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

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House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Work and Pensions Committee

Youth Unemployment and the Government’s Youth Contract

Monday 16 July 2012

RighT HON. CHRIS GRAYLING MP, JOHN HAYES MP and IAIN WALSH

Evidence heard in Public Questions 333 - 447

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Oral Evidence

Taken before the Work and Pensions Committee

on Monday 16 July 2012

Members present:

 

Harriett Baldwin

Andrew Bingham

Karen Bradley

Sheila Gilmore

Oliver Heald

Glenda Jackson

Brandon Lewis

Teresa Pearce

 

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

________________

Examination of Witnesses

Witnesses: Rt Hon Chris Grayling MP, Minister of State for Employment, Department for Work and Pensions, John Hayes MP, Minister of State for Further Education, Skills and Lifelong Learning, Department for Business, Innovation and Skills, and Iain Walsh, Head of Labour Market Intervention Strategy, Department for Work and Pensions, gave evidence.

Q333 Chair: Welcome to this afternoon’s session. We feel very lucky to have not only the Minister of State for Employment present, but also John Hayes from the Department for Education and Mr Walsh. Perhaps you would like to just tell us your role, Mr Walsh.

Iain Walsh: I am Iain Walsh from the Department for Works and Pensions. I head up something called the Labour Market Intervention Strategy division, dealing with moving people on DWP benefits into work.

Q334 Chair: We are, as you know, looking at the Youth Contract and youth unemployment, and we feel that this mixture of witnesses at ministerial level should be very helpful to us. Our Chair, Anne Begg, is much recovered, but not quite yet back to full health-but she will be in September-so she has asked me to chair today. Can I just start by asking some questions about preparing young people for employment and what schools should be doing? Many witnesses, the CBI and others, have given us the impression that careers advice is not as good as it should be, and that young people are not coming through with quite the right attitude for the workplace. In other words, there is a bit of a mismatch between what is going on and what is needed.

Mr Hayes: I think that is true. Historically, there has been a problem with careers advice and guidance in two respects. Firstly, the responsibility schools have is, of course, to provide advice and guidance, but it is clear from various kinds of survey information that schools typically did not give people the full range of options, because they were not equipped to do so. One survey for Edge found that teachers knew less about apprenticeships than any other qualification apart from the Welsh Baccalaureate-these were English teachers, by the way-so you will understand that is quite alarming. We are changing the statutory duty on schools from one where they are obliged to co-operate with careers advisers to one where they must secure access to independent careers guidance. Part of that is about ensuring that schools provide people with the full range of options available to them, and equip them with the knowledge they need to choose from amongst those options. I think that is really important, so that vocational and practical options get their fair share of attention, and people are aware of all that is available.

Sorry to be verbose, but the other aspect of this is Connexions. Of course, I have effectively replaced Connexions with a National Careers Service-for the first time an allage service-which I expect to have contact with people face-to-face, through a really good web product and through a telephone helpline, and to have a presence in about 3,000plus locations across the country. Those are the two things we have done.

Q335 Chair: Do you think schools are getting their budgets squeezed in this area, so that they are really not able to devote enough resources to it, or are you happy that it is a relatively good matchup?

Mr Hayes: Do not forget, Chair, that they already have statutory duties to provide careers education and co-operate with careers advisers. We are not adding a duty; we are changing a duty in those terms. The advice and guidance that they give at the moment is, in our judgment, patchy. Some schools do this rather well; many do not. The aim of creating a duty on them to secure independent careers guidance means that we think that many young people will get better quality advice about the options available to them.

Q336 Chair: Looking at work experience, a lot of employers have said to us that it is very important. There has been a change in the Government’s approach, from really looking to have work experience for the younger group to having longer internships for the older group, between 14 and 19. Is that right, and are you satisfied that there are good reasons for doing that? If so, what are they?

Chris Grayling: We are doing both. First of all, it remains very important that the one or two weeks work experience that typically happens in year 10 continues. One of the things that we are seeking to do is to bust the health and safety myth that somehow there is an onerous duty of responsibility on the shoulders of an employer, which makes it difficult to offer that opportunity. I was with a group of employers last week, who were saying, "Well, we don’t do this anymore, because of healthy and safety reasons." I said to them, "There is absolutely no reason at all why you cannot do it. Any suggestion that health and safety prevent you from doing that is nonsense." You have a duty to do a oneoff risk assessment about what happens if you have young people coming into your workplace. You do not have to do a risk assessment each time somebody comes into the workplace. Indeed, we should actively encourage employers to provide that opportunity.

Q337 Chair: What exactly would you expect them to provide for the 14to16s, and what would you expect for the older group?

Chris Grayling: It is a different need. We do take the view that the requirement for the older group is different and covers a longer period. For the 14to16s, I think it is a taster of the workplace. More often that not, it is an opportunity to sit, take part, observe, do a few bits and pieces in the office and get a little bit of practical experience, often shadowing somebody else for a week or two. Once you move beyond schoolleaving age, it becomes much more of a transition to employment.

Very early on in the origins of our work experience scheme, there was an e-mail that I received from the mother of an 18yearold, who had left college, was looking for employment, had negotiated herself a month’s work experience with a local firm and had been told by the Jobcentre she could not do it because, if she did, she would lose her benefits. That was palpable nonsense, so we took immediate steps to change the rules, so you can now do up to eight weeks of work experience, whilst on benefits. We actually started to use the Jobcentre Plus employer liaison teams to ask employers not just where they were going to recruit someone permanently, but actually to provide an opportunity for young people to do a period of work experience.

Q338 Harriett Baldwin: On the health and safety point, my own teenager just did some work experience and had to be CRB1 checked. I wondered if that is another potential barrier to small employers that might put them off.

Chris Grayling: What was the role?

Harriett Baldwin: It was volunteering to help in a caring role with adults with learning difficulties.

Chris Grayling: The CRB rules sit with the Home Office, but I have to say I would deplore that.

Q339 Harriett Baldwin: Have you heard that from anyone else, though, as a barrier to work experience for young people?

Chris Grayling: Not to any significant degree. It is normally much more the process around risk assessments that put employers off. I do think that it is an exaggeration of the requirements-and, if it is not, it should be an exaggeration of the requirements-for a CRB check in that kind of situation. To be honest, a 15yearold who is doing work experience is going to be under adult supervision anyway. I think it would be a desperate shame if that kind of opportunity were denied because of an excessive level of bureaucracy.

Q340 Harriett Baldwin: If it were an employer that was a sole proprietor offering work experience to a 15yearold, the school might require the proprietor to be CRB checked.

Chris Grayling: Again, I would argue that it should not be the case that that becomes part of the routine. At the end of the day, we have to take a decision. Do we actually want to encourage employers to give young people an opportunity? From the employer’s point of view, it is a hassle anyway having somebody new in the office for a week or two. If we place too many onerous requirements on their shoulders, we just will not get those opportunities. That is why we have been very keen to stress that, in terms of risk assessments, you just need to do a oneoff assessment: if I am going to have young people coming into my workplace, is there anything obvious that could be an issue so that, when they first come in, I need to say, "Do not put your hand in here," for example? Once you have done that, that should do. The health and safety rules are quite clear that that is all you need to do. In terms of CRB checks, it would be wrong to impose that on all employers. Otherwise, if you look at the number of people within a workplace a young person might come into contact with, at the end of the day the employer will turn around and say ‘no’.

Q341 Glenda Jackson: On the issue of the availability of work experience, we have had evidence presented to the Committee that few schools actually contact employers. Schools are being asked to do a lot as it is. I would love to know who qualifies to provide the independent careers advice. Who does? How are you encouraging employers to approach the schools in their areas to say, "If you are running work experience schemes with your pupils, we would like to be part of it"? Many of my schools, for example, are very assiduous in checking out the employers and also, once the child has done their work experience, in checking with the employer how well or badly they did. Are you pushing in that area or is it being left to the schools?

Chair: Can I just add to that, Glenda? It was the Recruitment and Employment Confederation that said that there were some schools where nobody had been allowed in for years. That is the point.

Mr Hayes: You are right, Chair, and Glenda is right that the performance of our schools is quite variable. Some schools have very good relationships with local employers and engage children in working with those employers, and indeed bring employers into the school; others, less so. The aim of the National Careers Service should be to help with that, based on the new duty I described earlier. I hope that part of what we have provided in accessing independent advice is good links to those kinds of opportunities with employers. The aim of that is really to give the whole offer a more employmentbased focus, so that the guidance that people get is not just about progressive learning-of course there is nothing wrong with progressive learning-but also about the link to employment and employers, in exactly the kind of way you describe.

Q342 Glenda Jackson: What are you doing?

Mr Hayes: We have established that service. We have changed the statutory duty. I have missioned the National Careers Service to facilitate just those kinds of communications with schools, so the Service will be available to all schools, rather than the patchy provision that is currently happening. This will create a greater consistency about that offer in exactly the way you recommend.

Q343 Glenda Jackson: We have seen Connexions, for example, disappear. To whom would the school go with sufficient confidence that the person they are asking to afford that independent advice is capable of so doing, and what are you doing with the employers?

Mr Hayes: The other thing that has happened in the careers industry, and I congratulate them on this, is, very much with our encouragement and support, they developed the best set of professional standards they have ever had, a new set of accreditations linked to that and an unprecedented level of co-operation among the bodies within the careers sector in order to meet the new standards framed in the revised Matrix Standard that we demanded, from the National Careers Service, with which schools will be engaging. Schools, for the first time, will be engaging a new set of highstandard careers professionals, who will be in touch with employment, with the character of the marketplace and with employers. They will bring all of that understanding and knowledge into the school independently. This will not be a teacher; this will be an outside expert coming to the school equipped with that kind of understanding.

Q344 Glenda Jackson: Who is paying for that expert advice?

Mr Hayes: As I said in answer to the earlier question, schools are currently obliged by law to work with careers advisers to provide this; they are now going to be obliged by law to secure independent careers guidance, so they are already funding, resourcing, the provision of advice and guidance. Our argument is that we want to make that better; we want to make it more consistent; we want to make it more empirical, which is precisely what we have done.

Q345 Sheila Gilmore: I am slightly confused here about the question of work experience for the pupils. We were given to understand from some of the witnesses we have heard that they are concerned that the statutory duty on schools to provide this work experience has been removed, but from what was being said it seems to be suggested that schools are somehow still expected to do it. There is no statutory duty, but we are just hoping they will do it. Is that it?

Mr Hayes: I have provided work experience, and I am sure you have, for many young people over the years, but you will know that the very patchy provision that I described has been what has prevailed. What we are hoping we can move to, as a result of some of the changes we are making, is routinely a much higher quality offer by building the relationship between employment and the sort of advice and guidance that young people get-the engagement with the professionals in the school. That is bound to give both a more independent but also a better quality range of options to young people.

Q346 Sheila Gilmore: A school could choose not to do work experience at all for pupils in that age group.

Mr Hayes: I certainly do not think that. I think it is very good that schools have relationships with employers.

Q347 Sheila Gilmore: Has the statutory duty been removed? That is what I am asking, because that is what we were told by some witnesses. Some schools do it, but presumably schools can decide that they do not want to do work experience.

