Select Committee on Education and Employment Minutes of Evidence


Examination of Witnesses[1] (Questions 275 - 299)

TUESDAY 12 DECEMBER 2000

RT HON TESSA JOWELL, MP, MR BILL WELLS AND MR HUGH TOLLYFIELD

Chairman

  275. Tessa, you are very welcome. You know we have embarked on this brief incursion into recruiting unemployed people, which I know is rather important for the Government's agenda and for us too. I wonder whether, Tessa, you would like to make a brief statement by way of introduction?

  (Tessa Jowell) I have not come prepared to deliver an introductory statement, Chairman. I am very happy to answer any questions that you may have. I and, I know, the Secretary of State see this as a very important inquiry and I am quite sure, as with all your Committee's inquiries, you will give us cause for thought and challenge us to do even better. We hope you will not disappoint us this time.

  276. We will try not to. Thank you. Clearly, turning vacancies into jobs is rather important to society as a whole as well as to the Government, and within that context we want to explore how effective the Employment Service is and some other agencies which the Government are trying to promote or to innovate upon. I think our questioning will be along those lines. If I may begin, we have done a number of reports, as you know, on the Employment Service, and one of the things we said to them in our recent report was, "Really you should be increasing your market share." Do you agree the Employment Service should be seeking to increase its overall share of the vacancy market? Is that a sensible objective? Were we right to say that to them?
  (Tessa Jowell) The short answer to that is yes, I think the Employment Service should. As you will be aware the Employment Service at present takes on estimate about a third of all vacancies and those vacancies are typically and disproportionately full-time vacancies. You may also be aware that this year we altered the definition of a placing by, first of all, recognising a job as involving working more than eight hours a week, and counting as a hit against the target that the Employment Service works to somebody actually turning up on the first day and starting work. Those are two quite significant redefinitions which tighten the job that the Employment Service has to do. But the present market share in relation to vacancies is about a third. You will also be well aware of the Employment Service's very particular focus on more disadvantaged job seekers and I think that I would like to take this opportunity to pay tribute to the Employment Service for the way in which they achieve this. I think it is unusual for a public agency, a public service, which deals disproportionately with the most disadvantaged, to have avoided the stigma and other baggage that many other such services which principally deal with the disadvantaged carry, and I think it is an enormous tribute to the Employment Service that they have not only avoided that but they are also winning the confidence of a greater diversity of employers who are seeking to place their vacancies with them. If I just say one or two things, having made clear the ambition to increase market share, about how I think it would be possible to do that, I think the programme of what we describe as "modernisation of the Employment Service" will be an important contributor to that. ES Employer Direct—the direct employer phone line; the network of touch screens which will be available in job centres in time replacing jobs boards; the fact we now have all our vacancies on the internet; all these are innovations which will enable us to process vacancies more quickly and we hope will make the placement of vacancies with the Employment Service more attractive to employers. I think there is, however, a second set of issues which is the way in which the Employment Service engages with employers which no doubt you will want me to talk about, but we see that as a very high priority. We now have a performance target against which the achievement of the Employment Service is judged in relation to that and, just as I hope we can increase our share of vacancies, I also hope that the Employment Service can become even more attractive for higher level vacancies and increase its market share there.

  277. Thank you very much. I must admit that some of the things you have mentioned, which we wholly welcome, which the Employment Service has brought in, when we came back from Australia we enthused about—certainly their use of ICT and modern means of communication—so we are very pleased that the Employment Service has either taken our advice or we have both been taking the same advice from somebody. Although it must be said that both in Australia and in the United States, the share of the public employment service of the market is very much lower than our own, and we were really rather gratified to find that. On this question of targets for market share, we put to Leigh Lewis, would it not be good to have a target for market share, and he resisted that because he thought there was a risk that if there was a market share laid down in the annual contract or by ministers this might distort some of the objectives of the service, particularly from, what you have already mentioned, their work with disadvantaged people. Do you share that view yourself? If so, what proportion of the vacancy market is it appropriate for the Employment Service to have if it is to deliver its objectives for placing the unemployed? Is there an appropriate market share, would you say?
  (Tessa Jowell) To answer the first part of your question, yes, I entirely agree with Leigh Lewis's view that we ought not to introduce a new target for market share. The principal function of the Employment Service is to get unemployed people into work and there are all sorts of ways in which we could deflect the focus of that effort, which, remember, has to be delivered through a thousand job centres up and down the country. It is a complex management task, to get alignment of effort day in, day out, to the delivery of the very tough performance targets which we set for the Service every year. It would be easy to create the sort of diversion that might in turn begin to create the perverse incentive that one might well be creaming. In other words, that you would go for vacancies which were quick and easy to fill, as opposed to those vacancies which can be filled by some of the hardest-to-help in the labour market, thereby delivering our twin objectives of expanding the size of the labour market and extending the opportunity to work to those who are presently outside it.

