young people have the skills that will enable them to get into the workplace, whatever that workplace is, so they have the critical maths and English skills, but, more than that, they also have the skills that are around communication, around simply being able to get to work at the right time, and knowing the appropriate sort of dress that you wear for work. It is those sorts of generic skills that mean whatever you choose as your career, you have the basis to be able to adapt.

Chair: Councillor Johnstone, I am very aware that you need to leave by 11, so perhaps we can move on to some questions about apprenticeships and we can cover some more of those issues.

Q200 Andrew Bingham: Obviously NAS have got various objectives in terms of apprenticeships, but where do you put reducing longterm youth unemployment in that scale? Is it top of the list or halfway down?

Michele Roberts: For NAS, everything is a priority at present. We have a key objective around encouraging individuals into apprenticeships and increasing the number of apprenticeships. Youth unemployment is obviously in there as a target group, as is college and school leavers. We need to work with other agencies to ensure that, one, we have the right programmes but also that employers have the opportunities available for those young people to go into. In terms of priority, I would say at the moment everything seems a priority to us.

Q201 Andrew Bingham: Talking about young unemployed people, to put them on to apprenticeships, what are the specific difficulties with that particular group? Is it that employers are reluctant; what do you find are the barriers or the hurdles?

Michele Roberts: Some of the barriers have already been explained. From an individual’s perspective, it is the fact they have low qualifications and skills, they tend to lack some of the softer skills as well, in terms of enthusiasm and motivation, that can be considered off-putting to an employer if they turn up to interview. There are some of those areas that are barriers from an individual’s perspective.

From an employer’s perspective, effectively they are taking on a new recruit, so they want to be able to see an element of enthusiasm in that individual to be able to take them on into an apprenticeship. Setting aside what I have said, apprenticeships are set by employers, so they set the standard in terms of what they want and what they need in their workplace, in terms of the job roles. They really are the ones making the choice about those young people entering their labour force.

Q202 Andrew Bingham: For instance, if an employer is looking at an apprenticeship for somebody who has been unemployed a long time, do you speak to the employers and make them aware that there might be different sorts of people coming for this apprenticeship that will have different challenges, so they are prepared for the variety of applicants?

Michele Roberts: Back in 2010, under the Backing Young Britain campaign, we had a specific grant initiative targeted at NEETs, where we delivered 5,000 grants to employers taking on apprentices. That was a tough call, because it was 16 to 17-year-olds, and we had to ensure that the employer understood the engagement with the individual. From our perspective, the employer is the one that will be making the choice around the young person.

Q203 Andrew Bingham: The grant was targeted specifically if the employer took on young unemployed people, was it?

Michele Roberts: Yes.

Q204 Andrew Bingham: When was that, did you say?

Michele Roberts: That was back in 2010.

Q205 Andrew Bingham: Right, okay. Do you target the apprenticeship grant? Do you still have targeted funding?

Michele Roberts: In terms of the Apprenticeship Grant for Employers that we currently offer, obviously unemployed people is one of those key groups, but it is not a key target in the sense that is all we are focused on.

Q206 Andrew Bingham: We talked about the key objectives and you said that everything is a priority-I am not sure you can have everything as a priority-but do you have a proportion of these apprenticeships that go to young unemployed people, or is it just a question of getting as many people into apprenticeships as you can?

Michele Roberts: We have been working with the Skills Funding Agency in targeting 40,000 NEETs for this year in terms of taking up apprenticeship opportunities. We have 10,000 individuals undertaking Access to Apprenticeships, which is a scheme that helps individuals progress into an apprenticeship as well; that is aimed at unemployed people. But this is the first year in which we are seeking the findings of that programme as such at the moment.

Q207 Andrew Bingham: In support of the service, you have done a small business day with me in my constituency, but that was aimed at companies rather than people.

Michele Roberts: Yes.

Q208 Brandon Lewis: Some people have commented on apprentices and aiming at higher qualifications. Is there a risk that some young people could find them potentially unattainable or hard to get to? For example, some of the top companies who offer apprenticeships have an almost higher level of applications to availability than Oxford and Cambridge universities. Is that a risk that you are aware of and what can we do to deal with that potential problem?

Michele Roberts: I am not sure that it is a risk. At the end of the day, the apprenticeships are there because the employers are demanding them. Obviously the employers are stating which job roles and what occupational areas they want young people to move into. We are driven by the employer and sector in terms of what their needs are for the here and now, but also for the future. That is why we have a focus on higher apprenticeships as well in the system, not forgetting that we are lagging behind some of our European competitors as well, so there is a need to push up skill levels within the economy so that we can increase productivity overall. In terms of young people accessing apprenticeships, there is lots of opportunity for young people to do that.