Mr Hayes: There may be, Chair, a nub of fundamental disagreement between Sheila and I on this, in that I seek to drive up standards not by creating baseline regulation, but by creating examples of best practice that then become the norm, and so normalising excellence. I have set about deregulating large swathes of the further education sector, not because I want it to be less good, but because I want it to be better.

Q348 Chair: It is more about the timing of the work experience than saying that there is no duty to do it. It is just the timing of it, is it not, because it used to be a duty at Key Stage 4? Can I ask you about the match between the sorts of courses that young people are undertaking and the jobs that are available in the jobs market-a subject I have asked you both about in the past? Do you think we are getting that match right?

Mr Hayes: There are two aspects to that, Chair. Are people getting the core skills they need, which frankly most employment necessitates? Secondly, are they getting the vocational competences they need to go into particular careers? On the core skills, you will know that, since we came to power, the Government has set about revisiting the issue of core skills. Under the last Administration, according to Parliamentary answers, about 40,000 16yearolds left school each year functionally illiterate and/or innumerate. That is not acceptable. It is a subject you raised personally, if I may say so, a number of times on the floor of the House, Chair. We believe that a refocus on those core skills is essential in order to equip people with what they need to go on to prosper in progressive learning or employment.

The second issue is around vocational practical skills. You will know that, simultaneously, we have put new emphasis on post16 skills, in relation to apprenticeships, and have grown the apprenticeship number very significantly indeed, precisely because we believe that many people with practical, technical and vocational tastes and talents need their chance to gain the skills best suited to their subsequent employment. We have built the biggest apprenticeship programme in modern history.

Chris Grayling: It is worth saying, Mr Heald, that I would encourage the Committee as part of this inquiry to take a look at the work that has just been completed by the UK Commission for Employment and Skills (UKCES); you may have already done so. It was very striking in the report that they published ten days ago that they identified, among all the barriers to young people entering employment, that employers cited educational issues in only a very small number of cases. A far bigger challenge for us is simply to encourage employers to give young people the chance in the first place. Very often, they are just simply not considering those young people at all. It was reassuring, but I think we still face significant skills challenges. It is a constantly evolving world. As a team, we need constantly to be looking at what is the next thing that needs to be done to keep ahead of the game. The apprenticeship programme expansion offers a really good route to achieve that, but it is worth noting that that is not at the top of the list of barriers cited when you actually do quantitative work with employers.2

Q349 Chair: They talk about the right attitude, don’t they? Anyway, Glenda Jackson wants to come in on the Wolf report.

Q350 Glenda Jackson: I do. It is sort of bleeding over from what we have been discussing just now. The idea that a school’s priority, for example, is to advise on vocational or, I presume, academic is not really helping, is it, with the issue of getting young people into a working mode of knowing what work is about?

Mr Hayes: It is partly about what are loosely described as "employability skills", but my case there, I have to say, Chair, is one of robust defence of young people. At 14, 15 and 16, can young people really be expected to have employability skills? Of course they cannot. When employers complain that 16yearolds have not got employability skills, I do not quite know what they expect. What they might reasonably anticipate is that people can read, write and count, have a degree of selfdiscipline and have a set of values, which have been imparted part by their family and part by their schooling. That seems to be perfectly reasonable.

I think you said in an earlier session of this Committee, Chair, that young people came forward who were not always able to prepare their CV. I have the details here. You talked about young people applying for jobs, but the applications being faulty because of the absence of core skills that allow people to prepare a good CV. That is pretty basic stuff. If schools cannot help people to acquire that kind of confidence, they certainly need to start doing it.

Q351 Glenda Jackson: Carrying on from that, certainly the Wolf review found that there is a kind of mismatch between the approach to planning a pattern of education and skilling young people, and whether that matches up with the needs of the labour market, and the changes with the funding-I mean the changes that were brought about by the Skills Funding Agency. Is that acting as a plus or a minus in trying to match this? How precisely can colleges, schools and further education be informed of what are the needs in the labour market when, at the moment, there is a very high unemployment rate, and the basic skills and the heavy industries we used to have in the past have gone? How are they to be kept on board with what are the floating requirements of the employment agencies?

Mr Hayes: If I might say so, I think that is a very good question, and that is something I have been grappling with since becoming a Minister. The only way of doing it is to create greater employer engagement in the skills system. I am about to announce the results of the first round of our Employer Ownership Pilot, Chair. We have put £250 million into a pilot, where we are inviting employers to come together and start to define what they think the skills system should provide. Many have actually done so in concert with FE3 providers with other consortia to try to get employers to drive the system. This is being run by the UK Commission for Employment and Skills, which my honourable Friend referred to a moment ago. A demandled system is likely to be a system where provision meets needs to a much greater degree than it has historically. The only way of doing it is to make the FE and skills system respond closely to the changing character of employer demands. To make it more responsive and sensitive, you have to put employers in the driving seat and that is what I have been trying to do.

Q352 Glenda Jackson: Employers, certainly on the evidence that this Committee has received, are virtually universal in condemning the fitness of young people leaving our education establishments for work. They are not going on the basis, as you said earlier, of the educational qualifications; they are talking about all the soft skills-being able to get up in the morning, knowing how to answer a phone, being able to look somebody in the eye when they have a conversation. How is that being translated between the employer and the school?

Chris Grayling: Can I pick up on that point? First of all, in defence of young people, what is particularly enlightening about the UKCES research is the number of employers who would not even consider hiring a young person and, therefore, do not sit down and talk to them. I had one of those classic cases of exactly that point a few weeks ago. A woman running a business in Manchester e-mailed me and said, "I know you are talking about hiring young people, but they are all a bunch of feckless youngsters and I would not touch them with a barge pole." I sent her an e-mail back saying, "Well, why not try one of our work experience people and just see how you get on?" Last week, I had a very sheepish e-mail back from her saying, "Well, maybe you were right. We were sent a young woman. She’s really good. She’s the first here in the morning. She’s working really well and I am now trying to recast my budget so I can hire her permanently."

Of course there are issues, but how many of us were actually the finished item the moment we left school, university or college? Actually, every employer that takes somebody on for the first time must accept that there are a few rough edges of development left, but I think the degree to which young people are simply illequipped for the workplace is greatly exaggerated. It is certainly a problem in some cases, but it does down the reputation of young people generally if that is seen to be the general view.4

Q353 Glenda Jackson: Should the funding agencies be playing a more proactive role here, and laying down the rules? You are very clear about the responsibility of school; with respect to both of you, you seem a bit woolly with regard to the responsibilities of employers.

Mr Hayes: I think the employer has got a fundamental responsibility. Part of the reason that I have boosted apprenticeships in the way that I described earlier is because they are jobs with training. I insisted, by the way, that all apprenticeships should be jobs. We insisted that all apprenticeships should be employed, but that is about a partnership, isn’t it, between an employer, the Government doing its bit and the trainee, the apprentice, doing theirs? There is no better place to gain employability skills than in the workplace, being mentored. That is a great example of how a young person can acquire the kind of "soft skills" that you mentioned, whilst they are doing the job and whilst they are learning.

Q354 Glenda Jackson: An apprenticeship is not soft skills. The requirements for an apprenticeship are really written quite large. What we are getting consistently from employers is that the majority of young people-in my day, it was called a "work ethic"-do not seem to have any work ethic. There seem to be few, if any, programmes that are engaged actively in skilling young people in this area. For example, within my own constituency, there is an extremely effective programme among some of the most difficult to reach young people in my borough and a local drama school. That scheme has gone. I do not know whether it was the SFA5 that pulled away the funding or the EFA6, but they were actively working with young people who, when they first came into the room, could not look anybody in the eye and say, "Good morning". Those are the kinds of skills that employers are telling us that they want. They do not want people to be able to do apprenticeships. They want them to be able to answer the phone, say, "Good morning" to people, and be nice, if it’s a retail thing.

Mr Hayes: I will answer the main thrust of your question in a moment. Just remember what an apprenticeship actually is about. Of course it is about acquiring a practical competence, but it is also about communicating with people, getting to know other people in the workforce, getting to understand you have to turn up on time, getting to understand that, actually, you have to interface with all kinds of other individuals, of all kinds of different ages and competences, as part of working life. On your fundamental point, frankly, if someone cannot present adequately after the years of statutory schooling-and let us not forget this begins when they are tiny and they are taken from their parent’s bosom and obliged to go into a place of learning-then that is a poor reflection on what we are doing long before they get to the age of 16. The reemphasis that we are putting on core values, on absolute insistence on independence, responsibility, on the disciplines and the rigour that you recommend with such vehemence should be music to your ears.

Chris Grayling: Can I just pick up on this point as well? You say that there is no focus on employability; that is absolutely not the case. In the Work Programme, we have the biggest programme of support for the longerterm unemployed. In terms of young people, that can mean as little as three months for those from difficult backgrounds. It is the biggest programme we have had in this country. It is built around payment by results, so therefore the organisations delivering it have to build employability among those people who perhaps do not have it, or they simply will not manage to get young people into work and will not be rewarded for what they do.

I would absolutely refute that we have no programmes of support in place that deliver employability support-just the opposite. I absolutely accept that there are some young people who emerge from school, college and university who are not, as yet, particularly employable. That may be for reasons of their background, or it may be because they are trying to do the wrong things, but we are focused on helping those young people. What I would also say is that it is not the majority. If you look at the patterns of unemployment for young people, the majority move off benefits within three months. For some, it is about finding the right starting point, and we are doing everything we can to help them find the right starting point. What you are describing is certainly there, but all I am saying is I do not want that to be seen to reflect young people in the workforce as a whole, because most young people are keen, enthusiastic and want to get into jobs.

Glenda Jackson: Speak to the employers, because that is certainly their view.

Q355 Karen Bradley: I just wanted to touch on the apprenticeships point and about communication of the apprenticeships. I am desperately trying to organise as much in my own constituency to promote apprenticeships. I am a big fan of what you are doing, Minister, and I want to make sure we do all we can. When we took evidence from the National Apprenticeship Service (NAS), they told us that they were doing all they could to promote locally and to contact all the stakeholders locally to make sure that the apprenticeships were being promoted. As it happened, during that evidence session, I received an e-mail from my office, which I did not get until after we had finished, saying that they had spent the whole morning trying to find out who the local representative of the NAS was and if I had any ideas of where we might find them. It was a shame I got it after the session, because I could have asked who it was during the session. It is just to make the point, Minister, that the apprenticeship scheme is very, very good, but people need to know how to get hold of it and to find the right person quickly and easily.

Mr Hayes: I would entirely agree. We certainly need to be micro-marketing. I successfully applied for a marketing exemption-we have this policy on marketing, as you know, Chair-in order to promote apprenticeships in the way you described. The ask I have made of the National Apprenticeship Service has been a great one. We have grown apprenticeship numbers over the previous two years by 90%, including a 30% rise in apprenticeships for very young people. That has put pressure on the marketing, because the more you do, the more there is to do, as it were. You are right: we need to be constantly vigilant about the need to get the word out. One of the difficulties is getting to very small businesses, to the SMEs, because unless apprenticeships are seeded in SMEs, you simply do not get the coverage or accessibility that you want. I hear what you say and I will certainly go back to the NAS again with that. Something I might recommend, perhaps advertised through you, Chair, is that a number of areas have run the "100 apprentices in 100 days" campaign very successfully with their local newspapers.7

Chair: As you know, in my area we have done this, and you have been very pleased with our national association.

