3 The Youth Contract: helping young
people who become NEET |
45. This chapter looks at the new Youth Contract
scheme to help 16-17 year-olds in England who leave education
without finding work or training (NEETs). We consider the nature
of support needed by disengaged young people; the policy objectives,
design and contracting arrangements of the new scheme; and the
challenges the Government faces in trying to identify NEETs and
help them to re-engage in education, training or work.
The nature of support required
by disadvantaged NEETs
46. We heard from several sources that supporting
and re-engaging young NEETs was often an intensive process. Staff
at the Prince's Trust's Fairbridge Programme had found that the
best way to build the confidence of disengaged young people was
through "experiential learning"learning through
practical experience of a range of different activities. The initial
access course for the Fairbridge programme included mostly outdoor
activities such as canoeing and rock-climbing. Following this
there were courses available in a wide range of areas such as
sports, film, music and practical vocational skills including
food hygiene, first aid and retail. The Fairbridge Programme achieved
positive outcomesa return to education, training or a jobfor
75% of participants using this method.
47. Community Links, a charitable organisation which
provides back-to-work support for young people in east London,
believed that the development of "deep value relationships"
between its workers and young people was the key to "restoring
confidence and unlocking potential". Building relationships
of this kind was an intensive process. Community Links described
its key workers as "part adviser, part carer, mentor, supporter,
builder and explainer".
Target group and policy objectives
48. The Education Funding Agency (EFA) is an executive
agency of the Department for Education with responsibility for
funding education and training provision for people up to the
age of 19. The key objective of the new EFA NEET scheme is to
help participants move back into education, training or work and
to keep them there. It also aims to provide the young people with
qualifications and work experience to help them to find work in
the future, thereby reducing the proportion that become unemployed
in later life.
49. As noted in chapter 2, NEET levels in the 16-18
age group have remained stable due to rising education participation
rates whereas the number of 19-24 year-old NEETs has risen steadily
since 2008. The new scheme is available to 16-17 year-olds who
have left school with no GCSEs at grades A*-C. The EFA told us
that it had chosen to apply this eligibility criterion because
these young people were "at risk of long-term disengagement".
50. Several witnesses welcomed extra support for
16-17 year-olds, particularly as very few have contact with Jobcentre
Plus (JCP) as the large majority of those who remain living in
their family home are ineligible for Jobseekers Allowance.
 JCP support
for young people is focused on the 18-24 age group (see chapter
51. Witnesses accepted that poor educational attainment
was an important indicator of the likelihood of young people becoming
NEET. Tony Wilson of Inclusion told us there was a "very
clear correlation": some 40% of young unemployed people have
qualifications below GCSE grades A*-C level.
52. However, some witnesses felt that the eligibility
criterion of no GCSEs at all at grades A*-C was too restrictive
and would exclude some young people who were at equally high risk.
The Careers Development Group, a welfare-to-work provider, argued
that a young person who has one GCSE at grade C but does not possess
a GCSE in Maths or English will face very significant labour marker
disadvantage and should therefore be included in the scheme.
Tony Wilson agreed that the criteria could be more "nuanced".
53. Community Links reported that there was a "wide
array" of factors causing young people to become NEET. These
included not only poor educational attainment but also: poverty;
drugs, alcohol or substance misuse; homelessness; mental health
issues; disability; involvement with crime and the criminal justice
system; and "chaotic family lives".
All of these factors were also highlighted to us by staff at the
54. Kirsty McHugh, Chief Executive of the Employment-Related
Services Association (ERSA) agreed that no GSCEs at grades A*-C
was a "very blunt" criterion, illustrating her point
by noting that "a care leaver who has multiple disadvantages
and has one GSCE in pottery" would not be eligible.
55. The EFA accepts that there are a range of indicators
linked to the likelihood of becoming long-term NEET, including:
poor school attendance, exclusion from school and coming from
a workless or "troubled" family.
Peter Mucklow, representing the EFA, told us that eligibility
had been restricted for budgetary reasons and to focus resources
on "those who are in the most need". He assured us that
there was sufficient funding to assist the estimated 54,000 young
people who would fall into the eligible category over the next
three years. At the
end of 2011 there were an estimated 85,000 16-17 year-old NEETs
in total in England.