We would expect the rest of the FE system to help support those young unemployed people that have not necessarily got the qualification and skill-set to take up an apprenticeship first time. We would look to them to help develop those profiles.

Q209 Brandon Lewis: With that in mind, would there therefore be an advantage in potentially looking at offering apprenticeships at a lower qualification level to get people involved in the programme in the first place?

Michele Roberts: As I said earlier, because this is employer driven, we do not get a sense that employers are asking for low-level apprenticeships. If anything we have a lot of intermediate or Level 2 apprenticeship qualifications coming through the system, which we are moving into Level 3 and higher apprenticeships. It is striking a balance and understanding where individuals are coming from and where employers need them to get to. We know that over the next 20 years those occupations are going to shift and change in terms of technical supervisory managerial levels becoming more available over time. It is really how you strike the balance in terms of what employers are asking for and what individuals currently have in the system.

Judi Baxter: One of the discussions we have had internally is sometimes we want apprenticeships to be all things to all people, and then you have the dichotomy of wanting it to be elite, in that you want it to be recognised and you want employers to want it. Actually, you do not want to weaken the brand sometimes by saying, "Anybody can do it." There is that constant tension about what is right for the target 19 to 24-year-olds in terms of good, credible alternative education other than school or sixth form college.

If you remember when I was talking about the Adult Skills Budget, apprenticeships are one aspect of the Adult Skills Budget. What we are asking providers to do is put on the training that is right for that individual. In some instances, absolutely because the Skills Funding Agency’s priority is 19 to 24, particularly the NEET cohort, one of the aspects we would say is for the provider, whoever is delivering that training, to work with the employer and say, "What is best for that individual?"

It is not necessarily about lower qualifications on the apprenticeships; it is about saying, "Can they do the good alternative credible Level 2, Level 3 and higher, and have a place with an employer, and therefore that is right for apprenticeships? Or should we bring them in-house and do some classroom-based training with them first? Should we do some other workplace learning to make sure they have at least the Level 1, possibly a Level 2, and some of the other functional skills before they progress?" For me it is always about career progression and making sure the providers and employers understand maximising that for the individual.

Q210 Brandon Lewis: If you just bear with me a minute-this is particularly for Michele, but I would be interested to hear from everybody-I want to outline something; I am playing devil’s advocate, and I would be interested in your feedback. Through this morning you have both made a lot of comments, and you keep referring to a phrase around the lines of, "The employers tell us what they need and they lead." I am going to come back to that, but one of the comments I get regularly-we have touched on this earlier on, Andrew mentioned it, and others-from employers and potential employers is the difficulty of understanding the system.

Michele, you made the comment about 33-odd schemes, 13 age groups: "What is applicable, what is right?" If a Government should, which I think we should, have the ultimate target of no youth unemployment, then the idea of an apprenticeship scheme in theory is to get more young people into work if they do not have academic skills or have a different leaning than pure academics and university degrees coming into the vocational workplace, and apprenticeships covering that. Some businesses have made the point-somebody made the comment to me a few days ago-that we have got a more regulated system for apprentices and things like that than even France, which seems an amazing situation to be in. We have bodies, organisations, and quangos, whatever you want to call them, sitting over our shoulders telling us what we can do, what we should do and what we cannot do, who we access and how we access them.

Is there a case for completely simplifying the system and looking at what we want to achieve with apprenticeships? If you want to achieve no youth unemployment, or at least much-reduced youth unemployment, in the short term and get more people into apprenticeships, rather than having all of these different schemes and the bodies overseeing them judging what is or is not good in terms of a qualification that qualifies, a business is going to want to take on an apprentice that they believe they can take through to be useful to that business, whether it is for two years, or for the 10 years they are with them as an employee, or longer.

With that in mind, would it be simpler to have a much more simplified system, where we simply say to businesses: "You can go out; you recruit who you want, where you want, how you want within this age group that apprenticeships apply to," and we leave it to the employer and the apprentices. The employer says, "In return for you pledging X amount of months or years to work for this company, at a reduced salary of X over and above normal salary rates, we will put you through this programme that will lead you to this qualification and this job opportunity at the end."

Other than somebody making sure that is followed through every two years, we leave them to do that contract between the two bodies: i.e. the employer and the employee, and not have other organisations sitting around on top of it, putting in layers of either costly bureaucracy or confusion and complication. We make it very simple; it is a contract between an employer and an employee, end of story.

Michele Roberts: To some extent that is what happens with those large employers that contract directly. They do offer some of that support and training and in-house activity for that individual to complete their apprenticeship programme. It is that agreement between the employer and the individual. But for the majority of smaller employers, because the training provider is part of that three-way conversation and support mechanism for the employer, it is really about how we ensure that that apprenticeship experience is a quality apprenticeship experience as well.

