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 employment and the youth contract

Wednesday 4 July 2012

kevin green, kirsty mchugh, david macdougall and maeve mcgoldrick

Evidence heard in Public Questions 260 - 332

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Oral Evidence

Taken before the Work and Pensions Committee

on Wednesday 4 July 2012

Members present:

 

Debbie Abrahams

Harriett Baldwin

Andrew Bingham

Karen Bradley

Sheila Gilmore

Oliver Heald

Glenda Jackson

Brandon Lewis

 

In the absence of the Chair, Oliver Heald was called to the Chair

________________

Examination of Witnesses

Witnesses: Kevin Green, Chief Executive Officer, Recruitment and Employment Confederation, Kirsty McHugh, Chief Executive, Employment Related Services Association (ERSA), David MacDougall, Head of Research and Development Manager, Avanta Enterprise Ltd, and Maeve McGoldrick, Policy and Public Affairs Manager, Community Links, gave evidence.

Chair: Welcome to this morning’s session. We are continuing our inquiry into the Youth Contract and Youth Employment. Welcome. Can I start by directing a question to Kevin, and then we will obviously involve everybody else, and other colleagues will join in? Harriett has to make a declaration first.

Harriett Baldwin: Can I just declare, Chair, for the record, that I am on the Board of the Social Investment Business, which has some customers who are bidding for the youth employment contracts?

Q260 Chair: Yes. Now, Kevin, you have said in the past that there is an expectations gap between what young people think employers want-skills, qualifications-and what employers say they want, which is "the right attitude". Would you like to tell us a bit more about that? Is there a bit of an expectations gap there, and what exactly is it?

Kevin Green: I think there clearly is. One of the things that is absolutely clear is that employers are putting more weight on experience now. Obviously, times are bad. There is some data from the CBI saying that 29% of employers say it is absolutely critical that people have the experience of having previously done the same job, and 45% of employers say it is absolutely significant. That means we have 74% of employers saying, "The main thing we are looking for, when we are looking at candidates, is experience," and clearly young people do not have that experience.

What we also have is a lot of data from employers who talk about things that are missing. We could call them "employability skills": selfmanagement, problem solving, young people being able to work as part of a team, understanding business context, use of language, use of numbers. I think employers are saying, "We are looking for experience and we are also looking for employability skills." Young people-and this is partly down to the education system and how we prepare young people for the world of work-are coming out with an expectation that if they get their degree or get their A-levels or pass their GCSEs, that is the key entry ticket to the labour market. In reality I think we are not getting the message across to young people at an early enough stage about all these other skills that are hugely important for employers.

The other key issue that we are really concerned about is the lack of careers guidance and work experience within schools. The Government is going the wrong way to a large extent in its direction of travel on that. We think there needs to be more work experience, and not just the traditional going into a business for a couple of weeks between 14 and 16. We think it is important that people, early in the education system, get exposure to employers and what employers are expecting in a range of different ways. It is about preparing young people for the world of work and challenging their expectations. I think this has a lot to do with the education establishment.

However, it is also about recognising that the labour market is shifting. One thing that sometimes gets lost in the current debate about youth unemployment is that this was happening prerecession. This was happening from 2005, and there are some structural issues in the labour market. There are fewer entrylevel jobs than there were traditionally. People are not retiring, because people are working longer, so there are fewer opportunities for young people. Some of those trends were already happening prior to the recession, so what the recession has done is amplify some of the structural changes that were happening in the labour market.

I think there is an expectations gap. I think there is a lot going on in schools that is good, but there is certainly more that is required. Again, one of the things we find when we go and talk to our members and to employers is that they are keen to work within schools and colleges and universities, but find it quite difficult to get access. There is something about how we bridge that gap and get more employers to participate within schools. How do we get the qualifications? There is a huge debate going on at the moment about academic versus. vocational, and it seems to have gone on in the UK for the last 20 or 30 years. In reality we want both, do not we? We want people who have those employability skills and are capable of operating in a knowledge economy. I don’t think it is one or the other. We want employability skills and we want them from all people coming out of education.

Q261 Chair: Do you think part of the trouble is that there are fewer opportunities for parttime work for youngsters than there were-I mean the under16s? Are they doing less parttime work?

Kevin Green: There has certainly been, over the last 15 years, a reduction in young people working and learning at the same time, whether they are at college or university. That certainly is not helping, but there has been a growth in the economy generally in parttime work, during the recession and the fragile recovery that we have had. Again, you find that young people still tend to be excluded from some of that activity because of this lack of experience. It is a bit of a Catch22 really: young people lack the experience employers are looking for, and unless you get an entry job it is incredibly difficult to prove you have the experience. That is why trying to find ways in which people can get experience while they study is hugely important.

Q262 Debbie Abrahams: When the CBI representative gave evidence to the Committee a few weeks ago, we put a similar question to him. We tried to unpick whether this is down to employers’ expectations being unrealistic, or whether it was principally down to young people. He was of the view that there is a mismatch on both sides. Would you agree with that?

Kevin Green: I think that is fair. We represent 3,760 corporate recruiters who are speaking to employers every day about the skills and capability they are looking for, and I think we do find that employers have, perhaps, an elevated view of what they are looking for. Again, I think young people are coming out with the wrong impression about what employers are looking for. Your point is absolutely valid: both sides probably don’t quite understand where the other side is coming from.

However, the key issue is how we tackle that expectations gap, and the action has to be around having that conversation early. I have a 17yearold son. He made choices at 14. His understanding of the world of work was limited-he had never been in a workplace, he had never had any conversation with any businessperson other than his father and his mother, and he was making decisions that would have a huge impact on what GCSEs he took, what A-levels he took, and whether he went to university. It is not something you can just leave until kids are 16 or 17. We have to do this at a much earlier stage.

It is also about educating the teachers and academics about the world of work. One of the great problems we have in our country is that very few teachers have had any experience outside the education system. If you look at who is the careers teacher or the careers adviser in a school, it tends to be somebody who perhaps has done very well and is working in a slightly different way. How do we make sure that the advice that people are being given in schools is relevant to the workplace not just now but over the next 20, 30 or 40 years? Young people leaving education today will be in employment, or trying to be in employment, for 40 or 50 years. Giving young people real understanding of the world of work is hugely important.

Q263 Sheila Gilmore: We have heard a lot of this argument, and it has become a sort of mantra: "Young people nowadays are not educated and ready for the workplace; their expectations are wrong." The implication I am picking up is that some time in this halcyon past, when young people did get jobs, obviously something must have been better. I would like to press you a bit on that, because we had no work experience when I was at school. My children did have some, but frankly I thought it was very poor quality. Work experience was something we never did. I don’t remember getting any work experience or employment experience through school, university or anything else. Is it actually more about the jobs? Did employers previously expect to give people that basic training when they took them on? I don’t understand what is perceived here to have changed radically. What was preparing young people before and is not preparing them now?

Kevin Green: I think you are right. This is wrapped up sometimes in a misty view about how the world used to be. I don’t think that is right. I don’t think careers advice in schools has particularly been great, certainly through my education or, as I say, through my son’s. I don’t think we are looking back. It is about the world of work changing, going forward: people having multiple careers, people having to work in different ways. If you look at the way work is now structured, it is more project based, it is more about communication, it is not about people all being in the same location at the same time. It is about people having four or five careers over the period of their lifetime. It is not about preparing people for the traditional way we have viewed work.

One of the problems we have with schools and perhaps even the media is that they still think about fulltime, permanent jobs as the core. If you look at our labour market, we have 8 million people working parttime, 4 million people selfemployed, 1.5 million people working in a freelance or temporary capacity. We have a much more developed and evolving labour market. If you are putting young people into that labour market, then I think there is more onus on us to prepare them for that world, which is much more volatile and much more difficult.

I am not saying we should go back. I am saying it is like the Wolf Report. "Work experience isn’t very good, so let’s not do it"-that is the wrong argument. It should be good, it should be highquality, and we should be preparing our young people to get employment that will be able to sustain them and their family over a long period of time. You are right-it is not about going back, it is about looking at how we prepare our young people. The point I made right at the beginning about the structure of jobs changing is hugely important. There are fewer entrylevel jobs, and fewer jobs that you can get without any qualifications. Preparing young people, getting them to understand what they need to succeed, becomes more critical. It will affect their life chances throughout their career and their working time.

Q264 Chair: Do you agree with the decision to remove the statutory duty to give information, advice and guidance, and the work experience placements that went with that?

Kevin Green: No, I don’t. No. I think we need to be encouraging schools to do as much of that as possible, and to bring employers in and create different ways of preparing our young people.

Q265 Glenda Jackson: We accept that there are far fewer lowerentry jobs than there used to be, but you do seem to be lumping all employers into the same bag, and all young people into the same-

Kevin Green: Yes, it is a generalisation.

Glenda Jackson: -lousy bag, but there are surely a sizeable proportion of employers where the necessary qualifications are already defined. I am thinking of the law, medicine, that kind of thing. What is this mysterious area of employers or employment possibilities? What do they provide as far as jobs are concerned-setting aside that we are in the middle of a recession-that they can be so very picky about what our young people are bringing to them? As a rider to that, why is it always argued that it is the responsibility of schools to prepare our young people in this way? Don’t they have enough to do?

Kevin Green: Yes, they do. The key issue in terms of employability is very much around the fact that employers have a choice. It is a hugely competitive labour market that we have in the UK. What employers are saying is, "If I have a choice of someone who has done this work before, or hiring experience or hiring potential, in the current environment I am likely to be cautious and go with experience." It is about our labour market being very different from how it has been historically, and I think it will continue to be like that in the foreseeable future.

I think what employers are saying is, "If you want young people to be competitive and you want to create the opportunities, then we need these employability skills as well as their qualifications," and we need to find ways in which we can prepare them so that they look more of an attractive proposition to employers. It is a competitive thing. It is a dynamic labour market. What was your second point?

Q266 Glenda Jackson: I have forgotten now. It was probably about why schools should have to carry the responsibility.

