The role of Jobcentre Plus in the reformed welfare system - Work and Pensions Committee Contents

5  Supporting an efficient and flexible labour market

Measuring JCP performance

Benefit off-flows

102. Prior to April 2011, JCP performance was measured against a range of indicators including the proportion of claimants leaving unemployment benefits to enter work and activity measures such as the number of Adviser interviews. In April 2011 DWP simplified JCP's Key Performance Indicators. Its aim was to move away from activity measures because they "reduced focus on outcomes" and it was difficult to assess the real value of each separate activity. JCP performance is now primarily measured simply by the proportion of claimants who have left benefit by the 13th, 26th, 39th and 52nd weeks of claims.[95]

103. As we noted at the outset of this Report, JCP has a good record of helping the large majority of claimants to come off unemployment benefits relatively quickly. Around 75% of JSA claimants come off benefit within six months, for example.[96] The Minister for Employment has highlighted that almost 90% of JSA claimants are off benefit within 12 months of their claim.[97]

The risks of a primary focus on benefit off-flows

104. In February 2013, the NAO highlighted the risks of a primary focus on benefit off-flows, including perverse target-driven behaviour such as prioritising those claimants most likely to contribute to the achievement of targets in the short term. JCP staff might feel under pressure to concentrate on claimants approaching their 13th, 26th, 39th or 52nd weeks on benefit. They may choose to prioritise more job-ready claimants, whom they believe will be easiest to take off benefit quickly, to the detriment of claimants who are more in need of their attention. As noted in chapter 4, there might also be a risk that JCP staff could see sanctions as positive outcomes in themselves. It should be noted that it was not clear from the NAO's research whether the benefit off-flow performance measures had in fact led to these perverse behaviours.[98]

105. Nevertheless, a key point highlighted by the NAO, and echoed by a range of witnesses to our inquiry, was that benefit off-flow rates do not necessarily reflect positive outcomes.[99] There are a number of reasons why claimants might leave benefit without entering work, including: coming to the end of their time-limited period of contribution-based benefit; transferring to another benefit; withdrawing from the benefits system altogether, possibly as a result of sanctioning; or being imprisoned.

106. DWP's own figures show that, of the 2.88 million people who left JSA within 12 months of their claim in August 2011 to July 2012: 667,000 (23.2%) "flowed back on to benefit or left the active labour market e.g. retired"; and 534,500 (18.5%) "found work". In the remainder of cases (1.68 million (58.3%)) DWP were not aware of the claimant's destination.[100] In the course of its research the NAO found that in 40% of cases JCP did not record the reason why a claimant had left benefit. One of its key conclusions was that "Simply measuring how many people end their claims for benefits does not reveal the true impact of jobcentre services."[101]

107. However, DWP defended its use of off-flows as JCP'S key performance measure. It highlighted survey evidence that a large majority (68%) of claimants leaving benefit do so initially to enter paid work.[102] DWP therefore considers off-flow to be a reasonably good indicator of positive outcomes. Neil Couling argued that off-flow targets are part of a "very successful, very active system at the moment".[103]

Measuring benefit off-flow into work

108. Some witnesses appreciated the logic of JCP concentrating on benefit off-flows and believed that DWP had taken a pragmatic decision to measure what can most easily and accurately be measured within the current system. Adam Sharples noted that previous attempts to measure "job entries" by people leaving benefit had involved a "team of several hundred people" phoning employers to check that ex-claimants were in paid work. Another attempt to measure employment outcomes had involved cross-checking off-benefit data with PAYE income tax data. Phoning employers was thought to be an inefficient use of resources. Measuring performance by tracking outcomes through the tax system could only be done with a twelve-month delay, which Tony Wilson described as "like driving a car by looking in the rear-view mirror".[104]