Mr Hayes: I was massaging your ego, Chair, unnecessarily but deservedly.

Karen Bradley: That is exactly what we were trying to launch in the Moorlands.

Q356 Sheila Gilmore: Mr Grayling will probably be astonished to know that I actually got quite heartened by something he just said, and he probably thinks that is quite unusual. There seem even to be different voices coming out here; there are certainly a lot of different voices that we have heard, in terms of whether there is some feeling in young people and/or the education they are receiving on whether there are some more difficult things going on here. From what the Minister for Employment said, he seems to believe that, on the whole, young people are not necessarily any worse prepared than they ever were, because there does seem to be, implicit to all of this, the idea that somehow we have got worse at doing this and there used to be a wonderful time when it was done. I am not convinced that there was, from my own experience, my children’s experience or indeed the fact that I recall a huge campaign being run by Government about 20 years ago on adult literacy, because there was such a gap in adult literacy, which suggests that the education some 20 years before that was probably deficient. Is all this debate actually helping or should we really be looking around to try to do something more practical?

Chris Grayling: It is a very important point. That is why I stress that we are talking about, in particular, the challenge that is posed to us by around 20%, give or take, of those young people who leave education without the skills that we need them to have, who often come from a family background where a working life has not been the norm, and who have low aspirations in life. They have a pretty difficult start in adult life and in the workplace. They represent a very real challenge for us. Among some of those people you find the attitude problems that Ms Jackson was talking about, and they are the people who will typically, more likely than not, need the kind of support we are providing through the Work Programme. They may need some of the work that John is doing to enhance skills for those who ended up leaving school without what they need. They are the people that the Education Secretary is trying to catch earlier, and to deliver an environment where we can develop them better.

The other group who represent a challenge for us are those coming out of university who do not have as clear a focus about what they can realistically achieve as possible. We do need to-and our universities could do an important job in this-provide better guidance to those leaving university. I meet many young people, for example, who have come out of university and who have done a specific course in the media, for example, who hope to get a job in the media but do not think laterally about how to get there. They spend month after month just applying for media jobs, without thinking, "If I did this and then that, I could get in by a different route." They need smart careers advice. One of the things that John Hayes and I have done is we have brought careers advisers into Jobcentres as well, so that when either of those groups fall into an environment where they need extra guidance and advice on careers that advice is there and close to hand.

Q357 Sheila Gilmore: I do not know why media always gets the blame for this sort of thing, because my own experience was that doing a history degree did not necessarily prepare you for work either.

Chris Grayling: No, it is not about the preparation for work; it is about your expectations. If you do a specific degree that appears to lead you into a particular career area, you may not get there in one step.

Q358 Sheila Gilmore: It is just poor old media studies always has a bad name.

Chris Grayling: That is true.

Q359 Harriett Baldwin: It is just a simple statistical question really. There were 457,000 apprenticeships in 201011. I just wanted to find out-we should know by now-how many of those led to jobs. Do we have a percentage success rate?

Mr Hayes: A very significant number. We know that people who do apprenticeships are more likely to get a job, keep a job and progress in a job. As you know, there was a piece of work done quite recently by the National Audit Office, which gauged the effectiveness of apprenticeships and found that they represented immensely good public investment, for the very reason that people’s job prospects improved markedly as well as their productivity and subsequent progress.

Q360 Harriett Baldwin: The "very significant" percentage is what, 80%?

Mr Hayes: More.

Q361 Harriett Baldwin: 90%?

Mr Hayes: Yes.

Q362 Harriett Baldwin: Over 90%?

Mr Hayes: The reason I am hesitating slightly is because, by quoting an average, I do not want to mislead the Committee about the value of different levels of apprenticeship and kinds of apprenticeship, nor do I want to discount the fact that very significant numbers of apprentices, as a deliberate result of policy, are people who are improving their skills who are already in a job. In coming to a conclusion about the number who, as you put it, get or keep a job, one needs to distinguish between people who begin their job with an apprenticeship and people who take on an apprenticeship already in work. That is why I am hesitating slightly, because I do not want to egg up our record more than it deserves, which is never the less, quite a lot.

Q363 Harriett Baldwin: But you will monitor how many people will have got into work, as a result of the apprenticeship pathway.

Mr Hayes: Not only will I monitor it, I think it might be helpful, Mr Heald, if I wrote to the Committee drawing out some of those facts for your consideration, so that I can illustrate the point I made about improved work prospects, early potential and subsequent progress.8

Q364 Harriett Baldwin: Do we know the gender breakdown of the 457,000?

Mr Hayes: Yes, we have changed that. I am very anxious to ensure that, across gender, ethnicity and in other ways, we are doing the best by everyone who has the potential to gain practical skill and employment results. I can tell the Committee, Mr Heald, that for the first time, under this Government, there are more female apprentices than male apprentices, so we are rather proud of the progress we have made in those terms.

Q365 Glenda Jackson: Previous witnesses have said that they support the apprenticeship scheme, as does everybody around this room, but there is no real clear provision for people who require preapprenticeship assistance. They tend to be some of the hardest to reach. Are you looking into this? Is this going to be supported in any way?

Mr Hayes: It is a point that this Committee made in its fifth special report of Session 201012, as you will know, Glenda. Specifically, and you do not often get a Minister who highlights something where I think we can do more, but specifically, the Committee said, "We are concerned that apprenticeships may not be the most suitable route into employment for those young people at the highest risk of long-term unemployment." Essentially what that is about is the bridge into apprenticeships, which after all are a level 2 qualification, for those with very poor levels of prior attainment. I agree, Glenda, that there is more to be done on that.

Let me tell you what we have started. I began a pilot looking at taking people with very low levels of prior attainment and creating what I call Access to Apprenticeships courses, which would then take them to the point where they could begin a level two apprenticeship. Several thousand young people are on that. I had a meeting about it this morning with my officials. I want to extend it further, but I also want to make sure that some of our best apprenticeship employers make sure those people then get a chance to move on into a level two and ultimately beyond that into longterm training or a job. I think we have made a good start, but it is area where we can do a lot more. You said it then, you have said it again today, and I agree with you.

Q366 Glenda Jackson: Have you any figures to show that it is working?

Mr Hayes: Yes, it is working. Of course this is quite a tough call, because we are often taking people who are a long way from the labour market, with actually quite poor levels of prior attainment, depending on their personal history of course. Actually, we have over 4,000 people now who are engaged in this pilot, which is quite a significant number. I want to build that to 10,000 people. I think that will give us a really good opportunity to look at the characteristics of the offer, see how we can adjust it and see how we can then build on it as a much bigger offer. I would like to call them traineeships, preapprenticeship training, which take people to the point where they can go on to the level two qualification. It is working, but I want it to work more.

Q367 Glenda Jackson: Are employers expanding? Are there more employers participating?

Mr Hayes: Yes, but I think we can do more on that. I have today asked for a seminar, or conference, in the autumn. I asked the National Apprenticeship Service this morning to organise this in anticipation of the penetrating questions that I knew would come from this Committee on this subject, because I want big apprenticeship employers-those large employers who already offer large numbers of apprenticeships-to take a close look at this and to make some commitments about the young people they will take on through this route.

Q368 Chair: Perhaps in your document that you have kindly offered to send us you could include a section on this.

Mr Hayes: Yes, I would be delighted to, Chair.9

Q369 Sheila Gilmore: When we started this investigation, we were told that Jobcentre Plus was taking on around 4,000 staff to provide the extra support. Some of those would be people who would have their temporary contracts extended or made permanent. Are we now skilled up? Have those numbers gone up?

Chris Grayling: Yes, we are. I could not swear that absolutely every one of those 4,000 is in place, but we started a big recruitment exercise back in February. We have extended the contracts for a number of fixedcontract staff. We actually had a number of very good staff on fixedterm contracts, and there was some degree of relief in the organisation that we were able to extend some of those. The aim, as you will know, is to be able to offer a weekly intervention rather than a fortnightly one from the fivemonth point, but what actually has been very encouraging is that many Jobcentres have adapted the local flexibilities we have given them to provide more regular contact even earlier in the job search process.

Q370 Sheila Gilmore: Could you explain that a bit more?

Chris Grayling: For example, I was in a Jobcentre recently where they have actually started doing weekly contract from the first time somebody signs on. Now, that will not always be an interview; it may be a telephone call or an exchange of e-mail or text messages, but there is a weekly contact, not a fortnightly one, for people who have only been unemployed for a few weeks. What we have tried to do with Jobcentre Plus is give as much frontline flexibility as possible. What I do not want is them all operating by edict from the centre. We are seeing some encouraging local initiatives like that to say, "We can, within the team we have got, do more in this particular area," and they are doing it.

Q371 Sheila Gilmore: Is it possible to say what the average amount of time an adviser spends with a young person is in these interviews?

Chris Grayling: They will do the classic fortnightly signing, but there is no single answer to that, because it will vary enormously from Jobcentre to Jobcentre.

Q372 Sheila Gilmore: Is there any target for how much time you would expect it to be?

Chris Grayling: We do not set targets.

Q373 Sheila Gilmore: I suppose what I am asking is we have said we are going to increase it to once a week; could that be simply text message or to have more workfocused interviews?

Chris Grayling: At the fivemonth point, it is coming in and sitting down with an adviser every week. Before that, it could be a text message. I know that was kicking around in the media a while back. It might be once a week a text message from an adviser saying, "How are you getting on?" but that is only because it is a way that is viable and sensible to make contact with that person. From the fivemonth point, it is actually a weekly facetoface, not just a text message. We are trying to take as flexible an approach as possible. The thing that now drives Jobcentres-in the past they had a paraphernalia of different targets-is the flow off benefits. That is what we are trying to achieve. That is the most important thing: are people moving off benefits? The thing that gets Jobcentre Plus teams most fired up and motivated is whether they are actually getting to the goals that they have been set-either set themselves or have been set by us-to get the number of people off benefits that they want.

Q374 Glenda Jackson: On that, how does that work, for example, for some of the hardest to reach or those with special educational needs? This is entirely anecdotal and it is directly from my own constituency. You say you do not like targets, but the applicant has to report at a specific time, and it is not infrequent that the individual who should be giving you the face-to-face assistance is not there. That is not something that is covered. What is happening in that area?

Chris Grayling: One of the changes we have introduced in the past 18 months, which is now bedded in across most of the Jobcentre Plus network, is that an individual claimant will see the same person regularly. What happened in the past is that they would come in and it was just whoever was available, but we have now moved to a situation where an individual will have a permanent adviser to themselves. This is something that is rolling out across the Jobcentre Plus network; it is not there absolutely everywhere, but it is rolling out rapidly. The situation for somebody in your constituency who has got a particular challenge in life is they should be seeing the same person every fortnight. There will be occasional issues like holidays and so forth, but typically they would be dealing with the same adviser. Of course we have people with specialisms in disability; we have special disability advisers and specialist advisers working with young people, but increasingly what they are getting is consistency of contact.

Q375 Glenda Jackson: It is still fairly thin on the ground.