Kevin Green: I think there is an onus on society, isn’t there? That is about parents; it is about the environment young people are brought up in and what they do outside of school. We have young people in education from five to 16, 18 and 21, and I think that while we want education to create the right young people for our society-make them citizens, make them bright, make them understand history and everything else that is going on in the arts-we also have an onus to make sure that we are creating the right input for our economy, so that in the long term we are creating the right capabilities, skills and knowledge for our economy going forward. At the moment I think what we are saying at a strategic level is that we don’t think we are getting that output. I think that is what employers are questioning as well.

If I look at the labour market today and what my members are saying, we have skill shortages and talent shortages in professional areas of the labour market: engineering, oil and gas. We will need more engineers. We were talking to Siemens the other day. Across Europe they will need 50,000 engineers. They cannot get them from Europe. They will have to bring them in from outside. There is a longterm structural issue about how we influence people in what they study so that they leave education with the skills, qualifications and capability that we need. Some of that has to be about a more strategic conversation between employers and education. At the moment there clearly is a problem, and I think the problem will get worse rather than better.

Q267 Sheila Gilmore: That is obviously interesting in terms of forward planning for certain fields, and how you make people take them up. That is not always easy.

Kevin Green: No.

Sheila Gilmore: I think a lot of people have had their fingers burned, and the jobs suddenly, 10 years on, are not there. However, could I just give you an example? Glenda talked about people who are qualified. My niece is probably at the slightly upper end of this age group we are dealing with. She has a law degree. She has recently done her law diploma. She spent three or four years working, initially in a bar and then managing a bar. She is now in a position where she needs a traineeship. There are very, very few traineeships, because in law at the moment in Scotland-I don’t know about elsewhere-the market is not exactly vibrant, and a lot of law firms, apparently, are indeed taking people with more experience who have been made redundant elsewhere, who are willing to take lower salaries than they would have done previously. It is a lack of jobs. I don’t think it is a lack of her preparation, frankly.

Kevin Green: No, but the point I am making is that this issue was here before the lack of jobs. This was happening from 2005. We had growing youth unemployment prior to the recession. This is a systemic issue that I think will get worse. It is amplified by the lack of supply, absolutely. There are not enough jobs for young people. I am not denying that. In that context it is even more important than young people have the right skills and the right capability to be able to present themselves. I think it is down to the education system and other providers to help prepare these young people, to give them the best possible advantage. There is clearly a lack of jobs, but we have this structural issue. This debate about preparing young people for the world of work has been going on for 20 years. It is not new, and we have not been doing it successfully.

Q268 Andrew Bingham: You have been quite candid, which I have quite enjoyed. The CBI said that schools’ careers advice services are "poor and going downhill". That is quite a sweeping statement, and you have made quite a few remarks about careers advice in schools. Do you think that is fair?

Kevin Green: Yes, I do.

Chair: Can we bring in Kirsty?

Andrew Bingham: I would rather stick with Kevin on this, if you don’t mind, Chair.

Chair: Okay, but then we need to widen it out.

Kevin Green: Again, we heard some statements this week about schools having a statutory responsibility to provide impartial, objective careers advice, which is what I am saying they need to do. That is quite difficult when you are already struggling. You are already under funding cuts. Most schools that I come across are incredibly busy institutions. I think it needs to be much more of an integrated part of the curriculum, rather than something that is seen as an adjacent thing that we need to do, and "Let’s give all the kids two weeks’ work experience and identify some teacher to do it." It is always a bit of an afterthought, and it needs to be integrated.

If you look at some of the things that employers are saying, we have more young people getting O-levels or A-levels-or GCSEs-in maths and English, but employers are still saying, "We have issues about the use of numbers and language." For me that goes back to the curriculum. Do we really need young people to understand algebra, or do we need them to be able to calculate and use basic mathematics-to be able to give people the right money, to understand how to work out percentages, to understand an interest rate? It is about the curriculum. It is not just about doing some careers advice when people are 15 and 16 and have perhaps already gone through most of their education. I think the careers service is poor and is deteriorating.

Q269 Andrew Bingham: You were talking earlier about using employers to get more involved with careers services in schools, and you said there was a problem with access.

Kevin Green: Yes.

Andrew Bingham: Can you explain a bit more? I was interested in that.

Kevin Green: It is quite difficult. When we go out and talk to our members-and again we employ, as an industry, about 125,000 people in the UK, and we employ a lot of young people in the recruitment industry-one of the things our members say is that it is quite difficult to get access to schools. If you happen to know about an Education Business Partnership in your area, and you know how some of the institutions work, they will signpost you to schools. However, if you phone up a school or a college and say, "I am an employer in the local area; I would like to come and see you," schools are quite fearful about allowing employers into their institutions, because of a whole range of things. Whether they are real or mythical I don’t know, but there is this fear that, "People will come in and sell, and we’re not sure about what they’ll be saying."

There is a chasm culturally between education and employment-there always has been-and I think it is getting worse. We need institutions to drive that. There is the Education and Employers Taskforce, which we have done some work with, and we have asked our members to sign up to a charter to commit to getting involved in schools and education. It is not just rhetoric; they are actually doing it on a daytoday basis. We find lots of people saying, "I have talked to my local school; they don’t want anyone in," or, "They won’t let us come in and do something," or, "We can’t take young people out."

There seem to be lots of blockages in terms of employers getting access to schools. I think they want to: they want to do their bit. They recognise that they are being critical and they know that one thing they need to be able to do is invest some time and energy in talking to young people directly, whether that is mentoring them individually or talking to them about the world of work. There is a real issue there about building that relationship.

Q270 Andrew Bingham: One more-completely off the script. Let us say we could remove those barriers. At what age do you think you should start talking to these kids? I remember choosing my options at 14 or something-not that it did me any good. At what age do you think you would like the employers to start speaking to the kids?

Kevin Green: An earlier age-I don’t know, nine, 10 or 11-and doing stuff in the curriculum at an earlier age, so making it really practical. If you think about making a choice at 14, it would help to have some presentations from employers about, "This is what I am expecting; this is what the law looks like." This applies particularly to disadvantaged young people. If you come from a middleclass background and you have professional parents, you will most probably have had access to different things, but if you come from an environment where perhaps you don’t have two working parents and people perhaps have been unemployed themselves, it is much more likely that you will have a very limited view of the world of work. It is even more important that we get in.

The good thing about this is, if you look at some of the programmes on TV-Dragons’ Den, The Apprentice-you can make business and work really inspiring for young people. They get interested in it if they hear about it directly. The more you get employers into schools, the more you will stimulate people, saying, "This is why qualifications are important, and these are some of the other things that we are really interested in, so if you can demonstrate you have worked parttime in a pub or restaurant, that is great-it means you have served a customer. If you have"-I don’t know-"done The Duke of Edinburgh’s Award, that shows these things." If employers are saying, "We think they are really important," then young people will take that more seriously, because they will recognise that they will be in a competitive position at some point in their career.

Chair: I will bring in Debbie and then Harriett, but then I would like to widen it out so that everyone gets a chance to tell us how young people should get realistic and uptodate careers advice, and whether your organisations have any role to play.

Q271 Debbie Abrahams: Very quickly; I appreciate we are under pressure for time. You talk about employers approaching schools and there being a resistance from schools to engage.

Kevin Green: Yes.

Debbie Abrahams: Is this anecdotal, or is there significant, substantial, strong evidence? It certainly does not reflect my experience, where we have genuine employers who want to engage with schools across the North West and further. Is this anecdotal? I think that is very important to establish.

Kevin Green: There is some really good data. There was a report that came out yesterday by UKCES, the UK Commission for Employment and Skills, on youth unemployment. One of the stats in there I thought was quite important showed that 63% of employers engage with education in some way, so there is activity going on. I am not denying that. What I am saying is that you will still find lots of data of people saying, "We would like to give more time; we would like to get more involved," and employers still experiencing that rejection.

Q272 Debbie Abrahams: I think that is a very important point, Mr Green, because the impression you gave before was that there was absolutely a barrier from schools, and what you have just described is that nearly twothirds of schools are engaging with employers. We need to be very clear on what evidence there is.

Kevin Green: No, no. The statistic was about employers, not schools. What you will find is some schools take this on very seriously, are very open and very engaged, and do it incredibly well. There are some schools where they will not have had an employer in for years. Employers want to get involved. Some of the schools are enlightened and engaged and do it incredibly well, and both parties benefit, but there are some that are clearly not doing that. The question is how we get into those schools and provide some of this access and value that we are talking about.

Q273 Harriett Baldwin: This can be widened out. I have two employment sectors in my constituency that are experiencing strong growth, high demand for young people and labour, and yet they are struggling to find the right sort of people. One is cyber security, which is forecast to create 500,000 jobs in this country in the next decade, and the people who seem to be most skilful at that, which is really ethical hacking, seem to be 16, 17, 18yearold teenagers, who often have spent a lot of time in their bedroom learning computer skills. The other sector, at the complete other end of the spectrum, is the horticultural sector. I am being lobbied at the moment by my horticultural growers to extend a scheme whereby they can bring in the seasonal agricultural workers from outside the EU, because they cannot find young people to come and pick the crops in the fields from the 400 million people who reside in the EU. So I just wondered if the panel wanted to make any observations on those two sectors, and why they find it so difficult to find the right young people to take those jobs.

Chair: Let us start with Kirsty: we will go that way, and we will bring in Kevin again at the end.

Kirsty McHugh: Thank you. I will make a few broader points, if I may-

Chair: Yes, if you would like to, please do.

Kirsty McHugh: -and then narrow it down. Going back to the whole point about whether our young people are employable, I may not make myself popular with the CBI in saying this, but the CBI has been saying the same thing for very many years about employability skills. I worked for the British Chambers of Commerce 15 years ago: employer organisations say this, and to some extent it has been ever thus. The remedies have always been known as well. We know that the links between education and business are weak. There used to be a fairly uniform infrastructure called Education Business Partnerships, which have been dismantled, in effect, across the country over the last few years, because there is discretionary funding, often through the LEA1, some charitable cash, etc., and they have disappeared. That is one of the reasons that businesses find it quite difficult to get access to schools, because there is not the infrastructure to direct them. A number of charities-Business in the Community, the Education and Employers Taskforce-have been trying to fill the gap, but it is piecemeal. It is very piecemeal. This is why the businesses think, "How do I do it?" and the schools also think, "How do I know who the businesses are, and how do I make those links?" It is a very basic point.

