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Lord Taylor of Holbeach: My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for giving us the opportunity to debate the Flexible New Deal regulations. He is right to point to the changed circumstances that form the background to this debate. We face rapidly rising unemployment and the Flexible New Deal is likely to have to be very flexible indeed in order to cope with the demands that will be placed upon it. My focus will be on the department’s ability to meet this demand and on the management of the budget within the department. I will therefore ask several questions, the answers to which I do not expect

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the Minister necessarily to have to hand, but I agree with the noble Lord, Lord Kirkwood, that it would be useful if, after studying Hansard, the Minister could provide answers where it is possible to do so.

I turn first to the background. As the Minister knows, the number of unemployed people increased by 177,000 over the last quarter and by 486,000 over the year to reach 2.1 million, yet the Government will not allow many people to retrain after 18 months of claiming jobseeker’s allowance. Why is that? The noble Lord, Lord Kirkwood, mentioned NEETs. We know that there has been a dramatic rise in the number of young people classified as such. I note also that the Red Book talks of a rise of £300 million in 2009-10 to £900 million in 2010-11. Has the department the capacity to handle this? Will the department have the resources to be able to maintain the employment guarantee for young people? Demand for the Flexible New Deal could be 300 per cent higher than first indicated. How has the Minister responded to the impact of the economic downturn on Flexible New Deal demand, and can he assure the House that delivery of the new deal will not be delayed in some areas?

I turn now to some specific questions. How much is FND1 projected to cost and what has been allocated for it in the Budget? The new structure is 40 per cent service charge, 40 per cent for getting someone into a job for 13 weeks, and another 20 per cent for sustaining the job for 26 weeks. However, is it true that the bulk of the 40 per cent charge—35 percentage points—will be paid in the first year? If so, how much will be in the budget for the first year and how much in subsequent years? I note the Red Book figures for the Department for Work and Pensions. Can the Minister put these on the record and explain what these sums are for specifically, in particular the much-increased figure for 2010-11 of £1,080 million? Given that these are long contracts, does it still make sense in the current crisis to send people back to Jobcentre Plus after a year with the FND providers? During the worst of the downturn, will this not incentivise the providers to do very little with these people since otherwise they will send them back before the job opportunities provided by the upturn kick in? What does Jobcentre Plus have in its budget for the proposed work for the dole programme when these people do come back?

What are the implications for FND of the Budget unemployment guarantee for those aged 18 to 24 who have been on JSA for more than a year? Will these people be withdrawn from the FND programme? How many of them are projected? I understand that currently only 5,755 people aged between 18 and 24 have claimed JSA for 22 months or more. Is that figure correct, and by how much is it expected to grow over the next few years?

The Merits Committee drew the House’s attention to a number of aspects and raised many issues to which the Minister may wish to respond. Above all, it points to the absence of an impact assessment, and although the Explanatory Memorandum states that the final evaluation will involve an impact assessment, how can it be evaluated when no current assessment exists? Sizeable sums are involved here and this is an expanding area of government spending at a time of

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austerity. What safeguards does the department offer us that it will be money well spent and within the capacity of the department to manage and control?

Baroness Thomas of Winchester: My Lords, I was going to start with the issue of the impact assessment but I do not think that I need to echo what other speakers have said—otherwise the debate would be very repetitive. We do not often get an impact assessment from the DWP, and that hampers the work of the Merits Committee, of which I am a member. I was also going to ask about the future jobs fund which was announced in the Budget and how it would fit with the Flexible New Deal.

The Social Security Advisory Committee made eight recommendations, some of which the Government have accepted in full and others in part. They have rejected only two recommendations. The first recommendation—that the timing of the delivery of the mandatory back-to-work sessions should be reconsidered in the light of the economic situation—has been accepted, although the Government have simply said that it should be kept under review. Perhaps the Minister can expand on that. After all, unemployment is still rising.

The second recommendation is that there should be well trained staff involved in the decision-making process relating to sanctions to ensure that the process is “expedient and transparent”. This has also been accepted by the Government. Can the Minister assure us that this is not what I call a click-box exercise on a computer but will consist of a proper training programme? How long is the training for those entitled to sanction payments?