Measuring sustained job outcomes

109. Policy Exchange drew on the same survey evidence cited by DWP to argue that JCP's approach tended to produce short-term outputs. For example, it noted that the latest destinations survey findings showed that "just 36% of JSA claimants will find a job within six months and remain employed for the following seven or eight months." It believed that JCP's short-term focus was resulting in many claimants coming on and off benefits for short periods, in what it termed a "low pay, no pay cycle".[105] Policy Exchange and other witnesses argued that JCP performance should be measured in relation to sustained employment outcomes.[106]

110. However, some witnesses highlighted the current difficulty of measuring sustained job outcomes. Tony Wilson noted that Work Programme providers, who are paid for achieving sustained job outcomes for long-term unemployed claimants, faced considerable administrative burdens in tracking and verifying those outcomes. This was primarily due to the lack of a technological solution, which had originally been envisaged in the design of the Work Programme but had not yet been delivered. Tracking and verification of outcomes therefore involved phoning employers and producing paper-based evidence. Tony Wilson believed that these administrative burdens were "disproportionate" and should not be replicated within JCP.[107]

Measuring JCP performance under Universal Credit

111. Expert witnesses believed that in the longer term the implementation of UC could offer a technological solution to the problem of measuring sustained employment outcomes. As noted, UC will merge in-work and out-of-work benefits and tax credits. It will gradually reduce people's benefit payments as their earnings increase. The key to this approach will be real-time information on earnings (RTI) supplied through a new HM Revenue & Customs IT system. Matthew Oakley believed that RTI should enable JCP performance to be measured against sustained job outcomes, as claimants' progress in work would need to be tracked as part of the UC system.[108]

112. However, in February 2013 the NAO found that DWP had yet to decide how to adapt JCP performance measures after the implementation of UC.[109] Neil Couling acknowledged that UC would change the nature of JCP's role and that performance indicators which measured sustained outcomes and pay progression were clearly desirable. He told us that DWP was still exploring how sustained employment outcomes might be measured using RTI and considering at which point in the transition to UC JCP might move over to a new system of performance measures which better recognises the changing nature of what Jobcentres were being asked to achieve (see "in-work conditionality", chapter 7).[110]

113. We believe that benefit off-flow is a very blunt instrument for measuring JCP's performance. A particular weakness is that non work-related outcomes, which are often negative, currently count towards the achievement of key performance targets. These outcomes will include claimants leaving benefit because of a long-term benefit sanction; because their time-limited contribution-based benefit entitlement has come to an end; or because they have withdrawn altogether from the active labour market. Such outcomes should not contribute towards the achievement of JCP's primary performance targets. We recommend that JCP establish a system by which it records, as a matter of course, the reason claimants leave benefit at the time they end their claims. We further recommend that DWP use this information to re-establish "off-benefit and into work" performance measures with immediate effect.

114. We recommend that DWP prioritise the formulation of JCP performance indicators which promote and measure sustained job outcomes and better reflect the changing role of JCP consequent on the implementation of Universal Credit and the proposals for in-work conditionality, with a view to establishing the performance measures across the Jobcentre network when full national implementation of Universal Credit has been achieved.

Provision of longer term training for claimants

115. The Association of Colleges (AoC) believed that JCP's performance measures incentivised a short-term and potentially counter-productive approach to pre-employment skills training. The AoC's view was that JCP was primarily "focused on getting people off the unemployment register". It argued that this was "entirely different from meeting the needs of the labour market." [111]

116. The AoC highlighted that full-time placements and courses offered through JCP, for example Sector-based Work Academies and Work Experience, were restricted to between two and eight weeks, in accordance with benefit conditionality rules. The Minister recently made clear that DWP had no plans to extend the permissible length of full-time training courses for claimants. The situation is that:

    All claimants can attend up to two weeks of full-time further education or training in any 12 month period, with the agreement of their Jobcentre adviser. In addition, claimants who have been on Jobseeker's Allowance for six months or more can undertake full time further education or training for a maximum of eight weeks where skills needs are a barrier to getting into work.[112]

117. Colin Booth of AoC argued that this approach had prevented claimants from completing courses which, in his view, would be very likely to produce excellent sustained job outcomes. [113]