56. Low educational attainment is an important
indicator of the risk of becoming NEET. However, using it as the
sole criterion for establishing eligibility for the Youth Contract
NEET scheme is likely to exclude a number of very disadvantaged
young people. We agree with the Government that it is important
to focus the available support on those who need it most. To achieve
this aim, we recommend that young people are assessed according
to a broader set of criteria to better reflect their level of
57. We are concerned about the potential gap in
provision for 16-17 year-olds, the large majority of whom have
no contact with Jobcentre Plus. Funding for the new NEETs scheme
will be sufficient to offer support to 54,000 16-17 year-olds
over the next three years. Our concern is that no single agency
or body will take responsibility for those 16-17 year-olds who
do not qualify for the Youth Contract scheme. The EFA, its Youth
Contract partners and local authorities must work together with
the aim of ensuring that all 16-17 year-old NEETs are referred
to appropriate local provision. It is vital that young people
are not left without support until they are 18, at which point
they may have been NEET for two years and may have become much
more difficult to help.
Programme design and contracting
58. The new NEET scheme is being contracted by the
EFA and delivered by private and voluntary sector providers with
experience of working with disengaged young people. It is designed
to draw on this expertise and gives providers freedom to address
an individual's specific needs without prescription from the Government.
This is known as a "black box" approach and is a key
feature of the Government's main employment scheme, the Work Programme.
59. Another feature of the NEET scheme which draws
on experience of the Work Programme is "payment by results":
providers will be paid only when they achieve a positive outcome
for each young person. Up to £2,200 is available for each
NEET (the "unit cost"). Payments will be staged, with
the majority of the money paid in the latter stages of the contracts
in order to encourage sustainable outcomes. The payment schedule
is as follows:
· An initial payment of up to 20%
of the unit cost in year one of the programme and up to 10% in
year two. To receive the initial payment providers have to identify
an eligible NEET and "work with the young person to complete
an effective and clear action plan for their re-engagement";
· A payment based on the outcome of re-engaging
the young person in education, training or work with training
(the re-engagement point) of up to 30% of the unit cost;
· A further payment based on the young person
still being in education, training or work with training six months
after re-engagement (the sustainability point) of 50% of
the unit cost in year one or 60% of the unit cost in year two.
Sustainability is defined as participation in full-time education,
training or work with training (including apprenticeships) for
five months out of six.
60. The EFA has let contracts worth £126 million
across 12 regions in England. Four of these contracts have been
awarded to Groundwork UK, an environmental regeneration charity.
The remaining contracts have been let to private sector companies
with experience in skills training and welfare-to-work. Services
will be delivered via supply chain partners in the private, public
and voluntary sectors. This "prime contractor" model
also draws on the design of the Work Programme. A further three
urban areasLiverpool, Leeds/Bradford/Wakefield and Newcastle/Gatesheadwill
decide how to allocate their own Youth Contract budget for 16-17
year-old NEETs (see below).
61. Contracts were let in July 2012 which will allow
delivery of the programme to begin in September 2012. The programme
will accept new participants until March 2015 but contracts will
run until March 2016 to allow for the staged payments for sustainable
outcomes to be made. The contracts set out quite stringent performance
measures which providers will have to meet in order to fulfil
the contracts, including that 70% of all participants achieve
the sustainability outcome within 12 months.
The prime contractor model and payment by results
62. In 2011 we reported on the contracting arrangements
for the Work Programme, which delivers services in a similar way
to the Youth Contract NEET scheme. Work Programme contracts were
awarded predominantly to private sector companies who might then
subcontract to smaller, often voluntary sector, delivery partners.
Our Report highlighted concerns that in these circumstances payment
by results could place significant financial risk on the smaller
organisations responsible for delivery of services on the ground.
We concluded that Work Programme contracts would require active
management by DWP to ensure that sufficient funds to enable delivery
of services were passed down from prime contractors to subcontractors.
63. Ralph Michell of the Association of Chief Executives
of Voluntary Organisations (ACEVO) raised a similar concern in
relation to the Youth Contract. He argued that, while charities
and social enterprises might be content with the principle of
payment by results, there was a risk that, when applied to the
new NEET scheme, it could result in insufficient money being available
for the types of specialised and resource-intensive interventions
often required to help young people who faced the greatest barriers
to finding training or employment opportunities.