It is the same thing about the careers service: again, we know what works in terms of careers advice. It is early advice, it is quality advice, it is onetoone advice, and it needs to be connected to the local labour market or know those wider sectors that young person might be interested in. Too often it is not grounded in that level of fact. We need to give particularly the schools now, who have responsibility for it, that level of information. At the moment I don’t think that is necessarily getting through.

For me, given that youth unemployment has been going up since 2004, we know there is something structural in this. The majority of young people, however, will get into work at some point. It is those who will become longterm unemployed that we should be focusing on. There are a number of factors there. We know it is concentrated in the old industrial areas, where there is a lower number of entrylevel jobs. It is also affected by the parents’ ability to work-high numbers on incapacity benefit, workless households, intergenerational worklessness. That is where the big problem and the cost is.

We also know that compared with many other countries-I am afraid I don’t have the figures in front of me-our intervention in terms of young people, and stopping them getting to long-term unemployment, is later than in other countries and not as wellfunded as in other countries. It could be a structural point. Again, this is all quite well known. This is where we are at as a nation.

You made a specific point about a couple of sectors. I go back to my point about local labour market information. Jobcentre Plus should know what the growth sectors should be over five to 10 years, and that should be informing the work of those frontline advisers. Once a young person at 18 gets referred to the Work Programme-and we want to stop them getting referred to the Work Programme; we need to get them a job beforehand-that information certainly will be there. I am not certain whether that is getting to the right places so we can make those connections. But information, I think, is key.

Q274 Chair: David-preparing young people for the job market, and also making sure they get realistic and sensible advice: your thoughts?

David MacDougall: There are probably just a couple of things for me. I think there has been a vacuum since Connexions has left. Connexions had its problems, everyone is aware of that, but I think schools have that in their remit at the moment. I think they probably need more development of what that looks like over the next couple of years. That will be a difficult one in time. Kirsty has mentioned that it is so important to have that integrated. In the way it is being put to schools at the moment, I have some reservations about how prepared they are to do that properly. That would be one element of stuff.

Kirsty made a good point, and it is not just around the old industrial areas; there is geography of unemployment, but for me it is a bit more sophisticated than just the old North and South divide. You have London, for example, i.e. East London, some of these inner boroughs; there is great unemployment there. You get places like Nottingham, and even in Birmingham. These are areas that this particular recession has had a big impact on, particularly manufacturing and construction. I think the old thing around the North and South divide is quite simplistic in this recession. I think it is small pockets, if you like.

Chair: Hotspots.

David MacDougall: Yes, hotspots. Don’t get me wrong: Scotland, per se, is in recession, but it is not just as simple as Scotland. There are areas in the west of Scotland that are thriving. There are elements of this recession, for me, that are different.

In terms of these geographies of unemployment, I will just use County Durham for example: there is one Jobcentre Plus vacancy to seven people in receipt of Jobseeker’s Allowance. Where that maybe gets slightly more interesting is if you look at the people on working age benefits: in relation to Jobcentre Plus vacancies, that is one in 53. That is when the ratio shoots up. It is very much about the fact that there is a lot of competition within that labour market, as Kevin alluded to as well. It is not just jobseekers looking for these occupations, as well: you have people on inactive benefits and young people. There is a huge amount of labour people can choose from at the moment, particularly in these tight labour markets.

Q275 Harriett Baldwin: But given that in my constituency, where we have relatively low unemployment, they are looking as far afield as Romania and Bulgaria, where they are proactively going out and recruiting people to come and move to the constituency to do these seasonal jobs, for those firms what are the barriers to tapping into the labour in other parts of the United Kingdom?

David MacDougall: I think it is probably something Kirsty said; it is about local labour market intelligence and information.

Q276 Harriett Baldwin: I am not saying local. I am saying you might need to look outside your local labour market. What are the barriers around that kind of mobility?

Kirsty McHugh: Housing.

Harriett Baldwin: Housing.

Kirsty McHugh: Housing is a big one.

Q277 Chair: Maeve, do you want to just come in at this point?

Maeve McGoldrick: The key thing from us, particularly from a delivery perspective, is everything that has been outlined before. We are talking about that gap between skills and access in the labour market. From supporting a wide range of people, not just the under25s, that is an issue for elderly people and for people having a career change as well. I am slightly concerned that this is not just a youth issue, where everything should be done in schools to get that gap between skills and employment. It is for all customers that we support, and there needs to be something done, to a large extent, to ease that transition. That is about work placement, about internships, and being able to afford those internships. There are issues that need to be resolved for everyone.

Specifically, when you are talking about young people, they have these additional specific issues that you need to deal with. I think it is important to start to assess and diagnose what it is that is preventing them from moving into that labour market and taking up those opportunities if they do have the skills. Again, you have a wide range of young people. In Newham, one of the key things that we deal with is motivational change programmes- enabling people to prioritise work and have that work ethic, and see the value of it-but also then understanding the context in which they are making decisions. Quite often there are extremely chaotic situations going on, so you have to do a lot of intensive work with the family, not just with the young person. That can be established through the schools support services that you are working with.

Q278 Chair: To what extent do you think the grey employment market, the unofficial labour market, is masking an element of youth employment? I think this is something you have looked at in the past.

Maeve McGoldrick: Yes, it has been. Again, it is not just an issue for young people; it is an issue for a lot of people who have certain barriers to employment. The benefits system is one, but also the confidence and skills to access formal employment. With young people in our area, there is a lot of entrepreneurial activity. Young people are very quick to do that, but there are not these services available within Newham and other parts of East London to tap into that activity and really harness it. It is that transition between the skills and enthusiasm and actually entering the employment market.

Q279 Brandon Lewis: I was interested in the comments earlier on about the way that schools work. In my constituency I have seen both. It has improved dramatically in the last 18 months to two years, but I have schools that work really well with some employers, and schools that are not interested. They think it is getting in the way of their curriculum, and they do not entertain it. Employers are frustrated because there is a big skills gap, particularly on energy and engineering

I particularly want to pick up on Harriett’s point. I also have a similar thing. My constituency is mixed between the tourism industry and a big agricultural industry, and people in the agricultural side say to me that they are having to recruit from Poland and Portugal, and accepting students to do work, when we do have a large number, in certain pockets of my constituency, of unemployed young people who just will not take those jobs. They literally say, "We are not interested in that." How do we breach that one? It is not a housing issue, because they already live there.

Harriett Baldwin: Those jobs come with housing.

Brandon Lewis: Yes, they do; that is true.

Kevin Green: It might well be a benefits issue. We have lots of recruiters who provide temporary seasonal workers to different parts of the labour market, and we hear this issue quite a lot about bringing people in from Romania or Eastern Europe. One of the things that is absolutely clear is that people have a huge concern, if they are on benefits, about taking a seasonal, a parttime or a temporary job.

Q280 Harriett Baldwin: So Universal Credit should address that with the earnings disregard?

Kevin Green: Hopefully, absolutely. At the moment the fear is, "If I come off benefits, and I do this job for six weeks and it is seasonal, I then find myself unemployed again, and there is a huge delay in the process of getting benefits, and that means I won’t have any income to support my family, so actually I would rather not take the risk at all." They will say, "I would rather stay on benefits than take the risk of coming off for a short time," even though as recruiters we are saying, "It’s good news, because it demonstrates you have work experience, gives you a foot on the ladder, and all of those things." The benefits system is one part of it.

Secondly, there is something about getting-and I don’t know quite how we do this-people to understand that any work experience, even if it is quite a menial activity, is really quite powerful when you are talking to an employer. I think we would all agree on that. If you can demonstrate, even if you have done three or four seasonal parttime jobs, that you have those skills to get up in the morning, to go and do perhaps a menial job, even if you have a degree or whatever, it demonstrates to employers that you have those practical skills, which are hugely important and something that they are looking for. It does help people in terms of their longterm careers, even if they can demonstrate that they have done jobs that they would perceive to be below their expectations.

Sheila Gilmore: This is maybe a question for Brandon almost. There is this suggestion-and I think it is an interesting issue-that people are not taking jobs. These people who are refusing these jobs presumably are not on benefits, because if they were refusing these jobs, they would be off benefits.

Chair: I am not going to have Brandon as a witness.

Sheila Gilmore: Points like that have been made.

Chair: You have made your point. Shall we go on to wage incentives?

Brandon Lewis: It is just a fact that there are employers who have to go overseas because local people will not take the jobs, when we do have unemployment in those areas. That does not quite add up.

Sheila Gilmore: If it is local young people, it would be interesting to know how that is happening, because of the conditionality.

Chair: I know, but I think once we start giving evidence, it will become a bit difficult to manage. I think we will move on to wage incentives.

Q281 Sheila Gilmore: I will ask Kevin first of all: in 2010 your organisation called for a twoyear National Insurance holiday for each additional young person employed in the private sector. Why did you suggest that, rather than a wage incentive scheme?

Kevin Green: Again, we are pleased that the Government have responded with the Youth Contract and the incentive scheme. I think it is moving in the right direction. The reason why we called for a National Insurance holiday was to avoid one of the things we are really concerned about with the Youth Contract and the Work Programme, which is the bureaucracy. If you look at the labour market, in reality, nearly all the jobs growth over the next three to five years is going to come from small and mediumsized companies.

If someone said, "I want to participate in this. I have a job vacancy. I am thinking about taking on a young person; how do I do it?", how are they going to know who to phone? "Is there one phone number? No, there isn’t one phone number. Do I go and talk to Jobcentre Plus? What do they then do? How informed will they be? Who will they then refer me on to? I have a job; I want to fill it, and I want to fill it next week." We are going to create a huge bureaucracy, which will make it difficult for employers who are looking to take someone on, and the incentive might just be enough to get them to take a risk on a young person.