Q211 Brandon Lewis: Can I just pause you there, because you are talking about the smaller employers, and that is what I am particularly interested in? The big employers have HR teams; I have worked with them in the past-I understand that. It is the SMEs who continue to say, "There is too much; there are too many organisations and there is too much regulation." They are exactly the people who are saying what you are saying is not working for them. What would be wrong with simplifying it for them as well to say, "You have got the job; you put these conditions on it. The employee understands that; that is the contract; good luck, get on with it."

Judi Baxter: That is what we are trying to do with the Employer Ownership Pilot. It has not been launched yet, because it is going through procurement at the moment, but SMEs have been asked to collaborate and put forward bits of how they will train their workforce. It moves away from the traditional way we have operated as an agency or how we have operated before, and it talks about the employer having the right of saying, "Here is my bit; this is what I want to do." It is proper procurement, but that is not launched yet, and BIS are very much on the lead in that with UKCES5.

Q212 Brandon Lewis: Do you think that could lead to a point-with the best will in the world to vested and present company-where companies don’t have to think or worry about any of your organisations any more; they can just go out into the marketplace and get on with it without worrying about an administrative bureaucracy behind it from a Government Department or NGO?

Judi Baxter: Absolutely, but I think it is right to challenge us as agencies. We have a number of things in place at the moment around the simplification agenda; it is absolutely high up on the Skills Funding Agency’s priorities within the grant letter. I am sure it is for other agencies too. We are constantly challenged as agencies in terms of simplifying, not for ourselves, but for our customers, and in that there is an outcome-

Q213 Brandon Lewis: Can I go further? Sorry to interrupt, but why would an SME or a micro-business with five or six employees, let alone one with 25, with enough to worry about, even need to know that the Skills Funding Agency exists, let alone what they do?

Judi Baxter: They don’t. It is not about promoting a brand in terms of agencies; we are a partner organisation of BIS. We are the wiring, if you like, in a funding contracting body, to enable-

Q214 Brandon Lewis: Why is that needed in that marketplace?

Judi Baxter: Because, as with any agency, it is about Government Departments still needing someone to give out the money, provide probity, manage the procurement process, and manage the legal bit.

Q215 Brandon Lewis: Why? Why does it need an agency to do that? That is what I am trying to get at.

Judi Baxter: I am saying somebody has still got to do it. Somebody has still got to do it that is not directly, if you like, the Ministers. Our job at the moment that we are just given is that funding and planning. What I am trying to say is that we have invested a lot of time and energy recently on doing something called whole provider view, which is drilling right through and saying, "Where are we causing the wiring issues, the perceived bureaucracy?" If you want to access public funds, there has to be some probity around it, so what is the minimum probity around those public funds that we need?

Q216 Brandon Lewis: Sorry, but why access public funds? Why not simplify it further, so instead of having public funds coming in to subsidise it, employers just have a contract and a reduced wage that goes straight to that employee, and therefore there is no need for anybody to access public funds.

Judi Baxter: But you could do that. The market can already operate like that, but then if that employer wants the individual to do some training and they as an employer cannot deliver it, where would they go?

Q217 Brandon Lewis: That is where local authorities could come in.

Judi Baxter: Somebody still needs to manage, if you like, the probity of the funds in terms of assurance, the training providers’ financial due diligence, good success rates, Ofsted inspections. Somebody still needs to say who is good and can deliver that training in the marketplace.

Brandon Lewis: If we have got local authorities who can perform that kind of scrutiny role, why do we need another agency?

One last question: with apprenticeships, is there still the issue around traditional educational establishments, with schools, where they seem in some cases very, very focused on classic academic qualifications right the way through? What is it-98% of families still want their children to go to university as opposed to going down a different route with vocational training? Is that still being reflected today in the educational establishments, and if so what more can be done to encourage schools to look more at vocational training as a massive parity of quality for the right pupils as opposed to necessarily university is the answer for everybody?

Michele Roberts: I have provided some evidence around what the National Apprenticeship Service is doing and our apprenticeship ambassadors, the employers, going into schools giving evidence around what benefits an apprenticeship can bring to those young people. As well as apprentices themselves, we have had quite a number of our own apprentices in the NAS go back into their own schools, and talk about their apprenticeship experience.

Young people, and particularly teachers who were quite sceptical about the young person entering into an apprenticeship, were quite enthused about their experience and what they were seeing in terms of benefits as a result of the employment. I think there is a lot of good practice taking place locally in terms of that. But you are right, in that traditionally we need to ensure that vocational education is getting the same parity of esteem as academic advice and guidance.