Chris Grayling: Which bit is thin on the ground?

Glenda Jackson: Both the people with some form of disability or young people who are hard to reach.

Chris Grayling: There is a disability adviser in every Jobcentre of course.

Q376 Glenda Jackson: That is just one person; there will be more than one person with disabilities.

Chris Grayling: That is true, but disability is a wide range of things. It may be somebody has got a minor disability and is able to deal with an adviser who has mainstream skills.

Q377 Sheila Gilmore: Some of the evidence we have already had, as you are probably aware, has been some concerns that people have had about the roll-out to create 250,000 extra work experience placements. What is being done to ensure that those would be quality work experience placements and that you are not just going for numbers?

Chris Grayling: The first thing to say, and I have been very clear internally, is that if we ever expected an employer was simply exploiting someone, then we would not place a young person in a work experience place there. The whole philosophy behind the timing and the nature of the work experience approach was that it was clearly ridiculous to have a situation where somebody who did more than two weeks’ work experience could not, because they lost their benefits. Equally, there comes a point at which work experience migrates into exploitation. I have to say I do not like longterm unpaid internships. We cannot, as a society, prevent people from volunteering and employers allowing them to volunteer, but I do not like longterm unpaid internships.

My judgment was that eight weeks was a sensible dividing line. If you take on a new employee in your office, in the first couple of months they are really getting up to speed and, after that, they should be ready to carry on doing good stuff for you. Eight weeks is long enough, in my view, for somebody to get familiar with the workplace, to start to show what they can do, and to begin to make a bit of a difference, to a point when an employer can say, "I really like them. I’d like to keep them." It is not long enough for somebody to be able to plan their business on the basis of using exploited labour, because actually, if you are changing the workforce every eight weeks, then it is a huge management effort and it is simply not costeffective for them. We consciously took the decision to go for the eight weeks.

What we are seeing is that it is not mandatory to be eight weeks; it can be up to eight weeks. Ironically, the controversial Tesco scheme was four weeks. If you have somebody for four weeks, you do not have time to actually take them beyond the point of finding which way round everything is, to a point when you can use and abuse them. One of the things I have found most disappointing about the criticisms of work experience, and particularly the most recent thing-the decision of Holland & Barrett to pull out after the most unpleasant pressure from extremist protesters, who were spitting at staff and abusing customers-is that Holland & Barrett had a really good scheme. It was eight weeks working in different bits of the business and, at the end of it, you got a qualification. How that could be described by anybody as a bad thing is beyond me. They were taking on a significant number of the young people who went and did that eight weeks. Many of them stayed with Holland & Barrett; those who did not had a qualification to take elsewhere. The guidance we have given to Jobcentre Plus staff is, "If you have doubts about an employer, do not use them".

In numbers terms, our aim is to have, in total across the Youth Contract support for the period covered, about 450,000 different pieces of the jigsaw. The aim is to have 100,000 placements, work experience or work experience with a training module attached to it per year. We are building up to that. The impact of the row in February was not as significant as I feared. We have not seen a big dropoff in places. It is growing slightly less fast than I would have hoped, but we will get to where we need to get to, and we will continue to encourage employers to offer the opportunity. The key point to make is: actually, a short period of work experience of a few weeks is an investment by an employer, not the other way around.

Q378 Karen Bradley: Just a very quick point, Minister: something that has been put to me by constituents is they feel that somehow the employers are using work experience as an alternative to taking on someone else into a fulltime job. They are using it as cheap labour. You would disagree with that.

Chris Grayling: I just do not see that this is a reality, partly because of the time it takes to develop someone. It is a fear that is simply not grounded in reality. If you talk to any employer, they will say, "In the first few weeks it is an investment by us, not the other way around." The biggest reason why this is important, if you look at the UKCES survey last week of employer attitudes to recruiting young people, is that most employers are not even taking a look at young people. They are not even considering somebody who is fresh from school, college or university for a position, and they are doing it, I suspect, in part because of the perceptions, in part because it is a hassle for them because they have got to make that initial investment. What we are dealing with is a situation where, all too often, an employer is looking on the one hand at a young person straight out of education without previous experience and somebody who is coming in from Eastern Europe who has got five or six years’ experience, who has got plenty of get up and go, because they have gone to the effort of coming here. It becomes an easy decision for them. What I am trying to do is level the playing field. Work experience is a part of levelling that playing field because, if you get the young person into the workplace, then they have got a chance of impressing and staying there.

Chair: We heard at a Jobcentre last week that, in terms of sectorbased work academy placements, this row has actually damaged the retail sector placements rather than the other sectors. It shows, in a way, that young people have been disadvantaged by the protest.

Q379 Harriett Baldwin: A similar topical case really: do you think that it is possible that the reason G4S was not able to fulfil its Olympic contract was that it was offering work experience rather than actual jobs?

Chris Grayling: It is difficult. Some of the qualifications to get into the security industry actually require you to have done some work experience on the job. If you look at the issue we had at the time of the Jubilee, quite a lot of those participants were actually going through a GVNQ, which requires you to get some practical experience. There is quite a big difference between the two; there are lots of training courses, of different shapes, sizes and descriptions, which require you to do some practical work as part of the training course, separate from a pure work experience period.

To be honest, I think not. There are big questions to ask about why there appear to be a large number of people who want to work as security guards for the Olympics who do not seem to have been processed appropriately. I had an e-mail from a constituent in that position this afternoon. I do not think it is to do with the work experience; I think it is much more down to the fact that, at first glance, it looks as if there are people who genuinely want to do it, who have not been processed in time and in the right way. The company will have some clear questions to answer on that.

Q380 Sheila Gilmore: Back to the work experience issue - sometimes I think I am on different visits from other members of the Committee, but perhaps not; we just hear what we want to hear. One of the issues that was raised, I thought, when we went to the Jobcentre was that, in fact, the number of opportunities in retail had fallen, not because of the dislike of the work experience scheme, but actually because retail demand was falling. I have also heard employees say, in certain big department stores in Edinburgh, that there have been fewer people taken on of late for things like Christmas and so on than previously. Some people put that down to them taking work experience people, but it might be down to retail demand. How do you disentangle that kind of thing, because people want to hit various different things over the head with that?

Chris Grayling: The focus is always on retail. You would believe, from all the debates in the media, that this was just about retail, and of course it is in lots of sectors and lots of different kinds of businesses. Interestingly, a lot of the noise that took place in relation to individual organisations was linking organisations that had themselves been struggling, were perhaps concerned about corporate reputation and were having difficulties. It is very easy to see demons when there are none, and my view remains that it is very difficult, in a short period of time-and the retailers are typically only bringing somebody in for a period of four or five weeks-to bring somebody who is completely raw, out of school, college or university, and who does not have a previous work history, and get them up to the point where they can actually deliver good service to customers. You need lots of supervision in the early days. You need lots of training. You cannot just walk someone through the door and say, "There is part of the shop; you go and look after it." It just does not work like that. If you tried to do that, you would end up with clothes on the wrong racks, products in the wrong place or customers given the wrong information, and your business would be damaged, so I do not believe any sensible employer would take that approach.

If you look at those retailers that take staff on over Christmas, they tend to employ them for a longer period of time. They tend to employ more experienced people. If it is young people, it is people who have previous retailing experience. I do not believe that there are employers who are using the work experience scheme as a replacement for labour but, if I ever found that there were, if anybody ever delivered genuine evidence to me that said this is actually what is happening, we would instruct Jobcentre Plus to stop placing people there.

Q381 Sheila Gilmore: Finally, how much tracking is being done? Figures again are being thrown around. I think one of our witnesses suggested that only 6% of people on work experience got a job with the employer that they have been with. From the sounds of it, they must all have been with Holland & Barrett, so others will use that as a springboard. Is that being tracked, so you will have some clear figures about this to know what works?

Chris Grayling: It is actually quite difficult to track how many stay with the same employer. You would have to do an enormous monitoring exercise around the country, which would cost lots of money, and I just do not think it would be costeffective to do that. What I am concerned about is the impact to the propensity to be on benefits. It has an impact; it has a measurable impact. It is not transformational, but it is a very cheap scheme. It costs a very small amount of money to organise placements. It measurably increases the propensity of somebody to move off benefits, most normally into employment and sometimes back into education. As you will know from previous discussions, the offbenefits data is not a very exact science, but it certainly has a measurable impact on the likelihood of somebody being on benefits or not. Certainly anecdotally, if you talk to Jobcentre Plus staff, you find plenty of examples of people who stayed on with the employers, and very often of employers who will recast their budgets to try to hire a young person, perhaps as an apprentice, because they thought they were really good.

Q382 Sheila Gilmore: It would be nice to know that though, would it not, rather than anecdotes?

Chris Grayling: It is one of those things. You can measure everything but, actually, at a time of financial austerity when there are lots of challenges, to start to put in place lots of extra mechanisms to try to track and monitor-and you would have to go back to each individual to check what was happening to them-I just do not think it would be costeffective. Yes, I would like to know, but I have to take decisions that are practical in terms of what is sensible to spend money on and not.

Q383 Karen Bradley: I want to deal with the effectiveness of wage incentive schemes, not the value for money. We are going to come on to questions on that later, just to be clear what we are asking here. The first question is: what evidence is there that wage incentives work?

Chris Grayling: The answer is patchy around the world. There is not clear evidence. The evidence, for example, on some of the National Insurance incentives is not absolute. The very clear message we got from employers and from the employer groups was that this would make a material difference to our propensity to hire a young person. We have not, in this country, done a wage incentive in quite this way before, so we are in test zone. It is quite clear we are in test zone, but we believe, and we had extensive discussions with organisations like the CBI, that this approach, which is very simple and unbureaucratic, has a chance of levelling that playing field. Our view was that, at a time when youth employment was still much too high, and where we want to level the playing field between an inexperienced person and an experienced person, that this was something that was worth doing.

I cannot sit in front of the Committee and say we sat there with hot towels over our heads and heard lots of international evidence. Sometimes you have just got to believe something is worth a try. The proof of the pudding is always in the eating. With regards to the decision we took about how to structure the wage incentive, we wanted to try to avoid paying for the same thing twice. If you look at the flows off benefits, most young people move off benefits within three months. In three to nine months, you are more likely than not to move off benefits. Between that period, our focus is very much about trying to get you into the workplace to get work experience, for example, filling any skills gaps through the shortterm courses that John and I have set up together.

We took the view that we would not spend money on the wage incentive until they got to the point of entering the Work Programme and became longterm unemployed. The money was deployed alongside placements achieved through the Work Programme. If you look at the figures we have published for the first three months, the only job entry data are very rough and ready, but it seems to have had a significant impact on the propensity to hire young people. We will not know for some time truly what the impact is, but my first view is that this has been a positive contributor.

Q384 Karen Bradley: One of the things we have heard from the evidence is that, from an employer’s point of view, it might just make the difference on the margins, in terms of perhaps making them employ someone earlier than they would have done. Is that something you are aware of? If that is the case, is that good enough?