I think we are all trying to do the same thing; it is about how you do it. I am concerned that the mechanism we are creating is too bureaucratic for SMEs to participate. I think a lot of them will not participate. That is why we thought of a National Insurance holiday, where you do not pay that tax, you get a code from HMRC and then you are away. You do not need to talk to any other government body. That is why we were keen to do it, because we think it gives ease of access, to make it easier for the employers. The fundamental thing is we need to incentivise employers to think about those young people. What the Government is doing is going in the right direction, and you can see our concerns about bureaucracy, and how people get through the system, and how you go through all of this process.

Q282 Sheila Gilmore: Particularly for Kirsty, perhaps: we have 160,000 wage incentives, and some of our witnesses have said that is an awful lot more than has been achieved in similar periods previously.

Kirsty McHugh: Yes.

Sheila Gilmore: Do you think all of these incentives will be taken up?

Kirsty McHugh: Do I? The short answer, in relation to that, is that I think it will be challenging-first of all, based on the evidence of previous wage incentive schemes, but secondly, the people who will be eligible for the wage incentives are only those who go through the Work Programme or Work Choice, which is a disability programme. However, the Government did announce last week that some who are still at Jobcentre Plus and unemployed for six months would also be eligible for the wage incentive.

If you look at the number of young people who are due to be referred to the Work Programme this year, the latest Government referral figures say that there will be 140,000. This is a drop in the number that they thought would be referred to the Work Programme from their volumes in December. So 140,000 referred. There is supposed to be a takeup of 50,000 wage incentives over that oneyear period. You can see that is quite a big proportion there. That is quite a big ask. Therefore, under those circumstances, there may not be the takeup.

That said, we have done some initial work across our membership in terms of how it is going. As with everybody, we were very much in favour of the wage incentive, etc. It all helps. However, the things we were concerned about were the extent to which it would have a displacement effect rather than a job creation effect, whether the level would be sufficient, particularly in some regions, whether-to put it bluntly-some corporations would scoop up large numbers, rather than SMEs accessing the money, and whether the administration would be simple enough.

What we have found, and it is very early days in terms of the feedback, is that the introduction of the wage incentive has driven business to the Work Programme providers. What is interesting is that what some of them are telling us-and it is not a uniform pattern by any means-is that they have then been able to, in effect, crosssell. It has not just been the wage incentive. They have then been able to talk about older people, and a variety of different employment support, but it has driven that initial business, which is a good thing.

The figures I have seen, and again it is fairly early on, show that SMEs have been taking up the wage incentive, but it could be a timing issue here, because corporations will take longer to organise bulk takeup. I think we could find the larger organisations coming in. I think Avanta have some evidence about that now. Initially, however, SMEs were more. What was also encouraging was that, rather than being displacement effects, because it is hard to tell really, it seemed to be encouraging employers to bring forward recruitment decisions. They were uming and ahing about whether to take someone on; they wanted to, but they did not quite have the confidence to do it financially. This does seem to have given them a bit more confidence to employ. It is still early days, and maybe David will have more experience in terms of the impact of the administration, etc., and whether that is proving a barrier.

Q283 Sheila Gilmore: I don’t know whether the initial contact is made by the Work Programme providers or by the DWP. I happen to know that Edinburgh University has received one of these letters. I think it was from the DWP.

Kirsty McHugh: Yes, that is right.

Sheila Gilmore: It is neither in the private sector, nor is it a small or medium employer, but they have received a letter encouraging them to get into the scheme. Who makes that contact?

Kirsty McHugh: Both. The Government sent out 365,000 letters to employers when they launched the scheme. Apparently they had a 15% response rate, which is good. That is actually very positive. The Work Programme providers will have it as part of their series of goods that they can sell the employer, as it were. It will be one of the things they will talk to the employer about. The Work Programme providers do have the ability to target that in the areas of most need, if they so wish.

That said, of course, there are so many on offer, actually you can have a wider selling strategy anyway in terms of the wage incentives. The history of previous wage incentives is that there tends to be higher takeup to begin with, but then of course it dissipates and goes downhill. One of the things we may need to put in place is some sort of national communications campaign at some point over the life of the incentives, and we have been talking to Government about whether that will prove to be necessary. We are not quite there yet.

Q284 Sheila Gilmore: So there will be facetoface contact, especially for the small and very small employers? Because letters are one thing; we all know you get lots of letters, and people complain about the amount of stuff. They probably get various things. Are the Work Programme providers able to make that kind of direct personal approach?

Kirsty McHugh: Absolutely. The Work Programme providers only make money, of course, by getting people into jobs. Therefore the relationship with the employer is key. They have to really invest in that relationship with the employer, and that employer has to trust the Work Programme provider to provide them with a good pool of candidates from whom to employ. They have those onetoone contacts, and one of the things they will be able to talk about is, "If you take on from this age group, you would be eligible for a wage incentive as well." Of course, it is down to the employer to apply for the wage incentive, so that element of bureaucracy does rest with them rather than the Work Programme provider.

Q285 Sheila Gilmore: Do you think there is anything more the Government could be doing, or do you think it is very much down to the providers at the moment to interest people in this programme?

Kirsty McHugh: The first thing the Government needs to do is refer eligible young people in sufficient numbers to the Work Programme.

Q286 Sheila Gilmore: Does anybody have any idea why the numbers are not being referred? This is something we have heard about-I think it was also about some of the hard to reach people, those with disabilities and so on.

Kirsty McHugh: Yes, the Employment and Support Allowance.

Q287 Sheila Gilmore: Does anybody have any understanding of what is going on here?

Kirsty McHugh: The statisticians. The Office for National Statistics has its figures in terms of those they think will be unemployed for a certain length of time and therefore would be eligible to be referred to the Work Programme. Of course that is based on OBR2 projections. That is put through the DWP’s marvellous systems, which come out with figures that are then sent to each of the Work Programme prime contractors in terms of what they can expect for each of the groups of customers-that is a horrible word-jobseekers: the 16-to-24s, the 25plus, those on Employment and Support Allowance, etc., etc. From there, they will be able to try to put together their financial model.

The latest set of figures has shown a decrease in that young age group, which has been surprising. We have known for a long while that there have been problems with those on Employment and Support Allowance, and we know that is caught up with the Work Capability Assessment and a range of issues that this Committee has previously explored. But given that we have 730,000 young people who are unemployed who are not students, and we know that early intervention can make a huge impact, there is a question mark about those figures, which does worry us.

Q288 Harriett Baldwin: But out of the 730,000, only 480,000 will be the ones in receipt of Jobseeker’s Allowance. Presumably most of the rest of the gap will be made up with people receiving Income Support-

Kirsty McHugh: Yes.

Harriett Baldwin: -who will maybe not have a youngest child aged five or more, so no obligation to seek work.

Kirsty McHugh: Yes.

Harriett Baldwin: Would they be expected to come from that pool of 480,000 who have been out of work for the specified length of time?

Kirsty McHugh: Yes. That is absolutely true. We still think the numbers look low, and when people have a look at them, they do look low. It may be this is correct, but we do know that specialist intervention is what people who have been unemployed for six months, nine months or more need, especially young people. We do not want them sitting on benefits for long periods of time, because that is the worst possible thing that could happen.

Q289 Glenda Jackson: These questions are essentially for David and Maeve; it is nice to be able to bring you in. Some witnesses have told us that paying job outcome and sustainability payments to Work Programme providers, in addition to the wage incentive payments to employers, will inevitably become dead weight, paying for outcomes that could have happened anyway. What will Work Programme providers be doing to justify the job outcome payments of up to £1,200 for wageincentivised jobs?

Maeve McGoldrick: I am happy to start. Again, our perspective is only focused on our delivery within Newham at the moment, and things are very different across the UK. Our take on the wage incentive is that we are not actually using it that much, to be completely honest. The relationships that we have with employers in the local area have been established for a very long time, and the basis for that good relationship is the guarantee that we can offer them good quality people that they can recruit, and it is secure employment for them.

Ultimately, our priority is about ensuring that those people are highly employable. Employers respond to people who are best for the job, in our view, as opposed to a limited amount of cash income. So from our perspective it is about prioritising that support for the customer, and investing in the support. The idea behind it is great-to create more job opportunities-but we are not necessarily seeing that there is dead weight coming as a result of this. What we would say is that there is still not necessarily enough money in the pot to support all young people. While they may be on JSA and under a certain age range, they have hugely varying needs and levels of intensive support that they require-not all of them: some need very little, and some need more.

Going back to what Kirsty was saying before, if we were to do this all over again, our key recommendation would be to do a much better diagnosis at the very start, have much more of an understanding of the types of needs of the different young people, and be able to tailor that support service and that package accordingly, and so have the level of funds that is necessary to deliver the support that is required for each individual. In that case you would be receiving the right outcome. They would be more accurately aligned. Your payment outcome would be more accurately aligned to the barriers you are overcoming with that individual.

It is a difficult one to look at if you are trying to compare the investment in employers to respond, the investment in providers not to cream and park, and to support these people appropriately. Then, whenever you look up, when Universal Credit comes in, there will be not necessarily more investment or less, we are not sure, but under25s will benefit a lot from Universal Credit, because currently they are unable to access elements of working tax credits. Under Universal Credit, they will be supported, so there will be financial incentives there for them to progress into work. If the Government is to look at how much money they are investing in terms of that financial incentive to get somebody into work, versus how much money they are investing in the support that is required to get them into work, we are not necessarily sure that they have that balance right. Financial incentives are important, employers respond to them, customers respond to them, but actually support, and really good, highquality, sustainable support, for us, is always the fundamental if you are to get that longterm outcome and the financial return.

David MacDougall: I would echo some of the things that Maeve has broached here. For me, the subsidy is not particularly important for some employers. Over 70% of employers we deal with are SMEs, and they will not actually interact greatly with Jobcentre Plus. They do not use Jobcentre Plus. We have longterm relationships with them already standing.

Regarding some of the anecdotal feedback we see from employers in amongst this wage subsidy, as we see it in the round at the moment there is investment for the wage subsidy, but it is not the overriding issue as to whether people will be recruited-it is an addon. Some employers, particularly SMEs, will use that money to up-skill. That will be a huge element of it. It might be the crux or breaking point of whether they will actually take someone on. For me personally, the wage subsidy is not enough to be a job creation programme,-£2,000 to an SME. Let us bear in mind what some of these SMEs are. They might be onemanbands; they might be five or six people. If you are investing that kind of money, £2,000, it is not a great deal in the wider scheme of things. Getting the right person for them, over a longer period of time, and equipping them with the prerequisite skills, for me is more important.