Peter Mucklow: Can I just say something on that? There is also a view that what employers want is young people who have succeeded in GCSEs, who have good standards of English and maths-is maths an academic subject or a vocational subject?-and who have high levels of literacy, numeracy: general skills that can be gained in a range of contexts. Is A-level physics an academic subject or a vocational subject?

Therefore, it can be quite legitimate for schools to focus on what you might call the more traditional academic qualifications, if that is where they see their strength as being, given that there are other providers, such as colleges and training providers, who might specialise in the more vocational areas. The concern from the Department for Education would be around the quality of some of the qualifications and the teaching of vocational learning that is done, wherever it is done, and certainly we would not be keen on schools teaching vocational qualifications that are of low value in the labour market and doing it poorly as a second rate option for a number of their young people.

Chair: We will move on to the new 16 to 17-year-old NEETs initiative.

Q218 Teresa Pearce: Before that, I have a quick question on apprentices to Michele. There was an announcement some time ago that a large supermarket was going to create quite a large number of apprenticeships, but in the small print it also said that they were going to invite existing employees to become apprentices. Is there any monitoring done of conversion of existing employees-are those stats going to be held anywhere? Rather than new apprentices, which is what we are talking about, are there any stats on existing employees who are converting to apprentices?

Michele Roberts: Yes, there are. I am not quite sure whether they are released in the statistical first release, but I am sure that I can look to provide that evidence if they are.

Q219 Teresa Pearce: We have talked about employers and how they access the funding and not knowing maybe the right place to go. In each of your opinions, what would be the first point of contact for a 16 to 17-year-old NEET who is not on out-of-work benefits? What would be the first point of contact for a young person like that?

Peter Mucklow: The local authority has a duty to maintain contact with young people who are not in education, employment or training. We would expect the local authority to have contact with that young person.

Q220 Teresa Pearce: What would that be; would it just be knowing about them or would they be contacting them?

Peter Mucklow: They certainly must know about them, and we would certainly encourage them to do something about them. From the young person’s perspective, they would not necessarily think, "I must go and find somebody in the local authority." We would expect there to be a situation whereby a young person could go to any school, any college, any training provider, or indeed Jobcentre Plus if their primary interest is in employment, and find the information and the orientation to opportunities that exist locally for them.

In many areas there are sources of independent information, advice and guidance. Some local authorities have maintained Connexions services, but even universally, even where those do not exist, they are expected to retain information, advice and guidance, and sources of information, advice and guidance, for young people who are vulnerable and not in education, employment or training.

Q221 Teresa Pearce: What you are saying is that there are a number of places that the young person could go; they will channel them into the right place. There is not a single first point of contact that should be advised; everybody should be joined up. Is what you are saying?

Peter Mucklow: That is correct; that is what I am saying.

Q222 Teresa Pearce: Is that what happens?

Peter Mucklow: There are strong incentives on all of the agencies locally, and all the educational training providers, to find and recruit young people who are not in education, employment or training. We, from a central government perspective, assess the numbers not in education, employment or training, and the performance of local authorities in keeping in contact with them. As I said earlier, there are strong incentives on providers through the funding system to recruit young people whom they can educate and train effectively.

As to how well the system operates for individual young people, clearly there will be variation in that, but in terms of the way that the system is set up, the incentives are there for agencies to contact them. The Youth Contract adds something to that; there will now be a specific group of people locally under contract who are paid to identify 16 to 17-year-olds who are NEET and to place them.

Q223 Teresa Pearce: Obviously, I want these young people to get help, but they do become economic units, don’t they? Almost what you are saying is they will advise or look at them, and want to work with them, because they are unit costs, aren’t they? That is how they get their money. It is a shame that we have come to this, but there we are.

Peter Mucklow: I am not implying that is the only reason.

Q224 Teresa Pearce: I know you are not, but looking at some of the background data about the amount they get, they refer to them as "unit costs", and it is like when you are in schools and it is "pupil budgets", and they are not pupils. You forget when you are looking at financials that each one of these is a person, and I think it is for us to constantly remember that each one is a person. It is difficult when it is termed in these phrases. I was not suggesting for a moment you were saying that is the only reason.

I am interested in this idea of local authorities. When we had some people giving evidence last week, one of the people said that in banks, for instance, you have a person who is like a fund expert for local businesses that come in, to say, "These are the different funding streams; these are the grants." Local authorities have a statutory duty, but should there be somebody whose actual task is to help the local small-business community to see which grant fits them best? It was suggested to us that if somebody did that-almost like in the Economic Development Unit-and that was their job in every council across the country, that would help not only the young person who was looking for work but the business community. It would help with antisocial behaviour; it would help with everything that a local authority has to do. Councillor Johnstone, you mentioned earlier about these pilots; do you see that as the way these pilots will work?