118. The CBI told us that this issue was not one on which it had had a great deal of feedback from employers. However, Lena Tochterman of the CBI believed that longer-term, full-time training was likely to be the best option for some claimants. To this extent, the CBI supported flexibility in the rules. Similarly, Kevin Green of the Recruitment and Employment Confederation (REC, representing private sector recruitment agencies) also stated that he had "not come across this as a major issue", but argued that, where claimants were being held back from achieving sustained job outcomes through lack of skills, and where longer-term, full-time training could provide them with the skills they needed to achieve sustained job outcomes, "we need to find a way of supporting them as best we can."[114]

119. We recommend that DWP make clear in guidance that Jobcentre staff can apply flexibility to the rules on the permissible length of full-time pre-employment training if it is clear that the claimant is being held back from finding sustained employment by a lack of skills which could be addressed by training courses longer than the currently permissible two to eight-week period.

Universal Jobmatch

120. As highlighted in chapter 3, broadly witnesses believed that Universal Jobmatch (UJ) represented an improvement on the previous vacancy system and had the potential to significantly improve the efficiency and effectiveness of claimants' job-searching. DWP's view was that UJ:

    [...] has made it easier for employers to recruit unemployed people by automatically matching jobs to work-ready claimants. In doing so it also identifies gaps in candidates' skills and experience which, together with the local labour market information it provides, will increasingly be used to improve unemployed claimants' readiness for work.[115]

121. However, a range of witnesses highlighted problems they had experienced using UJ. Tees Valley Unlimited, a Local Enterprise Partnership, reported that UJ contained "dubious" vacancies, including for "diplomats" in North East England, and a significant number of "duplicate" vacancies.[116] JCP staff in Oldham told us that the system contained a significant number of vacancies which had already been filled. They believed that this was because employers were not specifying a closing date after which vacancies would be automatically removed.

122. Tony Wilson reported that he had tested the system by searching for sales and retail jobs in London. The system had returned results which included, in the top 10 most suitable vacancies, a "retail solutions analyst" in Bracknell, a sous chef and a "copy and print centre specialist".[117]

123. Employers also felt that the system was not working as well as it might. The CBI told us that UJ was "a good idea that has had some unintended consequences". It believed that UJ's dual function as both a job-matching and recruitment website and a tool for Jobcentres to monitor claimants' job-seeking activity had resulted in employers being "flooded" with applications from poorly matched candidates. It believed that the way the system was being utilised encouraged claimants to make a certain number of applications as a way of meeting conditionality rules, regardless of whether those applications had any real chance of being successful.[118]

124. Damian Kenny, representing Monster Government Solutions, the company commissioned by DWP to design and deliver the UJ system, explained that UJ had been designed to produce a broad range of vacancies from job searches. The system employed an innovative "semantic job-search system" which produced matches with vacancies that required similar or related skills to those of jobseekers. It employed a technique called "spidering" to produce a broader range of search results. He described spidering using the following example:

    The system [...] knows that a plumber has a similar skill set to someone who may be a gas fitter. It then opens up all of those skills, and that may also then move into another set of skills for a pipe-fitter in a power station. What the system is trying to do is give the jobseeker more opportunities to define jobs. It is trying not to stifle that choice.[119]

125. However, he also acknowledged that there was an issue with employers incorrectly categorising vacancies. He explained that DWP had commissioned a "self-service" system, on which employers could upload their own vacancies via Business Link, an internet portal. He stressed that it was Monster's responsibility to provide a platform to support DWP's policy aims. While Monster had provided answers to Frequently Asked Questions within the online platform, it was the role of JCP staff to provide advice and guidance to claimants and employers using the system.[120] In response to the CBI's point about large numbers of "inappropriate" applications, Monster highlighted that there had been a total of 4.2 million jobs advertised on the system and 33 million applications made.[121] A ratio of less than 8 applications per advertised job might indicate that the problem of employers being "flooded" with applications is not widespread.