The third recommendation is that sanctions for claimants who volunteer for an extension to participation in the Flexible New Deal be removed. The Government have not accepted this recommendation. With jobs currently being scarce in many parts of the country, it seems likely that many claimants will opt for the extension to participation in the Flexible New Deal. It seems very perverse to extend the sanctioning regime to those volunteers—that is, offering choice with a punitive regime.

The recommendation that contracts are to be monitored for what is called “creaming and parking”—that is, creaming off the people who are easier to help into employment while parking the most difficult—is welcome, although it is disappointing that there will be no penalties to ensure that this does not occur. The quality of personalised support for those furthest from the jobs market is key here, and one hopes that the increased numbers needing help will not compromise the standard of service.

The strongest recommendation is that the DWP should delay the introduction of the second phase of the Flexible New Deal, due to start in October next year, until phase 1 has been thoroughly evaluated, the results published and the design of FND reviewed in the light of prevailing economic circumstances. The Government have just as strongly rejected this recommendation, saying that it would mean delaying access to personalised support for people in phase 2 areas. Who is right in this stand-off? There are good arguments on both sides. Perhaps a compromise would

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be an interim evaluation, carried out as quickly as possible, so that any redesign can happen before October next year.

I thank my noble friend for raising this matter in this new procedure, which I hope will catch on throughout the House.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I thank all noble Lords who have contributed to the debate and the noble Lord, Lord Kirkwood, for the manner in which he introduced it. He is right: it gives us an opportunity to talk about an important programme—the Flexible New Deal—and to pick up on some of the points raised by the Merits Committee and the SSAC.

A lot of questions have been posed about the Red Book. Unfortunately, I did not bring my Red Book with me tonight; I left it on my bedside cabinet. However, I will review the record and respond in writing to some of the points raised by the noble Lord.

The purpose of the regulations is to introduce a new regime for those claiming jobseeker’s allowance that increases the level of job-search activity that they are expected to undertake the longer they remain out of work and claiming the benefit. In return for this, customers will receive more support tailored to their individual needs as their claim progresses. This will culminate in a person being required to take part in the new employment programme, the Flexible New Deal, where they will receive intensive, personalised back-to-work support from a contracted provider to help them move into a job and to improve their lives.

This change represents the Government’s long-term strategy for tackling unemployment and with the current escalation in the numbers having to claim out-of-work benefits, it is even more vital than before to provide as much help as possible. Both noble Lords, Lord Kirkwood and Lord Taylor, referred to the changed circumstances since the programme was initiated and conceived. Far from being the wrong time to introduce this programme, the time could not be more right. We must improve our offer of employment support to customers who unfortunately find themselves out of work as a result of the downturn. Support for these customers cannot be delayed; instead, it will be enhanced. The Flexible New Deal, together with the six-month offer which became available at the beginning of this month and the future jobs fund announced in the Budget and to which the noble Baroness, Lady Thomas, referred, will help us to achieve this.

We propose to introduce the Flexible New Deal in two phases across Britain: 28 of the 48 Jobcentre Plus districts introduced the new jobseeker’s regime from 6 April this year and we expect to see contracts for the Flexible New Deal start in October. With that in mind, we expect to be able to announce the successful bidding organisations, about which the noble Lord, Lord Kirkwood, inquired, towards the middle of next month, in May. The remaining districts in Great Britain will introduce the proposals under phase 2 from April next year. This will creates the opportunity for organisations unsuccessful in the first round of contracting to re-tender for the contracts in the second phase.

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A couple of points were raised about where we are with the contracts and I shall try to deal with them now. In answer to the question of whether the Flexible New Deal has been delayed in its start, the answer is no. We still plan to go live from October, but the extra time needed for the additional bids means that this will be challenging, particularly if a winning bidder does not already have a presence in a contract area.

The noble Lord, Lord Kirkwood, asked about revising targets. We have very clear goals in the welfare-to-work arena to help more people and more of the disadvantaged in society back into work, and the Flexible New Deal performance expectations published in the ITT set out a clear view of where we want to be and what we are seeking to buy through the Flexible New Deal.