Chris Grayling: It is not so much even earlier than they would have done; I think it is trying to break down the resistance to hiring at all. There are two sentiments that I find amongst employers. There are those who say, "Actually, it is very expensive to hire, particularly an unskilled young person, and therefore I would not do it, because I am going to spend lots of my own money." One well known businessman I spoke to recently, who runs an engineering business, said to me, "Look, I value taking on apprentices, but I get nothing out of them for the first year." Therefore, providing financial support, either through the supported apprenticeship package that John has got or through the wage subsidy, to cover part of that cost, reduces the resistance to employ on the basis that, "It is going to cost me lots of money".

The other element is that it opens the door in the first place. If we are knocking on the door and somebody is saying, "You’re not even considering hiring a young person, but you will get a financial incentive to do so," for a small business, it actually makes that hire more costeffective. One of the things I always say to businesses is, if you hire a young person, either using the wage subsidy or if you go through the apprenticeship route, you are getting somebody who potentially could be very good for you, pretty inexpensively. That is a good commercial deal for you; it is well worth doing. I hope what we have done now is to create a situation where it is actually a smart move to hire a young person, in a way that perhaps it was not.

Q385 Karen Bradley: How will you measure the success of the wage incentives?

Chris Grayling: Most obviously in seeing an acceleration in the propensity for 18to24yearolds who are on the Work Programme or who are from the most acute areas of youth unemployment to get into the workplace. We will track that quarter by quarter. We will be able to see, through job outcome data in the Work Programme, the impact from April onwards of the wage incentive and then the trends in both getting into work and sustaining employment. We will be tracking it quarter by quarter.

Q386 Karen Bradley: You will be able to prepare both pre and post having wage incentives.

Chris Grayling: Yes, we will.

Q387 Karen Bradley: And also the difference between those groups that have the wage incentive and those that do not?

Chris Grayling: Yes, we will.

Q388 Karen Bradley: On takeup, the target is 160,000 wage incentives. That is a big number, which substantially exceeds anything that we have seen before. How confident are you that there will be takeup at that level?

Chris Grayling: The first quarter has been very interesting. We did a roughandready exercise with the Work Programme providers a couple of weeks ago; we asked them to go through their books and tell us how many job starts they had had, for young people between 18 and 24, since 1 April. The total was 17,100. All of those 17,100 job starts would, if they sustained for six months, be eligible for wage subsidy. Clearly if that happened every quarter for three years we would have a budget problem. In reality, they will not all sustain for six months and they will not all end up claiming the subsidy payment, but, as a starting point, it is suggesting an encouraging level of takeup and a very healthy level of those longerterm unemployed young people moving into work.

Q389 Karen Bradley: I think that is helpful, because that explains the press release that we have seen today from the Department about the first Work Programme data showing promising signs. We were not quite sure what that 17,000 number was, so that is work startups; they have not reached the point yet to qualify for the incentive but they have gone into something.

Chris Grayling: Basically, small employers are entitled to an interim payment, if they want it, after eight weeks, but we will not start paying out until six months, so we will not make the first significant payments until October.

Q390 Karen Bradley: Have any of the eightweek payments been made yet?

Chris Grayling: A very small number-a few tens so far.

Q391 Karen Bradley: One of the concerns that a number of witnesses have expressed, and I think it is a concern that I can understand, is how to communicate this to the employers that might want to take up the Youth Contract. Certainly when I went to my local job club run by my community voluntary services, their big message was, "Please find more employers to come forward to volunteer to take on people on the Youth Contract." What will the Department be doing to communicate about the Youth Contract to make sure as many employers, particularly small businesses, find out about it?

Chris Grayling: We are doing a number of things. Most immediately, I have personally written to 350,000 employers telling them that this support is available. We have held a number of events with trade bodies. We have particularly focused on the trade bodies to try to get them to disseminate information to their members as well. We have done a lot of work with the trade bodies and a lot of roadshows. Jobcentre Plus staff also are seeking to promote at, for example, some of the job fairs that colleagues have done-promotional leaflets about Youth Contracts. Of course, for the Work Programme providers themselves, this is a tool for them and it is going to increase the likelihood of them getting young people into employment. They are using this as a sales tool.

We continue to find every opportunity we can to spread the word. Most fundamentally, the 350,000 employers that are on the Experian national database have all had notifications about it, which at least means we have spread the word fairly widely. If the trade bodies then reinforce that, alongside the Chambers of Commerce, the CBI and others, hopefully we will get to as many as possible. I would love to say we will get to everyone, but there is not an easy way of doing that that is not extremely expensive.

Q392 Karen Bradley: Is there a way to make the message simple to employers? One of the other issues we had was about the 33 different possible funding streams an employer could access when taking on a young person via apprenticeships or the Youth Contract, and the complications of understanding that. Is there anything that can be done to have a onestop shop almost, a website you could go to that says, "These are the options available. Click here to find it"?

Chris Grayling: We are working on that now. John and I work very closely together to try to make sure what we do is joined up. Frankly, what we discovered in the early weeks of the Youth Contract is that the points of interaction were not as good as they should be. We have done some mystery shopper work now ourselves to see how good or bad our points of contact are. We have learned some lessons; we are making improvements. We are looking at simple single points of contact for people to try to simplify the messages.

Chair: If I might to be fair to Andrew Bingham, he is going to be asking a section on this.

Karen Bradley: Sorry; I do apologise.

Mr Hayes: Forgive me, Chair. On that particular point, I am conscious this Committee has previously been understandably critical of joint departmental working, communications and so on and so forth. We have, it is fair to say, enjoyed an unprecedented level of cooperation, ministerial and officiallevel.

Chris Grayling: We actually talk to each another, which is a useful start.

Mr Hayes: It is actually becoming quite tedious,-I hear what you say about the joint marketing of this kind of initiative. We have also been encouraging small employers to take on a young apprentice, and ensuring that consistent messages are broadcast. I think we might look at this afresh as a result of your inquiry.

Q393 Chair: If you were to undershoot on your wage incentives and there was part of the budget there left, would you be able to reallocate it to other parts of the Youth Contract?

Chris Grayling: Yes; there is no constraint on doing that.

Q394 Glenda Jackson: Do you undertake a secret shopper on the quality of the employer?

Chris Grayling: For the recruitment?

Glenda Jackson: Yes. If they sign up, does somebody actually check? You have made very clear you do not admire the possible exploitation of young people by employers.

Chris Grayling: The point about this is these are real jobs. This is not an artificial placement. This is somebody who has been hired for a longterm position, where the payment is not made for six months, so we do not, anymore than we would do mysteryshopper work on anyone who hired a young person through Jobcentre Plus. It would be totally unrealistic to do that. We would clearly check if we were funding a placement that was shortterm, a training place or whatever; there are mechanisms to inspect, but no, this is an incentive for an employer to hire someone.

Q395 Teresa Pearce: On the points that were just raised, one of the things that we have heard from employers is that it is confusing and they are not sure which schemes they are eligible for and which they are not. I know local authorities are pushed, but if there was somebody in the local authority who could be a fund finder for local business, that is something that could save them in the long run-improving business and getting people into work. Do you think that would be something local authorities could do or would want to do?

Chris Grayling: John, you might want to pick up the funding issues. If you look at the funding streams, from the point of view of employers we have very few within the DWP. Really, the only financial support or financial incentives that come with an employer hiring somebody come through the wage incentives in the Youth Contract or potentially if a localised deal was reached with the Work Programme providers. A lot of it is through the skills route.

Q396 Teresa Pearce: There was some confusion with the apprentice scheme particularly.

Mr Hayes: I think local authorities have a part to play in this. Part of the City Deals that we have been putting together with the eight principal cities include a skills offer. I was in Liverpool a week or so ago, working with the Liverpool region. If I might say so, my colleague Esther McVey MP has been very helpful in advising me on that, but also the Mayor of Liverpool, who I met when I went, and the Mayor of Knowsley too, who I also met. There is a real engagement there with local authorities, and I think they can play a really important role, as a conduit, both for people who want to get a job and get trained and for employers, particularly by bringing in the small employers. We have developed the idea of apprenticeship hubs with the local authority working with other agencies, for example, the principal local authority working with other authorities around it, which I was able to launch in Nottingham last year. As I say, they have been shaped with cities across the country.

There is an argument for taking it more widely. I was talking to the Planning Minister Greg Clark, who has been at the heart of this. I have been thinking about how we might take that to other kinds of local authorities, beyond the conurbations. I agree with you; I think local authorities can play a part in this.

Q397 Teresa Pearce: Mr Grayling, when you came to us in March, you told us that you had decided to deliver wage incentives through the Work Programme to "keep things as simple as possible". That is what you said. Would it not be simpler just to give the money-the incentive-straight to the employer, and actually leave out the Work Programme?

Chris Grayling: We do. Basically what happens is the Work Programme provider will help the young person find a job and will say to the employer, "Right, you are entitled to the wage incentive." All the employer has to do is, after eight weeks or six months, print out, either from the Work Programme provider or from our website, a twopage form, two sides of A4, and fill it out and send it to us. That is all they have to do; it is as uncomplicated as that and something the CBI has really welcomed. Normally in the past, you have had about 400 pages of complicated forms, but this is literally name, address, name of employer, which Work Programme area you are in, and that is about it really.

Q398 Teresa Pearce: Is it value for money, because you are paying twice? You are paying the employer and you are also paying the Work Programme provider for outcome fees and sustainability payments.

Chris Grayling: The Work Programme provider does not earn their fee in full for a young unemployed person until they have been in work for 18 months. The job of the Work Programme provider is not only to find the initial opportunity, but also to support that young person through not just the first six months that are covered by the wage incentive, but actually take them through the full 18 months, by which point we hope that the young person is well bedded - in in their job, and is well set on a career. The Work Programme providers do not get anything like all their fee at that point. They have a much longer job than that.

Q399 Teresa Pearce: The Work Programme provider will get their fee if they sustain someone in work. To be paying a wage incentive as well is a double payment for one person.

Chris Grayling: You are paying for different things. First of all, we have this great challenge that too many jobs, in my view, that could be going to young British school and college leavers are being taken by people who are coming to the UK from overseas. My goal is to level the playing field. It is that straightforward issue: do I hire the inexperienced young person or somebody who is five years older, who has got get up and go and has come across a continent to find work? What I am trying to do is level the playing field. What I am doing is paying for two things. What the wage subsidy is doing is it is levelling the playing field. It is actually saying to an employer, "We know, when you take on an inexperienced person, you have to invest more in them than you do if you take on somebody who has got a few years’ experience." Therefore, what we are doing is contributing to that.

In the case of the Work Programme provider, what I am paying for is the employability development that Glenda Jackson was talking about earlier, the preparation to get into work for an interview-and these are people who have been out of work for many months or who have come from very difficult backgrounds. You are trying to overcome the hurdles they face in getting into employment in the first place. You are getting them motivated; you are preparing them for the workplace; you are doing CV development; you are doing interview training; you may well be doing training and development of that individual. Then, once they are in work, you are paying to be at the end of a phone, talking to them regularly, making sure they have not developed problems in employment, making sure they are not likely to drop out. I am paying for two different things. Yes, we are paying for a more comprehensive service of support to get young people into work than we were previously, but I do not think I am paying for the same thing twice.

Q400 Teresa Pearce: When somebody is in that first six months with an employer, what obligation is there on the employer to actually give them training? They have to keep them for six months to get the money, but what other obligations are there?