126. Neil Couling told us that the intention had been to develop UJ as a self-service platform which was easy to use. However, he acknowledged that some employers were experiencing difficulties in using the system. DWP had established a telephone helpline for employers experiencing problems and some employers had received help from JCP Employer Advisers.[122]

127. We recognise the improvement Universal Jobmatch represents over the previous vacancy system and the scope for further enhanced uses of the system and data. However, Universal Jobmatch appears to contain a significant number of dubious, duplicate, out-of-date and inaccurately categorised job vacancies, which pose a risk to its efficiency and effectiveness as a job-search tool. We recommend that DWP increase its oversight of vacancies posted onto Universal Jobmatch, including by working with Monster Government Solutions to regularly purge the system and ensure that it contains, as far as is possible, only genuine and accurately described job vacancies. This is particularly important as Universal Jobmatch is intended to be used as a tool to monitor claimants' compliance with job-seeking conditionality. Claimants should only be required to apply for genuine vacancies which meet all the relevant employment standards. We recommend that this is made clear in guidance to JCP staff

128. We recognise the desirability of a self-service online vacancy system. However, some employers require greater support and training on how to use Universal Jobmatch effectively, including how to accurately categorise their vacancies. We recommend that guidance make clear that it is an explicit part of the JCP Employer Adviser role to monitor use of Universal Jobmatch by local employers and to offer help and guidance where necessary.

Engaging with employers

129. Our Report on the Work Programme identified weaknesses in some Work Programme providers' approaches to employer engagement. While there were some examples of providers engaging very effectively with local employers and providing well-matched candidates, we concluded that providers generally could do more to prepare jobseekers for real local job vacancies.[123]

130. Witnesses to this inquiry made similar points in relation to JCP. The CBI told us that it often heard "great stories" from employers about their close working relationships with individual Jobcentres.[124] As constituency MPs, many of us can point to successful local partnerships, such as Warrington Jobcentre's joint working with Waitrose, in which 47% of vacancies in a newly opened local store were filled by previously unemployed people. However, the CBI reported that a great deal depends on the quality of local working relationships and the leadership of local JCP managers.[125] REC told us that, in its experience, many Jobcentres do not really see employer engagement as a "core part" of JCP's role.[126]

131. Currently the level of service employers receive from JCP varies widely and is largely dependent on local JCP management. We believe that employers are ultimately JCP's key customers and employer engagement must therefore be seen as a core role in all Jobcentres. We recommend that DWP review the service provided to employers by JCP to identify best practice and then take urgent steps to disseminate understanding of what works best across the Jobcentre network.

95   National Audit Office, Responding to change in jobcentres, HC 955, February 2013, paras 2.2-2.3 Back

96   DWP, Destinations of Jobseeker's Allowance, Income Support and Employment and Support Allowance Leavers 2011, Research Report No. 791, 2012 Back

97   HC Deb, 10 October 2013, col 170WH Back

98   National Audit Office, Responding to change in jobcentres, HC 955, February 2013 Back

99   Q 16 Back

100   HC Deb 9 December 2013, col 46W Back

101   Ibid. Back

102   DWP, Destinations of Jobseeker's Allowance, Income Support and Employment and Support Allowance Leavers 2011, Research Report No. 791, 2012 Back

103   Q 492 Back

104   Q 14 Back

105   Ev 171 Back

106   Ibid.; Centrepoint, Ev 120; Inclusion, Ev 115; Local Government Association, Ev 157 Back

107   Q 16 Back

108   Q 16 Back

109   National Audit Office, Responding to change in jobcentres, HC 955, February 2013, para 2.16 Back

110   Q 491 Back

111   Q 227 Back

112   HC Deb, 23 October 2013, col 166W Back

113   Q 258 Back

114   Q 447 Back

115   Ev 144 Back

116   Ev w89 Back

117   Q 43 Back

118   Q 403 Back

119   Q 418 Back

120   Q 405 Back

121   Ev 75, footnote 1 Back

122   Q 532 Back

123   Committee's Work Programme Report, paras 67-75 Back

124   Q 381 Back

125   IbidBack

126   Q 446 Back

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Prepared 28 January 2014