As to the funding model to which the noble Lord, Lord Taylor, referred, he is right that the upfront fee has increased to 40 per cent because of the downturn and the recognition that a higher upfront fee was necessary to make the business economically viable for providers. So there is a 40 per cent job payment made when the customer moves into a job, and a 20 per cent sustainable employment payment.

I outlined the timing in which we propose to introduce the Flexible New Deal and I shall try to deal with some of the points around funding. The changes were originally designed to be introduced with no additional resource allocated by the Government, as the noble Lord, Lord Kirkwood, said, under the current spending review. In addition, the development and implementation costs were approximately £16.5 million. However, the recent increases in the numbers of people becoming unemployed demand a rapid response from Government and accordingly the Chancellor announced an additional £1.3 billion for the department in last November’s Pre-Budget Report. A further £300 million of new funding was announced following January’s jobs summit and in addition the day 1 offer, a £40 million package of support, will help 350 newly unemployed customers—the “willing”, in the noble Lord’s terms—including professionals and executives, who have a good chance of finding a new job quickly but require specialist support to update their job-search skills.

The Government believe that the economic situation now demands even greater investment to help people back to work. To meet that demand, as noble Lords will be aware, the Chancellor announced in his Budget last Wednesday a further £2.8 billion over the next two years for the department. These are the figures in the Red Book to which the noble Lord referred. Of this new money, £1.7 billion will enable Jobcentre Plus and the department’s employment providers to deal with the higher numbers of people becoming unemployed. This additional funding will also mean that Jobcentre Plus will be able to recruit up to 10,000 more staff on top of the 6,000 new staff already announced in the Chancellor’s Pre-Budget Report, a significant injection of resource.

8 pm

There will also be a significant new package of support for people—particularly young adults, to pick up again the issue that the noble Lord, Lord Kirkwood, raised—who have been unemployed for 12 months.

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This package is worth an additional £1.2 billion and will enable the department to guarantee six months of either employment or training to all young people to help others in unemployment hotspots. On the noble Baroness’s point about how that fits together with the New Deal, that is a choice that young people will have. The present levels of unemployment mean that this investment would be required irrespective of whether or not we were introducing the jobseeker’s regime and Flexible New Deal at this time, but this additional resource will address the concerns of the Merits Committee and the Statutory Instruments Committee, which, in its 12th report, mirrored the SSAC’s concerns about the department’s capacity to effectively deliver this change.

The SSAC, as has been mentioned, consulted on the proposals, and its observations and recommendations were published in the Command Paper that accompanied these regulations. The committee’s report was broadly supportive of the proposals and, as published in the Command Paper, the Government have accepted many of its recommendations for the design and delivery of the proposed changes.

We have accepted the recommendation to consider the timing of the back-to-work sessions, recognising that they need to be more flexible and to ensure that they are customer-focused and appropriate. During these important group sessions, customers can learn about the help and services available from Jobcentre Plus and become more familiar with the type of jobs and opportunities in their area. As a result of the SSAC recommendations, Jobcentre Plus district managers will have discretion to deliver these sessions at a time that best supports the customer’s individual needs. We will continue to monitor these sessions to ensure that they remain customer-focused, relevant and effective.

We have accepted the recommendation that staff must be well trained and deployed to ensure that sanctions and decision-making are expedient and transparent, a point that the noble Baroness, Lady Thomas, was keen to hear about. We recognise that well trained staff are central to delivering an effective sanctions regime that encourages customers to engage with their responsibilities and take up the support on offer. Flexible New Deal providers will be responsible for ensuring that their own staff are properly equipped to deliver all aspects of the programme, and the department will work with them following the tender process to ensure that their staff are ready. Jobcentre Plus has implemented a tried and tested approach for key job roles in all delivery arms for new staff, and, in light of the ongoing recruitment exercise to meet the increase in demand on jobcentres, that includes the expansion of training capacity and the revision of training packages. That will enable Jobcentre Plus to ensure that it can train the numbers of new recruits coming through its doors.

We have accepted the recommendation to ensure that sanctions could not be used by FND providers to avoid supporting the hardest-to-help customers, an extremely important issue. We have also accepted in part the recommendation that contracts should be monitored for “creaming” or “parking” of customers. Providers will have to help all customers who are

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referred to them, which is why customers who have not moved into a job earlier in the programme will have to be provided with a minimum of four weeks’ full-time work-related activity. Providers are required to invest in all customers who walk through their door.