Shona Johnstone: Yes, but I would point out that local authorities have taken a 28% cut in their funding. Therefore, when you have, as somebody described it yesterday, the elephant in the room of adult social care to support, some of these things would be very good to do and we would like to, but-

Q225 Teresa Pearce: It is almost a spend to save in that respect.

Shona Johnstone: Absolutely, but if the money is not there in the first place, then we have not got it to spend in order to be able to save further down the line. I think local authorities often are doing quite a lot. If I just quote Greater Manchester, they are doing a skills audit, for example, so that they know what skills their employers require and therefore what skills the providers need to be providing. We are often leading by example; Kent and Surrey County Councils are using their procurement to encourage more employment and workplace learning opportunities for young people. While we may not have, in every authority, that person that ideally you would have-

Teresa Pearce: It’s ideally, isn’t it, rather than practically.

Shona Johnstone: -authorities are leading by example in trying to encourage more apprenticeships. I know Essex is hugely increasing the number of apprentices that they are taking on.

Q226 Teresa Pearce: Do you think that local authorities-you are saying that many of them have got good practice here-will continue to refer NEETs to the programmes that they already work with rather than engaging with the new Youth Contract?

Shona Johnstone: I think it is difficult to say.

Q227 Teresa Pearce: Because it is all about networks and links, isn’t it, and if they have already got those links to bring in another contract, do you think it might be an issue?

Shona Johnstone: I don’t know. Can we come back to you on that one?

Q228 Teresa Pearce: What about you, Peter? What do you think? People go where they are comfortable and they have already got contacts with people. What incentive is there for them to refer people to the new contract, rather than what they already contract with?

Peter Mucklow: For a local authority, the availability of the Youth Contract provider locally provides another source of expertise in finding and engaging young people. I see the Youth Contract providers as having the potential to help local authorities do their job at no cost to the local authority. The Councillor has mentioned the financial pressures on local authorities, which are real. We would be very disappointed if local authorities did not embrace the opportunity, while recognising that collectively and individually they might have wished for the funding to be directed through the different route of using the existence of people whose job it is and who are paid to find and engage the hardest to engage 16 to 17-year-olds not in education, employment or training.

Shona Johnstone: I think local authorities are well up for it. If I just quote my own local authority in Cambridgeshire, we had a big event last month where we brought together young people with learning disabilities and employers, so that employers got a better understanding of the capabilities of people with learning difficulties and how they were very employable. The young people themselves had the opportunity to say what the barriers were in terms of getting into the labour market, particularly for young people with learning difficulties.

Most job applications are now done online, and if you cannot complete that page online in the time allowed, it times out, and if you struggle to get halfway through a page and then it times out, it is very disheartening and demoralising if you are young person with learning difficulties. That was quite an eye opener for some of the employers who came along, and they are starting to think, as a result, about different ways of helping young people into employment.

Q229 Teresa Pearce: I agree with that. Often people do things in a way, especially small businesses who are looking to employ, because that is the way they have always done it. No one has ever challenged them to say, "You are discriminating or blocking people out," because that is never their intention; it is just the way that is has grown up. I am also aware that somebody has to leave now.

Shona Johnstone: I can stay a little longer if that would help.

Q230 Chair: There is just one other question specifically about the LGA, Councillor Johnstone. The point the LGA has made is that local authorities ought to have a role in the tendering process for the new NEETs initiative. I wonder if you could explain to the Committee why the LGA thinks that, and what the LGA thinks local authorities can bring to that process?

Shona Johnstone: I think it is because local authorities have the knowledge of their local area, both in terms of the young people coming through and the information about those students and young people that are disengaged and most difficult to get in touch with and engage. We have also the knowledge on the other side in terms of economic development, and the new LEPs6, in a sense, which through local authority leadership can bring together the employers and the providers. Local authorities have got that in-depth experience, knowledge and understanding.

Teresa Pearce: I have just a couple more questions on NEETs that I wanted to ask, particularly for Judi.

Chair: Councillor Johnstone, if you need to leave, thank you very much for coming. Please feel free to leave whenever you need to.

Shona Johnstone: Thank you.

Q231 Teresa Pearce: Judy, you spoke about probity and due diligence. One of the things that concerns me is how long NEETs are monitored post-training and work participation. If it is only six months, could we end up with a revolving door of NEET, training, work, NEET? What checks are there and what checks do there need to be on that?

Judi Baxter: When I talked about performance monitoring before, we can performance monitor on the information that we get. Currently the way that the system works is, while somebody is receiving funding, they have to tell us the activity. The issue you are referring to is what happens when they are not receiving any funding anymore; how do we know? The onus then is passed from us as an agency, because we are not now directly responsible in terms of money; we do not have that relationship as such, and the onus should be on the training provider, because they have a responsibility to do follow-up. They have a responsibility to do learner surveys.