Q290 Glenda Jackson: Is it in effect money that is not being utilised, or is it money that you are arguing could be utilised more effectively?

David MacDougall: If I use the North East as an example, here are some statistics. Roughly 55% of the wage subsidies have come out around the North East at the moment, which I personally find quite encouraging, because that is showing that it is helping employers in the right areas. Employers are utilising that subsidy in those areas, where there are hotspots of largescale unemployment. I suggest that would be a very good thing. In the South East, where there are more vacancies and probably a bigger pool of people to choose from, the subsidy, I would suggest, would be less important, because there is a wider pool of people to take the jobs, and more skilled people as well. There are two different tales to tell, depending where that subsidy is geographically as well.

Q291 Glenda Jackson: To go back to the point that you made, Maeve, I was intrigued when you said that you think, in effect, this is not helping the hardest to reach, the hardest to put into employment. You mentioned a lack of-I am paraphrasing, I know-information about individuals, so that from the very word go, you are working with a hand tied behind you. Yet we have been told over all these inquiries that it was the hardest to reach that were the priority as far as the Government was concerned, and there were going to be specialist providers to help these young people. Am I overegging the pudding? Are you saying this is not happening?

Maeve McGoldrick: No, I think it is happening. The intention of every organisation we know that is delivering is to help the hardest to help. The majority of organisations would not be in this job if they were not there to do it, and that is absolutely fundamental to good quality delivery, from management right down to the front-line adviser.

Chair: Karen Bradley will have a set of questions on this in a second, so I don’t think we need to go through this in huge detail at this stage.

Glenda Jackson: She can finish, can’t she?

Maeve McGoldrick: Specifically on the wage incentive, I think the other element for us, very practically, in terms of delivering it is that the Work Programme is set up for a year’s sustainable employment in work. The objective is long term, yet the wage incentive is short term; it is a steppingstone to a large extent. It is only up to six months. As a provider, you are under a huge amount of pressure to deliver. There is a ministerial lead that "This has to be highquality performance, and if it is not you will be out of the game". That is a continual message going on. That is great, because it improves the quality of the services. However, people are always on eggshells, and there is always pressure to perform. Whenever you do that, and an additional programme to deliver on top of what we are already trying to deliver, for a very, very small team, it is highly pressurised. To an extent, it is not necessarily a priority. Our priority, when we have to sit back and think, is: "How many people do we have to support this week? How many personal advisers per customer? Do we have the time to go out there and negotiate with employers? Do we have the time to do the supposedly paperless administration of this incentive?" Effectively it is not paperless.

It would be better if you had a system where it was delivered by the DWP-automatic IT systems that allowed that to happen automatically-and it was an addition to the employer. Providers should really be focusing on supporting people, to match up the skill set and make them employable and find them the opportunities. The reality is, whether it is good or not, as a provider we do not have the resources available to do this additional piece of work, because our priority is really identifying the hidden barriers and providing that intensive support.

As an organisation we have a lot of extra resources. We have fantastic links with schools. We have an Ofsted registered school within the community. We have youth clubs. We have a range of Governmentfunded but also privatefunded NEET programmes, etc., so we have those extra resources that we can tap into and provide that wraparound service. It is important to keep the context in which you are trying implement this initiative under a highly pressurised programme.

Q292 Glenda Jackson: Is your wraparound support unique?

Maeve McGoldrick: No, not unique. There are loads of organisations out there, multipurpose organisations on a smaller and a larger scale, that do what we do. It is continually challenging with the cuts. We used to run fantastic Connexions services. They have all completely disappeared. There is an absolute gap in that market. I think what maybe is unique about us is the fact that we have been around 35 years, embedded in that community. Therefore people trust us and we have fantastic partnerships with the Jobcentre, with the schools, with the police, with the social workers, with the mental health organisations, which are absolutely fundamental to supporting the harder-to-help young people. That is a small bracket within the age range that we are talking about, of unemployed young people, and it is good that we can really specialise our support towards that group of people, because we have that history and those relationships.

David MacDougall: I would again echo what Maeve said. I think the most important element is the customer journey-giving these young people the skills they need. That is the crux of it: getting the diagnosis right, giving them skills, and then brokering job opportunities. I don’t think this is rocket science to a certain degree. If you get the diagnosis right, if you equip them with the right skills, and if we as organisations have the right employers on board, that for me is the right track, to get them back into work. It is not rocket science out there. These are things that do work. That is all I would add. The wage incentive is good; employers are taking it up, but it is not the beall and end-all of how we will reconnect young people back into work.

Q293 Glenda Jackson: Does that mean that in many instances the wage incentive payment on its own would have been sufficient to ensure the job outcome, or in effect would not have been?

David MacDougall: If I just go back to some of the anecdotal stuff I mentioned about the North East, there are a large amount of employers in the North East who are taking up that subsidy. If you are delivering services as an employer in a tight economic environment, something maybe around £2,500 will say, "I can afford to recruit someone now." It won’t be in three or four months’ time; it will be immediately. So I think the wage subsidy will be very useful in those areas where there is a more dire economic climate, shall we say.

Q294 Glenda Jackson: Is the evidence there? I mean more than just anecdotal evidence. We have spoken about hotspots; I can think of hotspots in my own constituency, but in the grand scheme of things, the numbers are small. Nonetheless, we know where the hotspots are. If that evidence is there, do you think that there should be some way of prioritising funding for those hotspots and not necessarily using it in areas where, as you say, it is not such a vital part of delivering the programme?

David MacDougall: I think the premise for that is right to a certain degree, but we need to focus back on what Kirsty said. The takeup for these regional incentives historically, right back since 1999, has been very low. There are geographical differences at the moment around the North East and South East. For me that is a good thing, because that means it is working in areas like the North East, but historically, as I said, regional incentives have not been taken up hugely. Given the amount of evidence I have at the moment, I think, as Kirsty said, it will be very challenging to meet that target.

Q295 Glenda Jackson: Do you regard that as an inevitable part of these wage incentive schemes? I think you do, from what you have just said.

David MacDougall: I don’t think it is inevitable, given the numbers we have-

Glenda Jackson: And past experience.

David MacDougall: -yes, and past experience. I think we have to look at the past experience of wage subsidies, and what they do to a labour market. I would just reiterate that I personally do not see them as job creation. There is not enough. £2,000 is not about job creation for me. The anecdotal evidence, I would give you again, just in some of the figures, is that a lot of employers are using that to train young people. That is what they will use the incentive for, and again that would be a precursor to say, "Okay, I will employ someone now as opposed to three months down the line."

Q296 Glenda Jackson: There are lots of nodding heads and waving hands, so clearly Kevin and Kirsty might like to jump in here.

Kevin Green: There are a couple of things here. On the wage subsidy thing, there are a couple of things. One is that we have to recognise we are working on supply and demand. There is the work that the welfare-to-work providers are doing in terms of preparing people who have been out of the labour market, or have been unemployed for a period of time, and getting them the right skills, and all the issues they have with particularly disadvantaged youngsters. It is not an easy thing to do, so the funding is certainly required to do that.

However, there is no point in doing that if we don’t have demand. You need something to create demand, particularly with SMEs. When we took evidence, when we ran our commission, employer after employer said, "This would help us think about perhaps taking a young person, because we do need to invest more in their training when they first come into the workplace." I don’t think it is, "Would I create a new job because I am getting £2,000?" I don’t think it will do that, but what it may do is, "Actually, I will take a chance and take a young person, rather than take the experienced one."

If you go to my evidence right at the beginning, I think this is a really important tool to have in our armoury, to encourage SMEs particularly to say, "I will take on a young person, and I will use that funding to give them some additional training and support at the beginning." I think it has a very powerful role to play, but obviously the Work Programme and the Youth Contract providers need to have the investment to be able to deal with the difficult issues that they have in terms of preparing young people for the world of work, where they may have a range of social issues that are being addressed.

Q297 Glenda Jackson: How would you guarantee that training was real, in those small and medium enterprises, and not just taking the money?

Kevin Green: That is one of the things that you would obviously want whoever was facilitating that process to make sure of: that the young person was there in six months’ time and was progressing.

Q298 Glenda Jackson: No, no, you need it earlier than six months, don’t you? There must be some way of guaranteeing, if that is the situation, that the young person is getting a fair deal. There is too much anecdotal evidence of kids being exploited in the past in these kinds of schemes. All I am saying is it is not just a oneway street.

Kevin Green: Yes, but these are real jobs. They are being paid. If the employer has taken that choice, then that is good news for the young person, good news for the employer, and however they are using that money, if it gets that person that opportunity, and if it means that someone in the workplace spends more time with them, preparing them, helping them learn the job, then that is good news. I think it is really important that we do not lose sight of creating those opportunities, and encouraging businesses to take a bit of a risk, or what they would perceive to be a risk, on a young person.

Chair: I think we need to move on to Karen now, if you are happy, Glenda.

Glenda Jackson: I think Kirsty wanted to respond.

Chair: Oh, sorry, Kirsty, yes.

Kirsty McHugh: Kevin is absolutely right. There is a lot of agreement, probably, across the panel: it is bringing forward investment decisions rather than creating huge numbers of new jobs, and probably just tipping more in favour of young people, so that is all to the good. I would just, I suppose, warn against judging the success of this based on the number of wage subsidies taken up. We should look at success in terms of how many young people go back into work.

Glenda Jackson: Thank you. Absolutely.

Q299 Karen Bradley: I have some questions-actually, Kirsty, that very neatly leads on-about wage incentives and supporting the most disadvantaged. In particular, I would like to drill down to the Work Programme. Do you know how the wage incentives are being allocated within the Work Programme? Is it consistent across providers? Are there different examples? Is it on the basis of a set amount in each contract package area, or for each contractor, or for each individual contract? Perhaps you could just give us some information about what is happening on the ground in the Work Programme.