Providers will not be able to sanction customers. They will have to refer any doubts about a customer’s compliance to a Jobcentre Plus decision-maker, who will consider all the available evidence, including the point of view of the customer, before reaching a decision to sanction. There is no easy route for providers to shunt people off their books.

All customers who reach the Flexible New Deal will be in need of intensive support. Most customers will have been unemployed for 12 months and everyone will have been unemployed for at least six months, so there will be no quick wins. Contracts require providers to ensure that customers receive a level of support appropriate to their needs, and the department will monitor that through contract-management procedures.

We accepted in part the recommendation that providers must have a clearly communicated complaints procedure, which is very important.

We did not, as the noble Baroness, Lady Thomas, indicated, accept the recommendation to remove sanctions for customers who volunteer for the Flexible New Deal extension period. Having spent 12 months on the Flexible New Deal, customers can elect, in conjunction with the provider and Jobcentre Plus, to extend the FND for six months. This is a positive option that allows customers to get further support where they have been working well with the provider and perhaps need just a little further help to move into work. It is a choice, but, once it is made, it is important that the customer continue to appropriately engage with the provider. The provider has committed its resources to the customer for an additional six months, and sanctions exist to ensure that those resources are well used. This is exactly the same arrangement that we now have for voluntary participation in existing New Deal options.

The noble Lord, Lord Kirkwood, referred to well-being issues and Dame Carol’s report. That is a debate that we should probably have on another occasion. It is important that these programmes—as with ESA, to which he referred—properly cater for people with medical conditions, particularly mental health conditions, and I am sure that we will be debating that in the Welfare Reform Bill. The noble Lord referred to this as Workfare, not a description that I would accept but one that I am sure that we will debate.

The noble Lord referred to the costs and savings figures, and I will write to him on that. He talked about a short-term transitionary benefit for those moving from ESA into work. We have done a lot of work to improve transitions and give people the reassurances they need to take jobs, such as the linking rules, the rapid reclaim and so on, which we have debated from time to time.

With regard to open access to advisers at stage 3, as much as I accept that it may be beneficial to have a system for open access to advisers at that stage, it would be difficult to manage and place unpredictable demand on adviser resource.

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I am sure that I have overshot my time, so I will conclude. I hope that noble Lords will find these reassurances satisfactory. The Flexible New Deal is an ambitious employment programme and now, more than ever, jobseekers need this support. Furthermore, the Government maintain their commitment fully to evaluate these changes against the revised volumes of people affected and the consequential adjustments to costs. In conclusion, therefore, I recommend to noble Lords that the Social Security (Flexible New Deal) Regulations 2009 be allowed to stand so that the full benefits of the programme can be realised by people who unfortunately find themselves out of work at this time.

Lord Kirkwood of Kirkhope: My Lords, I am grateful to the Minister for his usual courtesy and thoroughness in responding to the debate. I am also grateful to colleagues who have taken the trouble to contribute. The response has been useful, although obviously we will want to study it in some detail. More than anything else, I am reassured that the Government understand that they are in different territory and a different environment from that in which the policy was originally conceived. For example, is the 80 per cent employment target still valid? Until recently, it was safe to assume that 60 per cent of JSA claimants would leave within 13 weeks and 80 per cent would leave after 26 weeks. I do not think that those assumptions are safe any more. Against that, we have to weigh the increased expenditure that has been allocated, which is welcome. It would be very valuable to have answers to some of the important questions that the noble Lord, Lord Taylor, my noble friend Lady Thomas and I have raised. The debate has been useful, but I think that we shall return to this issue and not just in relation to welfare reform; this is a big policy change and colleagues in this House are entitled to continue to hold the Government to account on their flexibility in dealing with the Flexible New Deal in future.

Motion agreed.

8.10 pm

Sitting suspended.

Postal Services Bill [HL]

Bill Main Page
Copy of the Bill
Explanatory Notes

Committee (5th Day) (Continued)

8.28 pm

Amendment 95F

Moved by Lord Hunt of Wirral

95F: Clause 44, page 26, line 1, after “them” insert “that the postal operator has significant market power and”

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