Q232 Teresa Pearce: How long is that responsibility? Is it a short period of time?

Judi Baxter: They all do them differently, in fairness.

Q233 Teresa Pearce: Do you think it is a weakness in the system?

Judi Baxter: I think it is something we should look at. Absolutely as you described it, in terms of a revolving door, we need to understand more what that is and what we could do about it.

Q234 Teresa Pearce: Just another question on money: the way it is going to work, similar to the rest of the Work Programme, is black box, and there is an initial payment of up to 20%. If a provider failed absolutely miserably, would there be any responsibility for them to repay that initial 20%? My concern is that you could get an organisation set up, just take the 20%, and just disappear. What would happen? Is that in the contracting? Do we need to worry about that money?

Peter Mucklow: I think that is a question for me. Putting it in a slightly different way, if a Youth Contract provider failed, we, as the Education Funding Agency, would pay them for what they had delivered and what we had contracted for them to deliver. If they had engaged young people, they would get an initial payment, which is 20% of that value. If they had done that, they would get that payment and they would be entitled to it.

We are contracting with organisations that have expertise and reputations, not with any organisation that has just set itself up with a view to creaming off a bit of public money. All these organisations will have track records; they will all have experience of other funding streams with other public agencies. Were there to be the type of malpractice-I think the possibility is remote-that you describe, their business with other agencies would be at significant risk.

Q235 Teresa Pearce: What you are saying is the due diligence is in the contracting, the looking at the history, and making sure that they are a competent body, so there would not be any possibility of somebody just setting up as a company to cream off that money? That is just virtually impossible?

Peter Mucklow: Absolutely. It is important to recognise that even in the first year, 80% of the money, up to £2,200, is dependent on the young people being re-engaged in education, or training, or employment with training, and then staying in that for five months. It is backloaded, so even within that 80%, 50% in the first year and 60% in the second year in on the sustainability.

Q236 Teresa Pearce: It is the same model that we have seen with the Work Programme, with organisations having to be big enough to cope. The reason I raised the issue is because in the past there were a number of fake colleges that would set up and take somebody’s money and not deliver anything. I am glad that we have all learnt from that and that now when we contract with organisations, we do it in a much more sensible way.

Judi Baxter: If I can just give you the same assurance from the adult version of the apprenticeship age, that, again, is about using accredited training providers, approved training providers, who have gone through the due diligence. It is a very simple MI process. They are existing forms that they currently do, so they just have to tick one other box. It is contracting with people whom we know anyway, but we have got a monitoring process on there to ensure the probity of funds; it is a very simple process, but from an assurance perspective, there are not any dummy or different providers suddenly coming through, just because of this incentive. There is a route way in.

Q237 Harriett Baldwin: Carrying on about the 16 to 17-year-olds, I just wanted to clarify, with Peter primarily, the figure of 24,000 that has been given to us in terms of the number of 16 to 17-year-olds who have no qualifications whatsoever. Does that figure sound correct to you?

Peter Mucklow: The figure I have is 27,000, and to be clear that is our estimate of the number of 16 to 17-year-olds who are not in education, employment or training, and have no GCSEs at grade C or above at any one time, based on the latest figures.

Q238 Harriett Baldwin: The funding is designed to cover 100% of that cohort?

Peter Mucklow: That is correct.

Q239 Harriett Baldwin: We have had evidence from some witnesses who are concerned that that is too tight, and that you might well have someone who has got maybe one GCSE, maybe not one in English and maths, who would be equally difficult to employ as someone with none. I just wondered what your thoughts were on that; how do you respond to that criticism?

Peter Mucklow: It is clear from the evidence that the success or otherwise of young people in attainment at GCSE is very closely correlated with their subsequent participation in education, employment and training. For example, of young people with no qualifications at 16, 45% of them spend at least 12 months not in education, employment or training by the age of 18. For those who have five to seven GCSEs at grade C and above, that figure if 4%.

Q240 Harriett Baldwin: We all know this. If you have one GCSE, how is that materially different from no GCSEs?

Peter Mucklow: This is an initiative limited by the amount of money that is available, and therefore we have needed to focus it on those who are most in need. I fully accept that at the margins you could add on other groups who might also be deserving, but within the resources available we have had to focus on those who are most vulnerable and at risk.

Q241 Harriett Baldwin: You said you have got the funding for 27,000, but we had other evidence that said people would be very surprised actually if you managed to fully get that taken up.

Peter Mucklow: The 27,000 is the figure for the number of young people at any one time, so it is a stock figure, but there are significant flows in and out. NEETs are not a static category; there might be quite a lot of those young people who would find education, employment and training other than through the Youth Contract, but there will be lots of other young people coming into that population.