Chris Grayling: There is no obligation on the part of the employer but, unless that young person is there six months down the track, then the money is not paid. The obligation on the employer is no different from what it would be for any new employee. If you hire a new person, you want to induct them into your workplace; you want to train them how to do the job. That will certainly happen. John, you might want to say a bit about the supported apprenticeships you have. There are two options, the wage subsidy and also the supported apprenticeships.

Q401 Teresa Pearce: If you had an employer that took someone on, had them for six months and took the incentive at the end of six months, but they did not actually invest in that person, would you not use that employer again or would that be up to the Work Programme?

Chris Grayling: It would be the Work Programme provider. Frankly, if I was the Work Programme provider and I found a job for a young person, and the employer basically did nothing with them for six months except get them to do menial jobs, and at the end of six months said, "Thank you very much and goodbye," then I would be pretty unimpressed, because I would not be getting my fee. All the incentives are there for the Work Programme providers to try to find longterm employment, because that is how they maximise their return.

Q402 Teresa Pearce: When that person is in that job for six months, what ongoing inwork support would the Work Programme do or would they just leave them there for six months?

Chris Grayling: We have the blackbox approach to that. They can do whatever they want. What I expect most of them do is have a dedicated team that is in regular contact with the employee, who are talking about what is going well and what is not. If issues arise in the workplace, they will talk to the employer and try to get those issues resolved. What is happening in quite a lot of cases now, which is very encouraging, is what the Work Programme providers have worked out: that if they can help get somebody moved on in work that creates another vacancy they can fill. If they can actually support somebody to the point of getting them promoted, then it creates another vacancy for another person to come along behind. We are seeing some of them moving towards career development alongside that immediate backtowork support.

Chair: We are going to hear from the other Minister, John Hayes, about supported apprenticeships briefly.

Mr Hayes: That is most kind. I am speaking amongst experts here, of course, the former Social Security Minister and opposition spokesman on this, and we have former employers, teachers, councillors and all kinds of experts in the room, but I think it is important to set this in context. We are seeing a fundamental structural change in our economy, and that structural change is resulting in fewer unskilled jobs. Therefore, to get a job without skills is becoming increasingly difficult. That is why we focus so heavily on skills. Many of the young people we have been talking about might have been absorbed into the economy 20, 30 or certainly 40 years ago, but simply will not now, because those opportunities for unskilled jobs are not there. Part of boosting apprenticeships and focusing on young people is about equipping them, regardless of from where they start, with the skills that make them most likely to get a job. The Apprenticeship Grant for Employers is about targeting smaller employers in particular and trying to persuade them to take on a young person.

There are real and perceived risks for a small business to taking on a very young person. I am sure we would all acknowledge that. So, we want to help as much as we can. What I am looking at, at the moment, is whether we need to do more. It may be the criteria we have set-we have said, for example, that someone cannot take the support we are offering-£1,500-if they have offered an apprenticeship in the last three years-may be too onerous. Maybe we have narrowed the target too much in those terms. Also, I want to look at the success of this. I want to look at whether £1,500 is sufficient, or whether it is better to aim at a smaller number than the 40,000 but go for a bigger amount. It is better to get 20,000 or 10,000, if you like, than not hit the target on the basis of offering a smaller amount. I want to get this right by looking at it closely over the first 9 to 12 months and adjusting it to suit, so we get the maximum opportunities for young people to get jobs with small employers.

Q403 Teresa Pearce: Basically, Community Links told us that it was not utilising the wage incentives very much, but was concentrating on making Work Programme participants as employable as possible by building good relationships with local employers, but not actually using the wage incentive. When you designed this scheme, did you consider whether the money allocated for wage incentives would be better spent on more intensive one-to-one support, either from Jobcentre Plus or Work Programme providers? What made you think that wage incentives were the way forward?

Chris Grayling: If you look at the Work Programme, we had already established the contractual framework. We had the organisations involved signed up to a paymentbyresults regime. We would not have wanted, at that point, to simply put extra money into the Work Programme. They have all signed up in the belief that they can deliver a good flow of people back into the workplace and I intend to hold them to that. The wage incentive really came in part from representations from different business groups, which were all basically saying, "Look, we want to do something about youth unemployment, but there is this cost challenge that, when you take on somebody without previous experience, you are putting a significant effort in yourself. There is a financial cost and a time cost. What we would like to see is a wage incentive structure that recognises that." That was where the route came from. I think simply putting more money into the Work Programme, for example, or more money into Jobcentre Plus for what we are already doing would not potentially have made the difference that incentivising employers will do-levelling the playing fields. Iain, sorry; you have been left out of this. Do you want to say a bit about the wage incentives, in principle?

Iain Walsh: Yes. Firstly it is just to say, in terms of the amount of money under the Youth Contract, between £100 million and £200 million went to extra adviser time for Jobcentre Plus. We had some discussions early on about extra signing, but it is perhaps important to note that there is also funding for general more indepth adviser time. You have to come to a view about how much it is worth putting into that, which is still going to be costeffective.

In terms of the wage incentives, we have had some discussions about it already. What the evidence would show is that, yes, the cost effectiveness of wage incentives is varied, but the times when it is likely to be most effective is if it is focused on clearly defined disadvantaged groups, if it is done at a time of low labour market demand and if it is made as simple as possible. Now I think you need those three things in place to give it the best chance.

In terms of low labour demand, we know it is still quite a tough environment out there. It goes to the point the Minister was saying about people taking young people on. Secondly, we put it through the Work Programme. Employers taking someone on from the Work Programme would already know that they are relatively disadvantaged by the very fact that they are on the Work Programme. Sometimes there are issues you might get around - stigma, for example, about an employer thinking, "Well, I am not going to take on somebody with a wage incentive, because that shows me that they are already quite a difficult claimant to take on." We were not adding to that, because that was already known, and we were focused on the more disadvantaged. Generally speaking, with Jobcentre Plus, if you have been claiming for a relatively short period of time, it may be easier to get into work. By the time you have got to the Work Programme, it is more challenging and there is more of a case for giving that employer the extra push.

The third element around marketing and simplicity, as the Minister has mentioned, is that we work quite a lot with employers to try to keep the process as simple as possible. With the communications, all we can say is we have started that process. We, as well as Work Programme providers, need to continue that as far as possible. If, after all of that, further down the line, we find that not all the wage incentives are being used, then obviously we can review the matter, but that was the thinking early on.

Chair: That brings us to Harriett’s questions, which are about that group that are in the greatest need and their role with wage incentives.

Q404 Harriett Baldwin: Just a little niggly question that came up when Teresa was asking: a lot of these small businesses will be family businesses; is there any barrier or rule against hiring your own child or your own young person?

Chris Grayling: The answer is: no, there is not, but they would have to be out of work for nine months first, attending Jobcentre Plus on a fortnightly basis, demonstrably looking for jobs elsewhere. They would then have to be registered with the Work Programme. In theory, it would be possible but it seems unlikely. I would not want to legislate for something that might happen in a tiny, tiny number of cases. I think it is very unlikely.

Q405 Harriett Baldwin: Turning to the areas and individuals with greatest need, we just were curious to know why it is a flat rate across the country and why there was no particular variation in terms of the payments for areas where clearly youth unemployment is higher.

Chris Grayling: Simplicity. The problem with something like this is, as I have learned on more than one occasion since becoming a Minister, the more complicated something becomes, the more difficult it is to bed it into DWP’s systems and the longer it takes. The joy of this was it was very simple; it was easy to explain. There is a flat payment of £2,275 payable after six months. You fill in a twopage form to get it. If you are a small business, you can get an interim payment after eight weeks. You fill in another twopage form to get it. It was about simplicity and deliverability quickly.

Q406 Harriett Baldwin: Having said that, you then almost immediately made the change that Jobcentre Plus could offer this to those who have been out of work for six months, so there was an almost immediate variation.

Chris Grayling: It was something Jobcentre Plus staff had been very keen to do and it seemed sensible in a small number of areas, where there was a particularly acute problem, to allow them to deploy it earlier.

Q407 Harriett Baldwin: If you saw though that the takeup was happening in areas with reasonably buoyant labour markets, and that you were getting very disappointing levels of takeup in places where there are high pockets of youth unemployment, would you adjust your view?

Chris Grayling: We would certainly. The whole point about sensible governance is you adapt to circumstance. Yes, if we were finding that we were spending the money in the wrong places, of course we would consider whether there was a way to do it differently.

Q408 Harriett Baldwin: How quickly do you think you would be able to make that change and inform the payments in a regional structure?

Chris Grayling: The obvious way to do it would be to replicate what we have just done with the hotspot areas. That can be done very quickly.

Mr Hayes: In terms, Chair, of the specific call for apprenticeships in that respect, as I said, I am going to review the implementation of this to ensure that we are achieving the aim. I am very happy with the whole range of proposals of how we might target this more effectively. Chris is right that we have to be careful about bureaucracy. Nonetheless, it seems to me, if you are going to review something on the basis of evidence, you must use that evidence to adjust what you are doing. I am certainly going to do that in respect of the support we are giving to small employers with young apprentices.

Q409 Glenda Jackson: It is on this regional issue. There is a growing movement for regional variations, as far as wages are concerned. Is this going to impact on this scheme in any way, if it really takes off, as far as affording apprenticeships are concerned?

Mr Hayes: The apprenticeship wage is a statutory wage and indeed I have introduced the statutory conditions. You are right to point out, Glenda, that most firms pay more than the statutory wage, and of course that varies from place to place, company to company, sector to sector. I have no doubt that the apprenticeship wage will reflect regional and local wage differences, because it is a job with a wage, it is bound to do so.

Q410 Glenda Jackson: But is not going to affect your contribution to that-the Government’s funding. That is going to stay the same.

Mr Hayes: Our contribution will be standard, yes.

Q411 Harriett Baldwin: Turning to young people who have the additional barriers of disabilities, again we have received evidence that there might need to be higher cash incentives to reflect those additional barriers. Again, is that something that you’re likely to want to review at some stage?

Chris Grayling: We are looking at that quite carefully. Maria Miller is looking quite closely at what else we might do. Of course, within the Work Programme, there is a higher price paid to help people with disabilities into work anyway, in most cases, either on ESA10 or former IB11 payments, but it is certainly something we are considering.

Q412 Harriett Baldwin: Is the Access to Work programme well known among employers?

Chris Grayling: It is not as well known as it should be. Again, Maria is making an effort to build awareness of that. We see Access to Work as a very important part of what we do. One part of the changes taking place at the moment is to disability support. There has been a lot of debate about the changes taking place within Remploy, and I would stress again that we are not reducing the support that is provided to people with disabilities in relation to employment; we are simply redeploying money from one place to another, and that includes an increase in the financial support of Access to Work.

Q413 Harriett Baldwin: Do we know, out of the 17,000 young people who have so far been announced to have found work, whether there is any noticeable regional pattern or if any of them are disabled?

Chris Grayling: Not yet, I am afraid. This is very much the first pass. It was about the first piece of data we could gather, and it was very much a question of phoning them up and saying, "Give us the latest management information." We will be able to dissect that in due course.

Q414 Harriett Baldwin: If we check back in six months, do you think we would have a bit more granularity in terms of that data?