Level of funding per NEET
64. Kirsty McHugh of ERSA, representing welfare-to-work
organisations, some of which were in the process of bidding for
the EFA contracts when we took evidence, felt that the maximum
"unit cost" on offer was low, given that the target
group was likely to have a range of significant barriers to participation
and require intensive interventions as described above. She noted
that the maximum £2,200 payment was inclusive of VAT and
also that bidders had been encouraged to compete for contracts
on price. She estimated that the average payment for supporting
each young NEET through the entire process was therefore likely
to be only around £1,500.
65. The EFA told us that it had set the maximum payment
at £2,200 based on "experience and evidence from other
programmes", including advice from DWP, but that ultimately
it had been a "judgement call". Peter Mucklow stressed
that the EFA had a duty to secure value for money and had therefore
allowed bidders to compete on price. He confirmed that 30% of
the bid evaluation weighting had been assigned to the "commercial
proposition, which includes price", with the remaining 70%
assigned to the quality of the bid.
66. Delivering the new NEETs scheme through a
prime contractor model and on a payment by results basis creates
a risk that insufficient funds will flow to the organisations
delivering services on the ground. We believe that the financial
risks of the scheme should be shared by prime contractors and
not simply passed down to subcontractors, whose role will be to
deliver the often intensive interventions required. As part of
its contract-management role, the EFA must take proactive steps
to ensure that supply chains operate fairly and in a way that
ensures the best possible service for young people.
67. We share the concern that the maximum payment
under the scheme of £2,200 per NEET may be too low to enable
delivery of the intensive interventions often required by the
most disadvantaged NEETs. The EFA must monitor this carefully.
We recommend that the Government takes a flexible approach to
allocating funds within the overall £1 billion Youth Contract
budget and considers increasing the funding for the new NEETs
initiative should this prove to be necessary, either because of
the level of demand or if it becomes apparent that the payment
structure is preventing the delivery of the necessary interventions.
We would also find it helpful to know, in response to this Report,
the extent to which the Government expects NEET scheme providers
to make available in-depth support to tackle personal and social
issues, within the contractually agreed "unit price"
per young person.
Finding and engaging NEETs in the new scheme
68. Witnesses identified that finding and engaging
the young people most in need of help would be challenging. The
EFA referred to local authorities' statutory responsibility to
support young people to participate in education and that: "It
is expected, therefore, that providers of the Youth Contract for
16 and 17 year-olds will work closely with local authorities to
ensure that they engage and meet the needs of those young people
in their area who meet the criteria of the target group".
69. Staff at the Fairbridge Programme told us that
it could take their outreach workers months to convince some young
people to participate. Community Links said it often took two
months to find and recruit young people to its programmes and
that it involved going out and looking for them in the community.
For Community Links, working in east London, the task was complicated
by gang culture; if young people had been involved with gangs
they would not be willing to attend programmes in other gangs'
territories, for example. A similar point was made at the Fairbridge
70. Community Links told us that the critical time
for finding and engaging NEETs was the summer months, after young
people had left school. They could often "drift" or
"completely go underground" during this time if early
action was not taken to find and engage them.
71. ERSA argued that experience of previous publicly-funded
programmes suggested that relying on local authorities to refer
NEETs to the new Youth Contract scheme "will not work".
Despite local authorities' duty to track the outcomes of young
people leaving school, ERSA had found reliable data on the number
of NEETs with no GCSEs at grades A*-C in each local authority
area "hard to come by".
The Invitation to Tender for the scheme only indicates the total
number of NEETs by region in 2010, for example.
Kirsty McHugh of ERSA predicted that finding and engaging NEETs
would be an intensive process in which providers would need to
engage directly with schools, youth clubs and other local organisations.
72. Tony Wilson of Inclusion also highlighted past
experience of relying on local authorities to refer participants
to publicly-funded programmes. He noted that European Social Fund
"troubled families" provision had failed to reach expected
volumes: local authorities had not been motivated to refer participants
because they had not felt part of the original commissioning process
for the programme. He believed that there was a risk that the
same could happen in relation to the Youth Contract NEET scheme.