Kirsty McHugh: There was quite a lot of discussion about this to begin with, in terms of whether there would be set allocations per region or per provider, etc. To be fair to DWP, there was a lot of consultation around how this was going to work. Maeve and David are probably better placed in terms of the detail, but what I think happens is basically it is just down to the employer to apply for the wage incentive. There are caps, but we will not reach the caps, given the number of wage incentives that are out there. It is a threeyear programme, so they have allocated roughly 50,000 per year in relation to those, but if 50,000 were taken up in the first year, we could eat into the second year’s, probably without any problem. Given the numbers being referred overall, we do not think that will be a concern. It is very early days in terms of figures. There are some regional variations across providers in terms of how many wage incentives they have been able to sell, as it were, but it is too soon to see any patterns in relation to that, I am afraid.

Q300 Karen Bradley: Do you want to add anything to that, David?

David MacDougall: No, I would just say that was one of the great debates: should we ring-fence placements in and around the North East and South East? Again, I think it is too early to say in the round whether that should be done. I can tell you there are more placements we have in the North East than there are in other areas, and I would suggest that would say it has been successful, so that has been targeted in the right area.

Q301 Karen Bradley: Following on from that, one of the things we have heard in evidence is that there is a lack of awareness from employers about the wage incentive. Is there anything that you have seen from Work Programme providers that is helping employers to gain awareness of it, and therefore helping takeup of the wage incentives?

Kirsty McHugh: There is a lack of awareness, but more than anything else I think there is confusion in terms of the Work Programme, Jobcentre Plus, apprenticeships, and I know you have had evidence from CDG about the number of programmes being run in East London. We now have a Big Lottery Fund talent match scheme, £100 million, being targeted at youth unemployment in the most deprived hotspots, which will sit alongside all these things, and from the employer point of view you do worry about too many people knocking on the door with a whole array of wares. You would think, "I have no idea. How does this all fit together? What do I do?"

The most important thing the Work Programme provider can do is to make that coherent. It is that hackneyed phrase about "hiding the wiring". The good thing about the wage incentive is that it is going through the Work Programme providers primarily, so it can be integrated into that support. The Big Lottery Fund money, for instance, is coming through a different route. I am not saying that is a bad thing, but it is that typical policy layering that is going on, and you have the different frameworks, etc. It was all going to be simple, wasn’t it? All Work Programme. It isn’t.

Q302 Karen Bradley: So is there any mechanism available at all to focus the wage incentives on the hotspot areas?

Kirsty McHugh: Yes, the providers can do that.

Q303 Karen Bradley: So the providers can and are doing that?

Kirsty McHugh: Yes.

David MacDougall: We are marketing it; we have a simple leaflet. It is just coming down to the basics: "What does this programme mean for you? Here is what we can do for you. Please get in touch with us." We have had that longstanding relationship with a lot of the employers we are working with. It is important to be very clear about what the subsidy means for them and how we can help them implement it. Again, it is just important to know that the employer needs to do the paperwork. It is about us helping them, as well, in that kind of cycle. Just as an important point, as well, we keep on talking about: "There has been a new subsidy." If you do some research around some local areas, there have been 10 or 15 subsidies available, through local councils and so forth. The subsidy in itself is not new; it is how we can use it as an organisation more intelligently.

Q304 Karen Bradley: What about the flat-rate wage incentive? Kirsty, I think your organisation has suggested that it does need to be maybe a different level in areas of high unemployment, to add extra incentive. Perhaps you could expand on your thinking on that.

Kirsty McHugh: Again, this was a big area of debate while we were going through the policy formulation stage with DWP, and it was not just a conversation about potential regional differences but about parttime work as well, and whether there should be a lower level to incentivise part-time work, etc. DWP went for something quite simple, and I think that is probably the best way of doing it, but we know that what might tip an employer over the edge to employing a young person, creating a job in the North East, can be very different in London. That is just the basics; we all understand that. I sound like a spokesperson for the Government, which is quite unusual for me, but I think the Government is open to adapting that if need be, but at the moment we don’t know.

Q305 Karen Bradley: When would you recommend that be looked at again, for us as a Committee and for the Government?

Kirsty McHugh: We need six months’ worth of data.

Q306 Debbie Abrahams: My question is particularly to David and to Maeve. You have already talked about the need to get the diagnosis right, and then the treatment and tailored programmes need to be appropriate. In relation to the wage incentives for young people with disabilities, do you think that is the right level? Do you think we are approaching it in the right way? What else should we be doing to ensure that young, disabled people have the same opportunity in the Youth Contract that ablebodied young people do?

David MacDougall: Again, it is only a small part of the package around Work Choice. The subsidy is going to be a good thing for participants in Work Choice, including disabled people. For me, there needs to be still more structured inward support and help. It is probably about integrating some local provision as well.

There is other stuff happening around Access to Work. Integrating what is there a lot better is another important element. It is having the resource to give people the intensive interventions they require. If you have a very good employer and a good relationship with them, they will take on people provided they have the level of skill set needed to take that job. Generally, disability should not be a barrier to them being taken on and given that chance.

Q307 Debbie Abrahams: Can I just clarify, is the wage incentive available as well as the Access to Work grant?

David MacDougall: Yes.

Kirsty McHugh: We checked with the Department and, yes, it is available.

David MacDougall: I think it is important for that element to marry in.

Maeve McGoldrick: We don’t deliver Work Choice, but obviously we deal with a lot of young people. I said before that mental health among young people is one of our key issues currently. It is really scary how much it has developed in the past five to 10 years. It is a difficult one. We always go back to, what is the purpose behind the wage incentive? It seems you are answering two different things here: on the one hand, it is to ensure that the most disadvantaged are able to access the labour market; on the other hand, it is there to support employers in providing opportunities for young people as a whole. Clarity around that would really help in terms of being able to answer this question. If it is about ensuring those opportunities are there for people to enter the labour market, it goes back to the point we made at the very start about investing in that steppingstone into the labour market, which is one way of doing that. Work experience is great, but the thing that really motivates young people on our programme is paid work experience. Young people want paid work, very simply. They are not on a high wage. Returning to the geographical issue, it is quite easy to get young people in to us because they are on a much lower national minimum wage, and they are willing to accept that initially as a stepping-stone.

If Government strategy is to ensure that the most disadvantaged are able to enter the labour market, it is about providing the intensive support to deal with the current barriers to them being able to. If the Government’s intention is to motivate employers to hire those people, that is a different strategy. At the moment I think they are trying to do both, and as a result it is quite difficult for us as a provider to understand how to use that money effectively; either Government hands it to us and allows us to properly support people to get rid of those barriers, or it deals directly with employers and has a programme strategy around ensuring there is job growth for that skills area and ensuring there are opportunities and a transition approach that will allow people to move.

Kevin Green: In reality, DWP have never talked to us at all about a wage subsidy. We have 8,000 branches across the country, and 3,700 private sector businesses, all of which are talking to employers and to candidates every day. We think we have an active role to play in that space. We want to encourage DWP to talk to us, because we have expertise on that side-of the facilitation into the job; we do not have the expertise in terms of giving young people the skills and capability they need in order to get that job. I think the Government is trying to do two things, and it needs to think about its delivery mechanisms; sometimes it does need to be integrated, but sometimes you need different partners to work with in order to deliver the outputs we are looking for.

Q308 Debbie Abrahams: My next question relates to some quite horrifying figures for black and minority ethnic communities around current unemployment levels. Over 55% of young black men aged 16 to 24 are currently not working. I think in total it is about 44% for BME communities. A very interesting radio conversation over the weekend suggested that certain employers have said to employment agencies that they only want white people to interview. That is obvious, blatant racism.

Kevin Green: Yes.

Debbie Abrahams: But also, what about the unconscious bias certain employers will have? How can we apply that and address this within the Youth Contract?

Kevin Green: Can I take the first point? The activity you are talking about is against the law. We have laws in place on discriminatory activity, and we work very actively with our members to ensure they adhere to that and understand their responsibilities and, where they are given such an instruction by an employer, that they challenge it, that they point out that it is illegal and that they certainly do not collude with it. That is clearly what our members are trying to do on a daytoday basis. There is, and has been for a long time, an unconscious bias we have; that is why we have the legislation. What we are clearly trying to do is get our members to challenge, confront and deal with that. I am sure the same would happen in terms of the Work Programme.

I think there is something about stereotyping, and we need to educate employers. The legislation is there, and that is absolutely right, but we need to challenge any assumptions where people are found to have them. Again, our members do that on a daytoday basis. A lot of this is about why those people from black and ethnic minorities are disproportionately unemployed. Some of it is around their home background and educational attainment; there is a whole range of social issues, as well, often in play.

Q309 Debbie Abrahams: I take issue with that, Kevin. Yes, there are issues of educational attainment levels, but there is quite strong evidence that even with equivalent qualifications BME groups are disproportionately affected. Is it about monitoring? I would be very interested in terms of what data is collected, for example, around recruitment agencies. What is being monitored? When we are recruiting employees through our providers and so on, that should be an explicit area that is addressed and discussed with employers. These statistics should be horrifying us, they really should. Can you give me some reassurance in terms of how this will be addressed?

Maeve McGoldrick: From our perspective, it is not an issue within Newham. We have over 100 dialects spoken in Newham alone. It is an incredibly diverse community that we are supporting. It has not proved an issue for us in terms of recruiting people.

Going back to what Kevin said about the purpose of the wage incentives, is that to prevent discrimination in recruitment and employment, or, from the employers’ perspective, should we be using and upholding the Discrimination Act? If the wage incentive is about barriers in certain ethnic groups, it should come through in that needs assessment that they need more intensive support. ESL3 is a massive resource for our provider at the moment; it is the number one barrier, particularly with the older customers we are supporting, but there is not necessarily enough resource there to deliver at the intensity many of our customers need in that area. That is about the Work Programme, the initiatives and the funding there being able to sufficiently support a person to make them employable. There is then another side about the recruitment processes. I think, again, there is a blurring between these two purposes behind the initiatives.

Q310 Debbie Abrahams: Any other final points?