Over the three years there is enough money to help 54,000 young people, recognising that it is not a question of dealing with 27,000 and then there is no more that come in. Certainly we will want to work with providers to monitor their success in finding young people who meet the criteria of no GCSEs, and we will want to monitor that in terms of whether that might be changed at a particular point. Initially the focus is very much on the most disadvantaged, because that is where we want to focus the resource that we have available, which is limited.

Q242 Harriett Baldwin: Can you promise this Select Committee that in three years’ time when we look at this you will have fully used the funding for 54,000 places?

Peter Mucklow: That depends on the performance of the providers. What I am very clear about is that we have the resources over those three years at a unit cost of £2,200 to help 54,000 young people. I am sure that, if there is difficulty finding those young people or if the numbers are not coming through, we and Ministers will want to look at how that can be remedied.

Q243 Harriett Baldwin: Do you personally feel accountable for achieving the coverage, and spending the funding that you have? It is always so demoralising, isn’t it, when there is funding announced for a particular problem or issue and then it is not used?

Peter Mucklow: Certainly I feel accountable for the successful management of the programme and of the resources attached to it. I would certainly feel personally disappointed if at the end of those three years we looked back and said: "The Youth Contract did not achieve what it set out to do, and we did not learn lessons from it early and amend it, and learn as we went along."

There are elements of this programme that are quite new in the 16 to 17-year-old field. They are more familiar for 18 to 24-year-olds as part of the Work Programme: the fact this is output related; it is a black box in terms of design; and there is a prime contractor model. That is quite innovative in terms of 16 to 17-year-olds, and the objectives of this programme, firstly, are to place 16 to 17-year-olds, the most vulnerable ones, into education, employment and training; secondly, to help them develop the skills and experience they will need to avoid long-term unemployment; and thirdly, also to learn lessons about what is effective in terms of local delivery and payment by results.

Q244 Harriett Baldwin: We accept that this is testing methods of delivery, and presumably that means that you are really regarding this as a bit of a pilot programme in this area. Is that correct?

Peter Mucklow: A pilot implies that, if it is successful, it would be extended in some way.

Q245 Harriett Baldwin: So you would not extend it if it was successful?

Peter Mucklow: Well, that would not be my decision. It is a programme on its own terms, aimed at the most vulnerable young people not in education, employment or training. If the methodology proves to be successful, that might be used in other contexts or for an expanded programme in the future, but that would be a decision for the next Spending Review.

Q246 Harriett Baldwin: We want you to spend the money in this Spending Review, definitely. You are going to have checkpoints obviously along the way as to whether you are attaching enough young people through your providers. If you were not, can I give you some examples of categories of people where potentially you might want to expand the programme? For example, someone who has managed to achieve one GCSE but has a very poor record of school attendance, or someone who has managed to achieve one GCSE but has a very challenging family background, or perhaps someone who has achieved one GCSE but is a parent by the time that they are 16 or 17. Would those be the sorts of categories that you might consider expanding the programme to if you found that you were not getting hold of the whole stock and flow that you were expecting?

Peter Mucklow: If that were the case, I am sure we and Ministers would want to look at other categories of disadvantage, including the types that you have just exemplified, certainly.

Q247 Harriett Baldwin: You would agree with that being a potential area for expansion of the scheme?

Peter Mucklow: What we have to do first of all is try to ensure that the scheme as designed is successful, and I am not assuming that we will have the space in the programme to do that. If there is the space in the programme, then it is for Government to decide whether it wants to expand the eligibility or whether the resources would be better used elsewhere, and that is a decision that Ministers would need to take based on options, and we would certainly put options to them, which might include expansion of the eligibility.

Q248 Harriett Baldwin: How frequently are you going to be having those checkpoints to evaluate how things are going? Should we call you back as a witness in a year’s time?

Peter Mucklow: We will have a monthly report from providers in terms of how many people they have recruited, how many people have re-engaged, and how many people have been sustained. We will have a quarterly dialogue with providers. Given that this is payment by results and the success of the providers in providing this programme depends upon results, they will be the strongest advocates for change if they feel that the rules of the programme are putting unreasonable constraints on its success. Financially, failure is not an attractive option for them.

I would expect early intelligence from those providers about the success of the programme. We will have face-to-face quarterly meetings with them. This is about learning as we go along. There will be evaluation of the programme; clearly that will take some time before it comes through, but that will look at the value for money of the programme and the effectiveness of the different approaches that the providers are taking.

Q249 Harriett Baldwin: Have you chosen the providers yet?

Peter Mucklow: We have not agreed contracts with the providers yet.

Q250 Harriett Baldwin: You have chosen them, but you are still in contract negotiations?