Chris Grayling: Yes; we would be able to give more of a breakdown.

Q415 Harriett Baldwin: Then with the unemployment rate amongst young black men running at over 50%, I wondered whether you are considering further measures to tackle that issue in the Youth Contract.

Chris Grayling: The first thing to say, which I think is quite important, is that there are pockets of high black and ethnic minority unemployment but, in most areas, actually that is a slightly misleading situation, because the proportion of people in the local population who are from black and minority ethnic groups is also much higher. What may appear to be a very disproportionately high level is clearly significant, but it is not as out of kilter with the white community as would perhaps at first point appear to be the case.

Q416 Harriett Baldwin: Runnymede Trust says that 55% of economically active black men aged 16 to 24 are unemployed.

Iain Walsh: The unemployment rate for young black men is around 50%, from the most recent information, which is quite a lot higher than the overall for young people, which is about 2021%. Just building on what the Minister said, some of this is down to the characteristics that young black men might have. For example, on the whole, they have lower levels of qualifications, and lower levels of qualifications are associated with higher unemployment rates. Where they live in the country can also impact on their unemployment rates. There are a variety of factors that are affecting it. The general approach is to have support for ethnic minorities and black people mainstreamed, as I think we discussed before, through different interventions. Just in the same way as we have flexibility in the Work Programme and within Jobcentre Plus, we would expect them to set up particular types of support measures if they felt it was appropriate.

Chris Grayling: There is some very good work being done, if you look at, for example, what is being done in North London, in and around the Tottenham area. There are some very significant projects taking place on the ground-partnerships between Jobcentre Plus and, for example, organisations like the Tottenham Hotspur Foundation, looking to engage young black men, who have a higher propensity to be unemployed.

The point I was making about the numbers is quite often we have quoted parts of the country where there is a very high percentage of black and minority ethnic groups who are unemployed. What the comparators tend not to do is say what proportion of the overall population that those groups must make up. Clearly, if 60% of the local population is black and minority ethnic, then there will be a higher proportion or higher number of those people who are unemployed in an area where that is less the case.

Q417 Harriett Baldwin: I do not think that is what the statistic that I quoted was illustrating.

Chris Grayling: But we are working very hard. The approach we have taken with Jobcentre Plus has been to say we will do less at the centre; we will prescribe less; we will give you greater flexibility on the ground. Through the Flexible Support Fund, we will give you greater financial flexibility on the ground. What that means is that, in areas like Tottenham, the Jobcentre Plus staff have much more flexibility to tailor local projects, to support local projects, and to form local partnerships that can target individual groups like young unemployed black men.

Q418 Harriett Baldwin: That flexibility does not run to the wage incentive. That is all we are trying to ask about here.

Chris Grayling: No, it does not, but of course the wage incentive is available, through the Work Programme, to any unemployed young black man.

Mr Hayes: I agree with you, Harriett. I think it is extraordinary that, when half of young male black Britons are unemployed, we import migrant labour from lands of which we know little. I think that is extraordinary. Certainly for my part on apprenticeships, where the records on minorities have not been great historically, I missioned the National Apprenticeship Service to do specific pilot work on this. I am very pleased to say that I learned from them very recently that the group that I described to Glenda, the 4,000 that we brought in on Access to Apprenticeships has a greater proportion of people from minorities than any previous work that they have done. We are beginning to tackle this, but we have a big mountain to climb.

On disability, I have got an answer here from my civil servants, which says that "Making significant inroads into the gap between disability employment and nondisability employment will not be achieved by specialist programmes alone." But I do not entirely agree with that; I think you do need some specialist approaches on this. Again, there has not been sufficient work done in the past, and I think we need to do more. Disabled people deserve their chance to prosper on the basis of their ability, and I think we should go the extra mile. I shall be going back to them-because I do not wholly agree with this advice-and I shall be asking them to do more.

Chris Grayling: It is worth saying that there is a greater propensity among young people from ethnic minorities to be in education than amongst the white community. Those who are not in employment are more likely to be in fulltime education than their white counterparts.

Q419 Glenda Jackson: My question was based on your response that there were schemes that were working in this particular area. I think you said Tottenham. Are you disseminating this information to the other hotspots around the country?

Chris Grayling: It is not so much about disseminating information. What we are trying to do is precisely not do that. What we are trying to do, with our Jobcentre Plus staff, is to say, "Look, what we want to do is to give you the freedom to adapt what you think works for the needs of your local community." Of course, they share experiences, because we have management conferences in Jobcentre Plus that do precisely that: share what is working well compared with one area or another. What we are not trying to do is say, "You should do this." What we are trying to do is to empower the frontline staff to take decisions about what will work best in their areas.

In some areas that will mean creating programmes for redundant 50something executives. In other areas, it will mean creating programmes for young black unemployed people. The whole point about providing flexibility at the front line is that the individual local Jobcentre Plus teams have both the flexibility and the financial support to be able to tailor programmes to what is needed in their areas.

Q420 Glenda Jackson: This question was specifically about the 50% of young black males who are not working. My question was: if you are seeing Jobcentre Plus flexibility in one area producing very good results for that particular part of the population, is that being disseminated to all Jobcentre Plus? Well, it would not be all Jobcentre Plus but you must know the hotspots.

Chris Grayling: That is precisely why Jobcentre Plus has regular communication between all of its leadership-to talk about what is working and what is not working, the things they are doing and the things they could do.

Q421 Glenda Jackson: We all know it never gets from the boardroom to the shop floor, so how are you following that up?

Chris Grayling: You say it never gets from the boardroom to the shop floor, but this is actually involving managers of Jobcentres.

Chair: I think we saw quite a good scheme at the Prince’s Trust, but I think we are now on to the NEETs programme, Harriett, if that is alright.

Q422 Harriett Baldwin: Very quickly on the 16to17yearolds, we were hoping that Tim Loughton would be here. I think it is his Department that is going to put out the contracts for the 16to17yearolds.

Mr Hayes: Yes. I am in the DfE (Department for Education) as well. I have a brief. It is Tim’s responsibility, but I will give it my best shot, Chair.

Q423 Harriett Baldwin: Marvellous. When are we going to hear where the contracts are going in there?

Mr Hayes: I understand that the answer to that is imminently.

Q424 Harriett Baldwin: It has been "imminently" for a while.

Mr Hayes: Actually, I can do all kinds of things as I am in the hot seat, can’t I? I will take that back to DfE and let this Committee know exactly what "imminently" means.12

Q425 Harriett Baldwin: Great. We have heard evidence on the 16to17yearold programme. It is going to focus on those leaving education with no GCSEs.

Mr Hayes: Yes. The aim is to pick up those with low or no qualifications, certainly subGCSE qualifications, very much the group we have been talking about earlier who, as a result of that, are less likely to get into progressive learning or work. This is targeted at them and designed to get them into education, employment or training. The focus of the programme, very much building on the Work Programme approach, is to tailor the product that is best suited to their needs.

Q426 Harriett Baldwin: We heard that the amount in the contracts is probably only going to be about £1,500 after things like VAT have been deducted. We have heard evidence that that is not necessarily going to be enough.

Mr Hayes: It is £126 million, as you know. That has to be measured after analysing the effect, does it not? We cannot start by saying it is not enough; we need to measure its effectiveness, as I said about my own work in apprenticeships. It will vary according to how far those people are from the labour market and what their prior attainment is like, but my opinion about that is that there are many people who, with incremental additional support, can get to the point where they are likely either to get into progressive learning or work. That is not, however, a reason to avoid the hardtoreach cases. You may well be right that something additional is needed in respect of the people who are farthest from the labour market.

Q427 Harriett Baldwin: It is a national contract rather than the regional packets that the Work Programme had, but one of the concerns we have heard about the Work Programme generally is that not enough money was flowing down to perhaps some of the voluntary sector organisations. We just wondered why you would want to model it on the Work Programme with the prime provider, where you would not want to directly give the contracts to some of these.

Mr Hayes: That is partly about the voluntary sector organisations as employers, and I had a meeting with a group of them specifically to talk about their role in delivery, but also their role as employers and as trainers themselves. You are absolutely right that the engagement with the third sector is important, and some of the best work that is done with the hardesttoreach groups is done by the voluntary sector. We certainly would not want a vanillaflavour approach that did not take account of expertise. As I said, bear in mind this is about 16to17yearolds. I spoke about the hardest to reach, the people farthest away. I am not excluding work with those other older people who are outside the workplace; this is very much targeted at very young people, who I think that, with that incremental support, can get to where they need to be.

Chris Grayling: Can I just add on that? Essentially, the group that is covered by this programme, if you look at the 16to18 NEET figures, there is a fairly big number in overall headline terms but, when you actually strip that down, there is only a relatively small number-a few tens of thousands-who are NEET for any length of time. They are the ones that this is really focusing on. One of the challenges is that these are people who do not come into the benefit system mostly. A few do, but most do not. It is a different kind of exercise than the Work Programme. We cannot mandate people to this. It has to be delivered much more clearly on the ground.

One of the things we talked through in the initial commissioning of this was it actually also probably needed to be different from the Work Programme in presentational terms as well, if it was going to work and engage those young people. It is more localised. The amounts of money are smaller. The contracts are smaller. It is easier for voluntary sector groups to come in and operate on a paymentbyresults basis, given the size of the contracts. I know there is some noise in and around the Work Programme around money getting to the front line, but the truth is today that there are something like 200,000, by a rough estimate, people in the Work Programme being supported by the voluntary sector. There are lots of voluntary sector organisations that are happy and satisfied with the progress. Those that have tended to complain are those that have not had the degree of work for which they were hoping.

Q428 Harriett Baldwin: We have had conflicting evidence on this particular thing, because the estimate is that this money will cover 54,000 people over two years, but we have had some people say that, because they are so hard to find and identify, some of the money will go to waste. We have had other people say that it really should be extended to cover the person who was 17 last summer and did not get any GCSEs, but will perhaps be 18 by the time these contracts are awarded. It should also be extended to cover those who perhaps are single parents, who have never had any qualifications and it ought to be wider.

Chris Grayling: The 18yearolds would go into the Work Programme anyway. The moment they are on benefits, they would go into the Work Programme. We had all this around contracting the Work Programme as well. There is always lots of chatter about it not being enough money and it could be done like this or could be done like that. At the end of the day, they all bid, and they are putting their own money on the table. That is the joy of payment by results because, if they were not happy with the approach that we were taking or did not think they could work with it, they would not put their own money on the table to operate a paymentbyresults solution.

Mr Hayes: This is a targeted piece of work. As I say, we will clearly review its effect. It is premature to say this is insufficient.

Q429 Harriett Baldwin: Do you want it to be oversubscribed or undersubscribed at the end of the twoyear period?

Mr Hayes: I can think of no better group than this Committee to separate that paradox from that conundrum. It is not for me to secondguess your deliberations about the evidence that you have been presented.

Chris Grayling: There are plenty of bids though and no shortage of organisations that want to do it.

