List of Recommendations
Youth Unemployment trends
1. It is clear that
youth employment has been adversely and disproportionately affected
by the economic downturn since 2008. This in itself is unremarkable
and accords with trends following the recessions of the 1980s
and 1990s. Substantial recovery in youth employment rates will
to a large extent depend on a return to economic growth and resultant
increase in the number of jobs available. However, we welcome
active Government intervention in the youth labour market now
to try to ease the labour market disadvantage currently faced
by a significant proportion of young people. (Paragraph 41)
2. Not all of the
increase in youth unemployment can be explained by the economic
downturn; youth unemployment was rising prior to the 2008/09 recession.
Government policies will therefore also need to address disadvantages
experienced by young people as a result of structural changes
in the economy in recent decades. These conditions are forecast
to continue and we believe that it will therefore be vital for
the Government to focus on preparing young people for the types
of vacancies likely to be available in the economy and on encouraging
small businesses to recruit younger workers. (Paragraph 42)
3. Government policies
will need to recognise and address regional and sub-regional variations
in youth unemployment by focusing the available resources on areas
where it is most difficult for young people to find work. We also
believe action is required to address disproportionately high
youth unemployment rates amongst some minority ethnic groups,
in particular young black men. (Paragraph 43)
The Youth Contract: helping young people who become
NEET
Target group and policy objectives
4. 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 need. (Paragraph 56)
5. 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. (Paragraph 57)
Level of funding per NEET
6. 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. (Paragraph
66)
7. 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. (Paragraph 67)
Finding and engaging NEETs
8. 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. (Paragraph 76)
9. 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.
(Paragraph 77)
The Youth Contract: the role of Jobcentre Plus
(JCP)
The JCP Work Experience Scheme
10. The JCP Work Experience
scheme has the potential to help many young unemployed people
move into work. Evidence suggests that its impact can be maximised
by focusing carefully on quality placements for those who stand
to benefit most: those with no or little previous work experience.
Without careful monitoring by JCP, unpaid work experience may
be counter-productive for people who already have experience and
therefore have relatively good employment prospects. (Paragraph
98)
11. We believe the
focus should be on the quality of placements rather than the quantity.
The Youth Contract target of 250,000 extra placements over three
years may be over-ambitious. In this context we recommend that
the Government continues to work with employers and human resources
experts to ensure that work experience opportunities provided
under the Youth Contract offer genuine opportunities for young
people to increase their employability. (Paragraph 99)
12. Since we completed
our evidence, another work experience scheme has been announced
for young people, initially as a pilot in the London area. It
is unclear how this will inter-relate with existing provision
or how it will impact on the voluntary organisations and social
enterprises which are to be the focus for providing placements.
We expect the Government to fully evaluate the scheme before it
is rolled out more widely. (Paragraph 100)
Sector-based Work Academies
13. We support Sector-based
Work Academies which combine a period of unpaid work experience
with relevant training and the guarantee of a job interview. We
therefore recommend that JCP prioritises this approach. To be
effective SBWAs will need to be established in growth sectors
within local economies. We recommend that some of the extra resources
allocated in the Youth Contract go towards strengthening JCP's
ability to make a proper assessment of the requirements of the
local labour market so that SBWA placements can be properly targeted
and offer realistic long-term employment prospects. (Paragraph
107)
Use of additional JCP resources
14. We welcome the
additional resources allocated to Jobcentre Plus as part of the
Youth Contract. However, to ensure effective use of resources
the 4,000 new staff will need to be deployed carefully, to the
districts that most need them. We support extra adviser time for
young claimants, which has been shown to have a beneficial impact
on employability. However, JCP staff will need to be properly
trained to ensure that those providing advice have an up-to-date
knowledge of the employment and training options available to
young people, and that they recognise the importance for young
people of acquiring skills and customise the support to the individual
accordingly. While we understand the imperative to get young people
off benefits and into work, an equal focus on increasing skills
of value in the local economy is likely to produce more sustainable
outcomes. (Paragraph 109)
The Youth Contract: wage incentives and the Work
Programme
Concerns about take up
15. The Government's
target of 160,000 wage incentives over the next three years will
significantly exceed anything achieved by comparable schemes in
the past. We note the relative simplicity of the Youth Contract
scheme and hope that this will encourage employers to take part.