Peter Mucklow: We have chosen some of them; we will choose the rest of them this week. We are in contract negotiation with the number that we have chosen. We expect to conclude contracts and announce successful providers within four weeks.

Q251 Harriett Baldwin: So there will be an announcement about who has been chosen for which area in the next four weeks from today?

Peter Mucklow: There will.

Q252 Harriett Baldwin: What sort of organisations are we expecting to see delivering this scheme? Are they going to be mainly private sector? Will there be some voluntary sector providers?

Peter Mucklow: We have certainly encouraged a wide range of providers to apply, including private sector providers who may be involved in the Work Programme, colleges, charitable organisations, and local authorities. You can expect to see a mix of private and charitable providers throughout the chain, some at prime contractor level and some within the delivery chain. I clearly cannot go into those details at the moment, but you can expect to see a significant mix and variety.

Q253 Harriett Baldwin: Have you been working with colleagues at the DWP in terms of the prime contractor model and also their standard in terms of how the prime providers work with the rest of the supply chain?

Peter Mucklow: Yes, we have been working closely with the Department of Work and Pensions and learning their lessons from the Work Programme. We are expecting all successful bidders and their supply chain to adopt the Merlin standards around how supply chains work within that type of subcontracting environment. The Department for Work and Pensions’ commercial procurement experts sit on the commercial panel that makes the decisions about who are the successful providers, and they have been involved throughout in assessment of the bids.

Q254 Harriett Baldwin: Am I right in thinking there is going to be one prime per region?

Peter Mucklow: That is correct.

Q255 Harriett Baldwin: That is different from the Work Programme, where they deliberately chose more than one per region, so that they could shift between them depending on performance. Why did you reject that approach?

Peter Mucklow: This is a much smaller programme than the Work Programme. One of the business reasons for going for a regional model, rather than delegating to 152 local authorities, was to seek economies of scale. In terms of our assessment of the market, we did not think having a multiplicity of different contracting chains in regions was likely to provide an economically viable proposition, given the size of the programme, for a lot of providers to come in. We were also concerned about uncertainty for local authorities, young people, and other agencies, about whom to refer young people to if there are potentially competing supply chains in areas.

Q256 Harriett Baldwin: One last question: if the announcement is going to be within four weeks, when can we expect to see the first 16 to 17-year-olds joining this programme?

Peter Mucklow: We can expect to see the programme up and running in September. We have to be realistic that there will be a mobilisation period for the successful providers. As soon as we sign the contracts in July, providers will be able to recruit, but realistically we can expect September, in all regions, as being the start date for young people.

Q257 Chair: Just to finish off, could you perhaps explain how the maximum payment of £2,200 was arrived at?

Peter Mucklow: That £2,200 is a judgment. It is based on the experience and evidence we have with similar programmes. There was a pilot of a programme called the Activity Agreement, and another pilot of a programme called Entry to Learning, which ran to April 2011. There is also similar provision, which we have contracted for from the Department for Education through a grant called the voluntary and community sector grant, where a number of voluntary sector providers are providing similar types of provision. We took advice from the Department for Work and Pensions based on its experience.

It is a judgment. We have set it as the maximum that we will pay. Clearly we have a duty to try to secure value for money, and it has been open in the procurement process for bidders to say that they will offer to do it at a lower unit cost. We have taken that into account.

Q258 Chair: How big a role has that sort of proposal played in the bid evaluations?

Peter Mucklow: In the bid evaluations, we have assigned 30% of the weighting of the assessment to what is called the commercial proposition, which includes price, and 70% to quality.

Q259 Chair: Just finally, going back to voluntary organisations, I know in my own constituency it is the voluntary bodies that are delivering the Work Programme on the ground. Are you concerned that the pricing structure and competition for contracts might push out the voluntary sector in this initiative?

Peter Mucklow: It is a criticism one sometimes hears about the Work Programme. Clearly if you are a main contractor for this, the success of it depends upon your delivery chain; it depends upon those people who will have contact with the young people and will be placing them into education, employment and training. The supply chain cannot succeed if the local organisations, including the local voluntary sector organisations, or colleges, or private sector providers, whoever they might be, have not got the money to deliver.

Yes, we will certainly monitor and learn from the experience of managing the supply chain, and I cannot guarantee that there will not be problems or dissatisfied subcontractors within that. Nonetheless, this is a voluntary programme; there has been substantial interest. We have not been short of applicants in this; it is a significantly competitive process, so I think we can be cautiously optimistic, but we need to monitor it carefully.

Chair: Thank you very much. Can I thank you all for coming? I think it is clear that there is a challenge for everyone to get the money to the people that need it and make sure everyone is joined up, but you are clearly aware of that and on top of it. Thank you very much for your time.