David MacDougall: I would take up what Maeve said and say something regarding the administration of the incentive. Previously, the incentive on the New Deal was quite perverse to a certain degree. You had £75 a week that you got automatically. It was more an administrative problem; for example, after six months, a young person would leave Jobcentre Plus and we would just put someone in. What I have said in some of my written evidence is that we would like to adopt a "three strikes and you’re out" policy to regulate some of this behaviour, which may be in terms of discrimination. But it is not just about discrimination; some of these young guys from estates, for example, could be treated shoddily, so we would like to think, as a Work Programme provider, that we can regulate that very effectively by saying, "Okay. You have let that person go. What happened?" and then, the second time, "No way; we are not working with you." That general approach is, I think, a very good way of regulating it, and takes away the administrative burden I have seen previously on New Deal programmes.

Q311 Chair: Before we move on to discuss the 16- to 17-year-old NEETs initiative, I have one final question on wage incentive schemes. Do you think it is inevitable that there is a high level of dead-weight expenditure here on jobs that would have been created anyway?

Kirsty McHugh: I go back to my initial point: the fact it is bringing forward recruitment decisions, which is an important, positive result of this programme.

Q312 Chair: So it is not dead-weight.

Kirsty McHugh: If it means that young people are unemployed for a shorter period or have slightly more chance of getting that job over another candidate because of the wage incentive, all in all that is a plus.

Chair: So it is accelerating the process.

Kirsty McHugh: Indeed.

Chair: Does everybody agree? Yes.

Q313 Harriett Baldwin: Moving on to 16 to 17-year-olds and the scheme designed to reach those who have left school without any GCSEs or formal qualifications, I wanted to get the panel’s thoughts-particularly Maeve, I think-in terms of finding and engaging with them. We visited the Fairbridge programme at the Prince’s Trust and could see that was one of their challenges. Are you expecting to have to cooperate with local authorities and have them come forward with the people they think meet the category?

Maeve McGoldrick: As I say, we run a lot of programmes. We are doing the Innovation Fund currently as well. We are working very closely with schools; they already know those that will become NEET-those that they do not put forward for exams. For us, the critical period is the end of May through to September, when they have left school, are not sitting exams, and they drift. In the summer months, they can completely go underground or are not registered and we have to try to tap into them through our services. It is about early action, working with the schools to identify preNEETs and those most likely to become NEETs. We also run motivational programmes where we go in to schools and try to prevent them from becoming NEET and get them back on track two or three years prior to that risk age. So I think a lot can be done in terms of early action and engagement.

This is a huge issue for us; it is very difficult for Government to design a policy to be able to do this properly. I have said before that the key thing, particularly working with young people, is what we call our deep value relationship that we build with them. It is the idea of having that link worker, that specialist in certain areas who can also provide an array of support as the mentor and friend. The majority of our key workers have been excluded from mainstream education themselves or have been on a work programme with the New Deal or prior, so they have that empathy and that understanding. The type of person you are recruiting to do that initial engagement, and the way in which that engagement is designed, is fundamental.

When we do our recruitment, it is not a day or a week to get onto the programme; we do it over a twomonth period. It is very flexible. It is a matter of: we will do the recruitment down in our youth clubs, or we will come to them and find them, particularly if there are gang issues. In East London we have to think about finding a postcodeneutral area, it has to be that specific, to engage with some of the hardest to help. In terms of delivering the programme, again it has to be in a postcodeneutral area. We have tried to recruit the hardest-to-help young people who have been caught up in gangs, and therefore dropped out of school and become NEET. To try to support them we have brought them into our building; we have had young people with machetes outside our building trying to threaten them and saying, "You are in our territory." That is a really specific example, but it is about understanding what is preventing that young person from entering employment-it is something you would never put on a piece of paper or do in a general diagnostic at a Jobcentre elsewhere. You only get those hidden needs coming through when you have that relationship and the trust with the individual-the young person-with the school, and, as we said before, with the family you are working with at the same time.

Q314 Harriett Baldwin: So, working with schools, you are confident you will identify everybody who ought to be covered by this programme; or are there other organisations-young offenders’ institutes, local authorities-you ought to be working with? In terms of the funding we heard was there, they estimate there are 27,000 in terms of the stock, but that the programme funding would cover about 54,000. The Committee is very keen to hear from you in terms of whether you think you will actually reach that full number.

Kirsty McHugh: First of all, I think everyone is pleased that there is now going to be something for 16 and 17-year-olds, because there was a glaring hole. You don’t want this group getting involved in Jobcentre Plus, because it is about the benefit regime, etc. You need something that looks exciting, is integrated with their transition from school and seems really focused on them as a future. We need to make sure of that, and I think, from what I am hearing from the providers that are getting these contracts, it is exactly where they are. That is all positive.

We were involved in the consultation beforehand and had concerns regarding the eligibility criteria and the referral mechanisms. On the eligibility criteria, as you know, it is for those young people who have no A to C GCSEs. I am sure this point has been made to you before, but I will reiterate it anyway: that is very blunt. If you have a care leaver who has multiple disadvantages and has one GCSE in pottery, they are not covered by this scheme. That is just bonkers; it is not a good way. So the eligibility criteria are a concern.

There is also the question about identifying the young people who fit the criteria and whether the local authority has the information and will pass it across. I suspect they do not.

Q315 Harriett Baldwin: You would rely on local authorities rather than the schools.

Kirsty McHugh: There will have to be multiple ways of identifying these young people. The big lesson from the ESF4 Families contract-I have been doing a lot of work on ESF Families over the last few weeks-is that just relying on local authorities to refer will not work. It will be quite intensive, I think, for providers to have conversations with all the schools, the local authority and youth clubs, etc., to identify the young people, and it will be costly. If you look at the payment mechanism for this, it is £2,200 in the pot per individual, but that is inclusive of VAT, which takes you down to £1,800. Because of the way the commissioning has taken place, there is quite an emphasis on price. You have to go in at a competitive price, so it will probably be about £1,500 on average per young person. For that, you are not just going to be working with them; you will have to identify them to begin with. So it is essential to ensure that those referral and identification processes are as streamlined as possible, otherwise that will take the cash, rather than actually working with young people.

Q316 Harriett Baldwin: What I am hearing you say is that it is going to be very well subscribed; you are very confident that you will be able to cover the full number you have funding available for, and actually what you would really like is to see even greater levels of funding so you could cover the people you talk about who have very low levels of educational qualifications but might not meet these criteria.

Kirsty McHugh: I am not going to bed with complete confidence about this scheme, I think it is fair to say, particularly because I have seen what has happened in terms of ESF Families. There is certainly enough need out there, but the eligibility criteria being drawn just to young people with no A to Cs I think is wrong, and will miss out some people with lots of need, who, because they have an A to C in something, will not get it. There are also concerns around finding the young people who fit the criteria.

Harriett Baldwin: So you may not cover all of them because you may not find all of them.

Q317 Chair: Are there any data protection issues getting in the way here about getting the names and addresses referred from the local councils? That is not the barrier you mean.

Kirsty McHugh: No idea, if I am honest. I don’t know whether you know.

Maeve McGoldrick: No. We already run quite a few NEET programmes and work very closely with our local authority. In Newham, we and our local authority expect there to be a huge number of NEETs who are not on the register, and this is not tapping into that, so it is about going underground and finding them.

Q318 Chair: So it is not a legal problem; it is just practical.

Maeve McGoldrick: No, but I would like to back up Kirsty’s point about eligibility and referral. We are also delivering ESF Families at the moment. We do have a question about how these two programmes will interact. Is designing them separately the most effective way? There are also very practical things about eligibility. For example, currently with ESF you need to have somebody, or somebody within their family, who is claiming benefits. We have arranged with our local authority, because we have that relationship with the community, that they let us pick people up and refer them directly on to a programme rather than through the local authority. People are coming to us who are not on benefits, and they cannot get their family member to come in to qualify for them, so we are investing in our welfare advisers that come into our programme to advise them to go and sign on benefits and make a claim so they can come onto our programme so we can then get them off benefits. I think we need to think very practically about the reality. If we want to act early and want preventive services, do we wait until young people are at the point of crisis, or do we expand that and think about working with the whole family, rather than the young person?

Q319 Harriett Baldwin: In terms of the contracts, our understanding is that the providers will be announced very soon.

Kirsty McHugh: Yes. They have been coming out in two tranches, but there has not been a public announcement of all of them. We were expecting the public announcement on 29 June. It seems to have been pushed back a week or so.

Q320 Harriett Baldwin: Have there been any challenges in the procurement process, or any problems with the timetable? What were the main difficulties in the procurement process?

Kirsty McHugh: There were a few, weren’t there, David?

David MacDougall: If we step back, I would suggest DWP’s Employment Related Support Services Framework is a good vehicle, if you like, to procure from. Obviously we had information that the Department for Education and DWP were speaking, and there was very much a likelihood that it would go in the framework. After consultation and so forth with DWP, it then went on to a separate procurement process through the Department for Education, I think with some feedin by DWP. The frustration for me is that you spend so much time getting on a framework that was going to be the catalyst, for employability services. Let’s face it: the welfare to work philosophy has been to consolidate the marketplace to a certain degree, not create new additional frameworks. So it came as somewhat of a surprise to us that there was an additional procurement process to go through.

It was more from the third sector. We did not actually go in as a prime contractor for this provision, to be honest with you. I can tell you that some of the third sector did say, "Look, can we have an idea who is actually on this framework for the contract?" and what was said to them was, "Let me get back to you on that one." Then they came back and said, "Why don’t you put in your expression of interest to the Department for Education, and they will subsequently give it to the prime contractors?" There was a communication problem between the third sector and the prime contractor, who did not always have a marketplace to open up constructive dialogue. I think it was quite an opportunity missed to get some organisations into that marketplace. That would be some kind of anecdotal stuff around the procurement process. It could have been streamlined somewhat, I would suggest, and we might not have the variety of organisations we would like in the end.

Q321 Harriett Baldwin: So how much have these procurement challenges added to the time needed to get these contracts underway? We are talking about a small window to tackle someone who is 16 or 17. It sounds like some of the people who were 16 when it was announced might well be 18 by the time it is operational. Is that possible?