73. As noted above, the Government has allowed local
commissioning in three conurbations as part of its "City
Deal" agenda, designed to give more autonomy to England's
However, the Local Government Association (LGA) had called on
the Government to allow local authorities to commission the Youth
Contract scheme across England, arguing that they "already
understand who the most vulnerable young people are, record and
track young people's progress and understand which local organisations
are best able to help them".
74. In oral evidence, the LGA told us it was "difficult
to say" whether local authorities would refer young people
to the Youth Contract scheme in the way expected by the Government.
In follow-up written evidence it stated that the centrally commissioned
model offered "minimal engagement" with local authorities.
Its view was that the decision not to implement local commissioning
across the country was a "missed opportunity" to integrate
Youth Contract funding with extensive existing local provision
for NEETs. It argued that, now that the contracts have been let,
there is one remaining mechanism by which funding might be better
aligned: by allowing local authorities a contract performance
75. The EFA told us it would be "very disappointed"
if local authorities did not engage with the Youth Contract. Peter
Mucklow emphasised local authorities' statutory responsibility
to support young people's participation and argued that the Youth
Contract had the potential to help local authorities discharge
this duty at no extra cost.
76. Our main concern about the Youth Contract
NEET scheme is that it will not reach its intended volumes unless
local authorities engage fully with it. Local authorities have
a statutory duty to support young people's participation in education.
We therefore expect local authorities to engage with Youth Contract
providers and assist them in finding and engaging NEETs.
77. Local commissioning of the Youth Contract
NEET scheme in three areas provides an opportunity to compare
the effectiveness of the local approach with the EFA-contracted
provision in the rest of the country. We recommend that the Government
conducts research to ensure it properly understands the advantages
and drawbacks in each approach and makes any necessary changes
to the scheme in response to the evidence on relative effectiveness.
Proliferation of initiatives to help NEETs
78. Several witnesses highlighted the proliferation
of schemes and initiatives aimed at re-engaging young people in
education and employment in England. The devolved administrations
in Scotland and Wales also each have several of their own schemes
The Careers Development Group (CDG) noted that, in the course
of researching its bid for the Youth Contract, it had identified
several duplicate programmes contracted through the Skills Funding
Agency, the Greater London Authority, the DWP Innovation Fund,
the European Social Fund and the Department for Communities and
Local Government. There was also a range of local authority projects.
CDG argued that the proliferation and duplication of provision
for NEETs was likely to lead to a low referral rate for the Youth
79. We discuss the variety of different funding streams
and accountabilities for delivering the Youth Contract, and education
and skills policy more generally, in chapter 8.
38 Ev 110, para 5.5 Back
YPLA, Invitation to Tender: Specification and supporting information
for the Youth Contract, March 2012, para 6 Back
Ev 133, para 4 Back
AELP, Ev w9, para 6; Manchester New Economy, Ev w37, para 35;
Reachfor, Ev w42, para 2.1.1 Back
Q 44 Back
Ev w13, para 19 Back
Q 47 Back
Ev 108, para 3.1 Back
Q 314 Back
YPLA, Invitation to Tender: Specification and supporting information
for the Youth Contract, March 2012, para 17 Back
Q 240 Back
DfE, NEET Statistics Quarterly Brief, February 2012, table
"Radical Scheme to rescue NEETs kicks off today", Office
of the Deputy Prime Minister press release, 20 July 2012 Back
EFA, Ev 134, para 22 Back
Fourth Report from the Work and Pensions Committee, Session 2010-12,
Work Programme: providers and contracting arrangements,
HC 718, Chapter 6. Back
Q 37 Back
Q 316 Back
Q 257 Back
Ev 134, para 13 Back
Q 313 Back
Q 237 Back
YPLA, Invitation to Tender: Specification and supporting information
for the Youth Contract, February 2012 Back
Q 316 Back
Q 46 Back
"Radical scheme to rescue NEETs kicks off today", Office
of the Deputy Prime Minister, press release, 20 July 2012 Back
Ev 147 Back
Q 226 Back
Ev 148 Back
Q 228 Back
See http://www.scotland.gov.uk/Topics/Education andhttp://wales.gov.uk/topics/educationandskills Back
Ev w14, para 21 Back