We accept that a national marketing campaign would be an expensive
option; however, the Government should consider targeted regional
media campaigns should take-up be low in areas which would stand
to derive particular benefit from the scheme. (Paragraph 128)
Delivering wage incentives via the Work Programme
16. Delivering wage
incentives through the Work Programme has some advantages. It
ensures that support will be focused on longer-term young benefit
claimants who are more likely to have significant barriers to
work and therefore require more intensive help. The Work Programme
payment structure is also designed to encourage sustainable outcomes.
If large numbers of young unemployed people are recruited through
this delivery method it will bring significant benefits to the
Exchequer through increased tax revenue and reduced welfare spending.
(Paragraph 136)
17. However, delivering
wage incentives via the Work Programme has value for money implications
which will require careful monitoring by DWP. The Government will
need to assess, during the first year of the scheme, whether young
people placed in wage-incentivised jobs are receiving ongoing
support from Work Programme providers at a level which justifies
sustainability payments. If it proves to be the case that employers
themselves offer all the support that the young employee needs,
this would call into question the cost-effectiveness of the approach.
The Government would then need to review the value of using Work
Programme providers to implement the scheme over the remaining
two years—or at least whether continuing to make sustainability
payments for wage-incentivised jobs can be justified. (Paragraph
137)
Supporting the most disadvantaged
18. The Youth Contract
wage incentive is designed to "level the playing field"
between young inexperienced people and experienced people competing
for the same jobs in the mainstream employment market. Unlike
previous programmes, it will not guarantee subsidised employment
to long-term young unemployed people. It may be less likely therefore
to help those who are furthest from the labour market, such as
young people with disabilities. We welcome the Government's decision
to include Work Choice participants in the Youth Contract scheme.
However, we note concerns that the wage incentive level of £2,275
may be insufficient; more may be necessary to encourage employers
to recruit young disabled people. DWP should include a review
of the effectiveness of wage incentives for young disabled people
as part of its evaluation strategy. (Paragraph 145)
19. The Youth Contract
as originally announced lacked focus on unemployment "hotspots".
The decision to offer wage incentives earlier and directly to
employers in areas of high youth unemployment is welcome. This
approach will allow direct comparison with the efficacy and cost-effectiveness
of wage incentives delivered via the Work Programme. We recommend
DWP conducts a comparative study of the two approaches to establish
which produces the most cost-effective and sustainable outcomes.
We recommend it undertakes and publishes this study by the end
of July 2013, one year after the introduction of the JCP scheme.
It should act quickly to roll-out JCP delivery of wage incentives
if this proves to be the most cost-effective delivery method.
(Paragraph 151)
20. If the Youth Contract
is to succeed, the money available for wage incentives needs to
be spent in areas of greatest need. Further measures may be necessary
to encourage take-up in areas of high youth unemployment and to
minimise deadweight spending where youth employment is relatively
buoyant. Regional caps calculated on the basis of the proportion
of young people on JSA may be required. DWP should also consider
increasing the level of incentive payment available to employers
if take-up is low where youth employment is most depressed. We
recommend that DWP reviews the need for regional caps and differential
regional incentive payments in April 2013, a year from when the
Youth Contract was introduced. (Paragraph 152)
21. Unemployment rates
amongst some ethnic minority groups are disproportionately high,
particularly amongst young black men. Further, targeted measures
may prove necessary to tackle this. As part of the Youth Contract
evaluation strategy DWP must monitor its impact on the employment
rates of different ethnic groups. We recommend that DWP assesses
the Youth Contract's effectiveness in tackling high youth unemployment
amongst minority ethnic groups after it has been operating for
12 months and responds quickly to introduce additional measures
if this is shown to be needed. (Paragraph 155)
The Youth Contract: Apprenticeship Grant for Employers
22. Apprenticeships
form a small part of the Youth Contract offer. We welcome the
attempt by the Government, through the Apprenticeship Grant for
Employers, to increase the number of young people taken on as
apprentices. However, we remain concerned that apprenticeships
may not offer the right support for young people furthest from
the labour market, who may have no qualifications or experience
and come from difficult backgrounds. We therefore welcome the
steps the Government has taken to date to increase pre-apprenticeship
provision; this is a useful starting-point on which it needs to
build. (Paragraph 171)
Related policy areas: education and skills
Raising the participation age
23. We believe that
reform of vocational education is required to avoid young people
wasting time on courses of little or no labour market value, particularly
as the education participation age in England rises to 18 by 2015.