David MacDougall: It could well be. To add another layer to this, we are dealing with a really vulnerable group here. You will have heard of the City Deals in and around Newcastle and Leeds. Some of the big cities that have real hard areas of NEETs were not part of the YPLA5 procurement round. As of yet, Kirsty, I and everyone else are still wondering, "What does a City Deal look like? Will that reflect what the YPLA contract looks like?" To date, we have not really found that. As an example-I won’t use the North East this time-in the North West, Liverpool and so forth, they might have a twotier provision, with mainstream provision through YPLA and the City Deal that is different. I think there is some kind of uniformity needed in this kind of provision, because it has been quite cumbersome.

Q322 Harriett Baldwin: We have had evidence that there are 40 separate funding streams just in England to support young people’s engagement in employment.

David MacDougall: We have that just in Glasgow.

Harriett Baldwin: Presumably there is a risk that local authorities continue to refer NEETs to existing provision, rather than this new provision.

David MacDougall: It is probably worth me saying I am from a local authority background, from a wee while ago. It is probably important just to understand the dynamics. With ESF Families, it was their social work division that was interacting with the prime contractors; it was not their economic development division, which would probably have been better placed to understand the needs around employability. So for me, engagement with local authorities is everything, but engaging with the right people in a local authority is even more important, because, dare I say it, we do work in certain silos. Employability and employment progression for some departments might not be a huge priority. So I would suggest there may be blockages around strategy and various different outcomes. There are areas like that that need to be ironed out as well.

Q323 Harriett Baldwin: Maeve, in terms of the voluntary sector specifically, we have been told by ACEVO that they are worried that, for all these reasons and others, particularly money, voluntary organisations might not be actively engaging with this programme. Have you found that to be the case?

Maeve McGoldrick: No, we have not. We have put a few submissions in with a few primes for that, but I do take your point. Because we had the relationships already established, we were quite lucky, but we did get a lot of offers of networking opportunities, but at a very, very late date, and we know of a lot of fantastic organisations that currently are not part of this; they were not geared up. Similarly to the Work Programme procurement, the pace of change is so immediate that you need to have the resources and the infrastructure already established to be part of the game. It is the smaller, more specialist organisations that may not be present because the procurement process has not taken into account their requirements.

Q324 Harriett Baldwin: Are we, ironically, saying that because there are so many different funding streams in this area and so many complex differences between different parts of the UK, there is a risk that we might not actually reach those 54,000 young people?

Maeve McGoldrick: From our perspective, it is really interesting talking about so many programmes; we are like a microcosm of how it works at a national level. Looking at Community Links and our internal battles in trying to co-ordinate all these different programmes, we have so many different programmes for this age range and our own departments funding them, similar to Government Departments, with different outcomes and timescales. The overall thing is there are only so many young people and they are already getting so many pokes from different places, so what you need is that link person, that one worker, to manage this for them-the wiring behind the scenes, as Kirsty said before.

Also, what is interesting from our perspective is the internal conflict between these two programmes. I am not talking about just government programmes; we then have privatesectorfunded programmes. There is a huge social drive for corporates to have a responsibility around youth unemployment, but it is also in their interests. To manage all these different programmes and ensure that our departments actually support each other and work together, we have had to sit back and identify all the different programmes. We have created almost a leaflet for young people in the community, to go out and say not necessarily, "These are the services we offer you," because that confuses them, but, "If this is you, then come to Community Links and we will manage that for you." To try to apply that at national level, maybe you need that co-ordinating body to be the interface and to make it simple and accessible to young people.

Q325 Harriett Baldwin: Have you submitted that leaflet as evidence? It might potentially be quite interesting to include in our report.

Maeve McGoldrick: No.

Q326 Harriett Baldwin: Just in terms of addressing this, would you like to see one Department, perhaps even one Minister, made responsible overall for youth education and employment?

Kirsty McHugh: We certainly would. To give you an example-I don’t know whether you picked up on this-the Big Lottery Fund announced last week £100 million for youth unemployment. There are going to be strategies at Local Enterprise Partnership level, primarily talking about bringing together employers or employer organisations, the chamber of commerce, the public sector-primarily the local authority-and the voluntary sector to put in place new provision for NEETs. You could see a situation there where a lot of local authorities, love them as I do, will want to be doing a lot of their own delivery. What is the incentive for them to actually refer people to the NEET programme that has come out of DfE when they have the Big Lottery Fund offering £100 million, not dissimilar in scale, where they could do the delivery themselves? I know there was not much consultation across Government in relation to this. How do those two things fit together? Goodness knows, and certainly there was not a joinedup Government discussion about it.

Q327 Harriett Baldwin: Does anyone else want to address that particular point?

Maeve McGoldrick: I think for us the Big Lottery Fund announcement is interesting, because the reason it is there is to offer an alternative-to allow third-sector providers like us to do things differently. A lot of people got knocked out of the Work Programme, and that potentially provides an opportunity to do things very, very differently. It is not necessarily a bad thing that is there; it is about co-ordinating, as Kirsty said, the two different programmes.

Kirsty McHugh: We are not against the money; money is always great. It is about co-ordination.

Q328 Harriett Baldwin: The money ought to be reaching the people who need to have it spent on them.

Kirsty McHugh: We do not want to waste money.

Maeve McGoldrick: It is our strategic thinking, but we would be hesitant if we saw another Department set up to tackle this area. With all our services, we are very concerned about the tie to young people. It is about needs; it is not about people with disabilities, parents, etc. We always fall into this cohort, and it is the basis for the majority of the fundamental problems with a lot of this sector. We would like to see a ministerial working group-a crossdepartmental strategy to tackle youth unemployment and job creation, and making that link between skills and unemployment. They are the three key issues, but we would be really cautious of going down the route of silos.

David MacDougall: We need to learn a wee bit from what has happened before. You had the Working Neighbourhoods Fund, a £2 billion programme, running in conjunction with the Flexible New Deal and the New Deal, and at times never the twain met. It is really important that we pick up some of the evidence in and around that. Also, around some local areas, if we talk about Local Enterprise Partnerships, you have the old regions; for example, in and around the East Midlands there are seven Local Enterprise Partnerships across different boundaries. It is very difficult to understand how some of this would work. I think there is a fundamental question for some public bodies: do they want to be almost a strategic procurement partner, or do they want to be a delivery agent? I think being both is a step too far at times. That may be a fundamental question.

Q329 Chair: Last but not least, we have Jobcentre Plus. Of course, it has its plans for youth hubs, with the idea that all the relevant agencies co-locate in the Jobcentre and that there is more flexible advice given. Then these are the places where the 250,000 extra work experience and sector-based work academy places are housed. Who would like to start with a comment on this idea?

Kirsty McHugh: Co-location is a marvellous idea, and there has not been enough of it out there. We do need far stronger relationships between Jobcentre Plus and a variety of providers. Our experience is in some areas it is extremely good; in other areas it is not very good at all. So "patchy" I think is probably a fair characterisation of it. I am sure Kevin will say similar from that perspective. Co-locating the key people is not going to happen; I just cannot see them going into the same location. However, better communication between them all, and that strategic approach at the local level, would be most helpful.

Q330 Chair: So it is a good idea.

David MacDougall: I think it is a really good idea. It would co-ordinate some really essential services between Jobcentre Plus and a provider. I think it would be a great idea, and it is not an idea that has not been tried. Action Team for Jobs in the early 2000s had colocation as well, and that worked in some aspects because Jobcentre Plus were running the action teams as well. So there is evidence there that it works. I would really welcome it, particularly in areas like Northumberland, which is very rural. Jobcentre Plus have estates in these kinds of areas, so I think it would be silly for a Work Programme provider to set up premises when there is already a big Jobcentre Plus estate there.

Kirsty McHugh: They have already entered into leases, which will be at least five years long, because of the Work Programme contracts.

Maeve McGoldrick: In theory, I think it is a good idea in terms of efficiency and service delivery. To make it successful, we would need to have more of a shared understanding of the desired outcomes and the approach to our services, and a shared ethos behind that service. To make that work practically, we have done a lot of work going into our Jobcentres and with Jobcentre advisers coming out to our different community hubs, etc. That has been an evolving process, and has taken a lot of understanding of whom you are working with and flexibility in terms of the Jobcentre’s delivery.

One caution, which we potentially need to tackle but is not a reason to stay away from it, is that young people’s perception of the Jobcentre, real or not real, is absolutely fundamental. I shadow occasionally in our Work Programme. We were doing motivational programmes about selfesteem, and it was heartbreaking to hear the majority of the young people in the room, when we asked about the Jobcentre, say, "Well, that is fundamental to a lot of my selfesteem issues." Whether that is true in reality or a perception that has been passed down through families from the community-it is at times absolutely real-we would not say one way or the other. That branding and that perception is a huge issue that potentially needs to be overcome and seen in a more positive light as something that would help you, and moving back into work is a positive aspect and a step towards that.

Q331 Chair: It is probably true that organisations such as yours, and also the Prince’s Trust, which we visited, are making quite a big effort not to be like a Jobcentre. Kevin, do you want to comment?

Kevin Green: This is one of the things where you could end up investing huge amounts of time and energy in negotiations about leases and getting everyone into the same premises. I am not sure the value that is delivered will be huge.

On the issue about Government and one Department, what seems to go on time after time is that Government changes its mind. If it has the right programme, it is clear about what it is doing, it has its partners in place, it then needs to communicate to the employers in a consistent, methodical way and stick to it, and not keep changing the funding mechanism and confusing the providers. Thinking about the employer that is trying to find a way of accessing all this, this becomes hugely complex, with huge amounts of confusion and duplication. So simplify stuff, have clarity-let’s have one Minister responsible. Crossfunctional working across Government is always a bit of a challenge; we have never quite seen it work in reality. So we would be in favour of that.

The idea about hubs: if you can make it happen locally, and everyone is in favour, then why not? But do not spend huge amounts of time and energy worrying about that. Get the programmes to deliver the outputs they are being focused on.

Chair: So a cautious welcome. Thank you very much indeed for coming. It has been a fascinating session. We are really grateful to you.


[1] Local Education Authority

[2] Office for Budget Responsibility

[3] English as a second language

[4] European Social Fund

[5] Young People’s Learning Agency (now the Education Funding Agency)

Prepared 19th September 2012