Q430 Brandon Lewis: I had a meeting today with some MEPs, and a comment came forward from an MEP that there is a real focus on NEETs and a lot of political drive to deal with NEETs. They had actually analysed their area and hit on the point that you had just raised, which is actually that the number of those who really need help is a very small percentage. Therefore, in terms of this summer period we are going into, for example, a lot have finished school; we do not necessarily know what they are doing in September. What comments have we got or what is being done to make sure local authorities are able to keep account of them to know who they are or where they are, without overly making this bureaucratic to be able to get to the right people to make sure they are getting the support they need, without wasting time and money on those who do not need it, to be blunt?

Chris Grayling: It is very difficult, because these young people are not necessarily people who come within the ambit of the welfare state. They may show up through the troubled families work. One of the things that we have clearly said to the providers in the 16to17 package is that they will need to go out, recruit and identify. It is a difficult age group to work with, because they are not in the benefit system. Local authorities have got a reasonable idea who they are, and certainly the providers will need to work with local authorities.

Mr Hayes: Do not forget local authorities will have a statutory duty to ensure people participate. As Teresa argued earlier, there is a perfectly reasonable tieup with local authorities in the identification and the allocation of resource to target that group.

Q431 Brandon Lewis: Just to clarify, there is therefore a statutory requirement for local authorities; there is also an incentive for the providers to actually get in and deal with that anyway.

Chris Grayling: If they do not recruit, they will not be able to earn any money.

Q432 Brandon Lewis: One that has been touched on in a few different areas today is the proliferation of funding schemes, groups and organisations in different schemes. I heard somebody talk about 33 or 40 for a particular age group. In that sense, what can be done, or is there a need to do anything, to simplify, so that businesses that want to be involved, and can offer apprenticeships or whatever else, can do it simply, easily and understand it, instead of being scared off by a wall of bureaucracy and funding streams? Equally, for 16yearolds and 17yearolds to understand it, does it need to be simplified or is there one body of people who can do that for them? Is there more we can do to just make that simpler, so eventually you get to a point when an employer can shake hands, to use a phrase we heard the other week, with the employee and get on with it?

Mr Hayes: I did mention earlier-I talked at some length indeed-about the National Careers Service, which we have put into place. One of the things I have missioned that service to do is to insinuate itself into those communities where some of those challenges are greatest. I want it to have a reach through housing associations, through community vehicles, through public libraries, through village hills and through all kinds of different communities and sections of communities. Getting the word out, as you suggest, is partly about reach, isn’t it? The National Careers Service has a job to do, in that respect. Do not forget that will be about advising people not just on jobs but on training, on reengagement, on enhancing their capabilities so they might get into the labour market. Chris is right: in a sense, the more challenging, the more difficult it is to identify people, to get them back on the road to learning and work, and to tailor a package suitable for them. It does not mean we should not do it, but it is a significant challenge for any company.

Q433 Brandon Lewis: To use an example particularly pertinent to this group, we have got the Big Lottery Fund, with its Talent Match programme, which has just launched and obviously EFA. Do you see those as complementary or are there things that need to be done to make sure they do not become almost competitive with each other?

Chris Grayling: I have to say that the Big Lottery Fund caught us by surprise. They did not talk to us first. I think it is a shame they did not, because there is a danger. The reality is that there are lots of people and organisations in the welfare to work arena. Before we came along, the DWP actually had contracts with 1,200 organisations to provide welfare to work related services. We have reduced that quite substantially, but it is still probably more than we should have. It is not entirely clear to me how the Big Lottery Fund is going to avoid duplicating what we are already doing. That is a risk.

There are lots of people who want to do the right thing, and I admire them for doing that, but there is no point in us all doing the same thing twice. The reality is every unemployed young person who has been out of work for more than nine months, or three months if they come from a difficult background-for example having previously been NEET-will be on the Work Programme. Anything anybody else is doing needs to complement or work alongside. If it does not, it just duplicates.

Q434 Glenda Jackson: It could be, could it not, that a young person will find anything with the National Lottery in it far more attractive than Jobcentre Plus, or college or further education? We know there is extreme difficulty in getting hold of all the NEETs. Could it not be that the Lottery Fund could have the magic touch?

Chris Grayling: If you are talking about the 16to17yearolds, yes, but if they are on Jobseeker’s Allowance they are subject to conditionality. We cannot leave them to choose.

Q435 Glenda Jackson: We have already said that a lot of these young people do not come on to the benefit system at all.

Chris Grayling: Before the age of 18 that is certainly the case.

Chair: This is really bringing us to Andrew’s point.

Q436 Andrew Bingham: Thank you, Chair. Apologies for being late. The contract was announced by the Deputy Prime Minister. Today we have with us Ministers from two different Departments. That illustrates how it cuts across so many Departments. Does that demonstrate how difficult it is, because it seems to be to me? It is such a big issue that it just cuts across so many different Departments.

Chris Grayling: The Deputy Prime Minister has a different role in all this, of course. The truth is it predominantly fits between our two Departments. The Programme has been jointly commissioned between the DWP and DfE, so we have had two teams working together on that. John and I work very closely together and, yes, we have got different Departments. You can make an argument for saying skills should be moved into sit alongside employment, but we are where we are, and departmental reorganisations are hugely disruptive. Frankly, I think it is better to have two Ministers working closely together and, as I say, able to pick the phone up to each other and say, "What about this?" than trying to do departmental reorganisation.

Mr Hayes: I can see it has reached the point where I am your boss. I can see that. You are right, of course, that the challenge is that the risk is duplication or conflation.

Q437 Andrew Bingham: Do you think there is a case for a single youth unemployment agency?

Mr Hayes: I tell you why I would not do that at the moment. I think Chris is right that departmental reorganisations are always difficult and costly. It would interrupt some of the progress that we are achieving at the moment. What we have tried to do is to create sufficient overlap between what we do, around adding additional coherence. We have a joint ministerial advisory group; our civil service work very closely; we meet with alarming regularity to ensure absolute consistency in what we are doing. Frankly, our functions are rather different, but the reason they are so closely linked is the reason I gave earlier. In order to get people into work, very often they need to acquire skills and learning, and my job is to give them that. The absolute clarity with which we are working together does overcome some of the potential risk that I mentioned earlier.

Q438 Andrew Bingham: You have probably answered the next question I am going to ask. I am sure colleagues, like I, have had quite a few emails from constituents asking for a single olderpeople’s Minister. I think you have partly answered it really, but what are your views about letting your responsibilities on that go to a single youth and unemployment Minister?

Chris Grayling: Effectively, I am the youth unemployment Minister most fundamentally, but I am not exclusively for young unemployed people. My job is to make sure that we deliver the best possible support to all unemployed people. If you took a slice of my job away and gave it to somebody else, who would be responsible for the Work Programme, for example? Would it be them or would it be me? Segregating by age makes no sense. Youth unemployment is a big issue. The two groups that we have the biggest problem with are young people between 18 and 24, and people over the age of 50. Splitting those into two halves and having somebody responsible for each just fragments the support we provide.

Q439 Chair: This is an area where the Cabinet Office is also involved with the Deputy Prime Minister with an overseeing role.

Chris Grayling: He does not really have an overseeing role. He stirs some pots, but they do not have an operational involvement. He has the kind of stirringpot role that the Prime Minister does in wanting to set a strategic direction.

Mr Hayes: Having said that, where you are right, Chair, is that it is important that someone apart from us, frankly, as well as with us, does the business of brainstorming, does the business of the creative thinking, encourages us to review and calibrate policy. There is a role there for the Cabinet Office and there is a role there for Number 10. We do work closely with them along those lines.

Q440 Chair: This is a very important priority for the Government.

Mr Hayes: Precisely, and that is the fundamental priority.

Q441 Chair: Could I thank you both?

Chris Grayling: Chair, just before you wrap, could I just make one point to the Committee, which we have not touched on before, which I think is very helpful to know and understand? There is a lot of chatter around at the moment about trends in youth unemployment, both trends in longterm youth unemployment and the absolute numbers of young unemployed people, and I just wanted to clarify a couple of points for the Committee.

The first is that there has been no significant increase in longterm youth unemployment in the last two years, and we keep reading that there has been; it is not the case. What has happened, in the past two years, is a series of policy changes have impacted upon the way the figures actually appear. The best example of why that is the case is that, in the past, under the previous Government, when not just a young person but any unemployed person moved into a New Deal programme or similar, they were moved for a period of time on to a training allowance. That removed them from the JSA (Job Seeker’s Allowance) figures. When they came back on to JSA after a period of time, they went back to being a day one claim. It is a statistical nuance. Those people were, of course, still unemployed; they were just on a training allowance. They were still unemployed for a lengthy period of time, but they did not show up on the statistics. We do not do that anymore. One of the things that the Committee should be aware of in its considerations is that talk about a significant increase in longterm youth unemployment is not accurate. There has been no such increase.

Q442 Sheila Gilmore: Are there any published statistics on this, of numbers?

Chris Grayling: There is a paper available in the House of Commons library. You will see the exact calculation that has been done by our statisticians, free of political interference, I should say.

Q443 Sheila Gilmore: Has it got a link?

Chris Grayling: We can certainly make that available.

Q444 Chair: Perhaps you could write to the Committee.

Chris Grayling: We will do that.

Q445 Chair: I suppose the other very significant factor is participation in education. When I was a young person, very few people went on to university and now it is a very high percentage. Of course all of them are included in the ILO measure.

Chris Grayling: Absolutely, which is very unfortunate.

Q446 Chair: I have not cut you short, have I?

Chris Grayling: The other point very briefly to make is I will also send the Committee the calculation of the impact of other policy changes because, under the previous Government, a number of young people were in the Future Jobs Fund and did not therefore show up in the youth unemployment figures while they were there, even though they were in Governmentfunded placements of a temporary nature. That also has had a measurable impact on the actual level of young people who did or did not have jobs. We will make available, if I may, some statistical details to the Committee about the true changes in youth unemployment over the last couple of years, which may be value to it.

Mr Hayes: Mr Heald, I would not want to be trumped by my colleague in making an incisive final point so just to pick up your point on participation, which was an absolutely accurate point, it would be perhaps useful if we just dropped the Committee a line on the trend in participation,13 which shows growing levels of participation-up to more than 93%-and takes into account both the factor you raised and the greater engagement of people in workbased training. I would be more than happy to make that information available, alongside what my honourable friend has said he will.

Q447 Glenda Jackson: Are there any subdivisions within those figures?

Mr Hayes: Yes, there are. I will break it down for you.

Chair: Thank you very much. I think we would all agree that youth unemployment is, nonetheless, a concerning thing, running at levels that are high, and needs tackling. I would like to thank all of you for coming today. It has been very helpful to the Committee, and we will have to think what we say in our report. Thank you very much indeed for coming.


[1] Criminal Records Bureau

[2] Ev 126

[3] Further education

[4] Ev 127

[5] Skills Funding Agency

[6] Education Funding Agency

[7] E v 127

[8] Ev 127–8

[9] Ev 128–9

[10] Employment Support Allowance

[11] Incapacity Benefit

[12] Note from Witness : The contracts were announced on 20 June 2012: http://www.education.gov.uk/inthenews/inthenews/a00212063/radical-scheme-to-rescue-neets

[13] Ev 130–132 and Note from W itness: Information on Trends in education participation rates can be found at: http://www.education.gov.uk/rsgateway/DB/SFR/s001072/index.shtml

Prepared 19th September 2012