The Government has recognised the need to take action in its response
to the Wolf Report. Steps to implement its recommendations now
need to be taken as a matter of urgency. We request that the Government
sets out, in its response to this Report, how it intends to proceed
with these reforms, including the timetable for implementation
in preparation for the change to the participation age in 2015.
(Paragraph 188)
Reform of schools work experience and work-related
learning
24. Business organisations
appear ready to play an increased role in the provision of work-related
learning and careers information, advice and guidance. We welcome
and support the current examples of innovative measures which
link schools with local employers and help young people to understand
and engage with local labour markets. We recommend that the Government
plays an active role in facilitating a national infrastructure
which allows such initiatives to flourish. (Paragraph 200)
25. We support giving
schools flexibility in how they provide work-related learning.
We acknowledge concerns, highlighted in the Wolf Report and echoed
by witnesses to our inquiry, about the practical difficulties
and sometimes disproportionate cost of the traditional one or
two week work experience placement at age 14-16. We also acknowledge
the rationale behind prioritising work-related learning for older
students—a decreasing proportion of young people in England
will enter employment at age 16 as the education participation
age rises to 18. However, we believe school-arranged work experience
placements should continue for pupils whom schools believe will
benefit most from the experience. (Paragraph 201)
26. It would be regrettable
if schools chose not to provide work-related learning for younger
age groups as a result of the recent removal of the statutory
duty at Key Stage 4. As well as arranging work experience placements
where appropriate, we believe schools, in co-operation with local
employers, should incorporate work-related learning into lessons
at Key Stage 4 and for younger school students. We are concerned
that the removal of a broadly defined statutory duty will send
the message to schools that work-related learning is something
they need not do. We request that, in response to this Report,
the Government sets out how it envisages its new approach will
enable schools to deliver effective work-related learning, including
work experience where appropriate, for all school students. (Paragraph
202)
Careers information, advice and guidance
27. We did not get
a clear sense from Ministers of how the Government expects schools
to provide good quality "independent and impartial"
careers information, advice and guidance to students without additional
funding to enable them to deliver this. We do not consider the
National Careers Service's offer of online and telephone advice
to younger students to be an adequate alternative to face-to-face
careers guidance. We request, in response to this Report, a clear
statement of the practical steps the Government wishes to see
schools take to ensure their pupils have a good understanding
of the jobs markets and the skills and qualifications required
to pursue their chosen careers. (Paragraph 209)
Coordinating the Youth Contract and youth employment
and skills policy
28. There is a plethora
of services and funding streams aimed at increasing young people's
participation in education and employment. We do not doubt that
it is all well-intentioned and some of it works well. However,
we are not convinced that public money is being used in the most
cost-effective way and the scale of duplication must be contributing
to waste as well as complexity and confusion for young people
and employers. The Government seemed reluctant to tackle this
by appointing a single Minister or delivery agency and we have
some sympathy with this reluctance to introduce machinery of government
changes which would not necessarily resolve the problem. Nevertheless,
we believe that there is a very strong case for consolidation
of funding streams and delivery bodies and improved cross-departmental
working. We recommend that, in response to this Report, the Government
sets out how it plans to deliver a more stream-lined and cost-efficient
system for providing youth employment and skills services both
in the short and longer-term. (Paragraph 217)
29. We identified
one specific current weakness which needs to be addressed if the
Youth Contract is to succeed. There is currently no single information
and support service, either locally or nationally, for employers
who wish to offer opportunities to young people or to find out
about government employment and training schemes. We recommend
that DWP sets up a dedicated telephone helpline for employers
looking to offer young people employment, training and work experience
opportunities. The helpline should be staffed by trained employees
with a full knowledge of the Youth Contract offer and all related
schemes. A parallel single online information service should also
be established. (Paragraph 218)
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