Mr Allan

  278. Minister, whilst we are aware of the proposal to create the Working Age Agency, in the context of the Employment Service's work with employers, I wonder whether this will have any major impact in terms of shifting the focus of the Employment Service's work away from the employer side and more towards the reduction in benefit side. Do you have any views on that?
  (Tessa Jowell) I think quite the reverse. I think the focus on the work with employers with the new Working Age Agency will in fact intensify. The confidence in the new agency, just as the level of confidence in the Employment Service at present, really comes from two sources: the satisfaction of job seekers and the confidence of employers. So the success of the Working Age Agency will be in no small part judged by its success in building the confidence of employers and being able to build on the success that we have seen in a number of parts of the country, particularly Sheffield in which I know you will be particularly interested, where the Employment Service are at the moment handling I think 700 vacancies for Dixons. Dixons have effectively handed over the recruitment for their new business to the Employment Service. We have similar examples in the South West where Virgin are asking the Employment Service to recruit all of their 400 call centre operators. So these are measures of confidence on which we want to build and I do not think anything in the plans for the Working Age Agency suggests that will have a lower priority. One supplementary point on that is the way in which this is underpinned. I am very keen that the Employment Service as it moves into the Working Age Agency develops a greater strategic capacity in relation to its local labour market, moving beyond simply filling vacancies to understanding, anticipating, vacancies and being able therefore to match people at the time those vacancies need to be filled. The Learning Skills Councils will have an important part to play in that with the Employment Service but we are developing full employment plans for every region and the greater strategic role of the Employment Service will be an important part of developing those plans.

  279. The work with the large organisations you need to deal with, like Dixons in Sheffield, is very successful and very well respected, I think, in the local area. The concern will be that the Working Age Agency might have a negative impact on that. You yourself referred to the fact that the Employment Service has been very successful in avoiding stigma, the stigma sometimes associated with organisations only working with disadvantaged people, and so perhaps you might understand that there may be a concern that by merging with the Benefits Agency, which I would suggest does not quite have the same high level of reputation amongst employers and people out there, there may be a levelling-down. You are suggesting you hope the whole thing will level-up.
  (Tessa Jowell) All the enormous development effort which is being invested into the early planning of the new agency is about ensuring that it is work-focused, because it is the central point of contact for all claimants of working age. There will be a major opportunity to build a different kind of culture. It will be very important with the new agency that it is more than simply the sum of its component parts. Job seekers are aspirational and the new agency has to be aspirational for them too.

Chairman

  280. We have all been very struck with the culture change which has taken place within the Employment Service, which was not easily achieved. What we are embarking upon now is to merge with another agency and we are looking for another culture change for this new agency. Are you not rather under-estimating the difficulties which will occur there and is there not the possibility, as Richard has said, that the work focus that you speak of might be severely diluted especially in the initial stages?
  (Tessa Jowell) I can only reiterate our determination to build an agency which is a work-focused agency. That is the whole rationale behind it, that is how the agency will be judged. That is the premise on which the planning is being developed. As you know, the ONE pilots which we are now running in eight parts of the country with four call centres are beginning to show some very, very early lessons about culture change. You know when you are in a ONE office that you are not in the Benefits Agency office and you are not in a job centre, you are in somewhere which is different which has its own distinctive culture. The protocols are very strict and clear in order to bench-mark performance and perhaps the most compelling thing of all about the early indications from ONE—and you will no doubt want to invite me back at some time in the future to share the outcome of the evaluation with you—is that the ONE service is very popular with not just job seekers because it is a single point of entry for claimants and for job seekers and people like it. They like the personal service, they like the personal adviser, they like the very disciplined focus of both the start-up and the work focused interview. That is very much the sort of approach that the project team are looking at for the new agency.

Mr Allan

  281. That is for the job seekers and the claimants, what about the employers, are they as happy? Are the early results from ONE saying that the employers are happy? Hopefully they are happier with ONE than they were with just the Employment Service on its own.
  (Tessa Jowell) There are no indications they are less happy.

Mr Nicholls

  282. I wanted to move on to the whole question of managerial and professional vacancies. You will know something like seven per cent of the Employment Service vacancies are actually in those fields, although the amount of people out there looking for work in those categories is a great deal greater. I wonder if you feel the Employment Service should be seen to increase those vacancies which it attracts as a matter of priority. If it is a priority, how might it be achieved? Might it be a question of saying that one should, one way or another, reverse the decisions taken in the 1980s to hive-off the PER? Can you talk to us about that general area?
  (Tessa Jowell) In my first answer I made clear our wish to increase the share of vacancies and also to maintain the diversity and the extent perhaps of the Employment Service's reach. That means being seen as a service which is relevant to anybody who is out of work and looking for a job. Yes, I would like to see us increase the number of managerial vacancies. There are a number of factors about people looking for managerial jobs—the turnover tends to be much quicker, for instance, and there is some evidence that people move on to new jobs without using the sort of intermediate advice of an employment agency—but we do see this as a gap in the provision of the Employment Service. We are at the moment piloting in the South West the Employment Service-Plus on-line offering comprehensive advice to job seekers looking for managerial-type jobs in recognition of this. I wonder if Hugh Tollyfield from the Employment Service would like to amplify that answer?
  (Mr Tollyfield) Yes. All the evidence is that the Employment Service-Plus on-line in the South West is taking off. It is based in Bath and covers four surrounding counties. Also there is evidence, and you might have picked this up from Australia and the USA, that when you put vacancies on to the internet you actually get an increase in the level of vacancies that comes on board. This is one of the things we will be looking at, to see if we get the same effect with our own internet-based vacancies which Leigh Lewis told you about when he appeared before you. Of course, we will also be bringing on board the private agency vacancies onto the internet data base, which means that we have the two together; we will have our own vacancies plus the high level of managerial vacancies.

  283. Is it really the internet side of things which enables you to raise your profile? I say this not in a pejorative way but there is a perception that the strength of the Employment Service does not lie in recruiting in the managerial and professional sector. That is not in itself a criticism, it might be no more than a statement of fact. What is it in a sense you feel you lack in not being able to offer these services? Or is it that in a modern age you feel you really are out there competing against the private agencies which offer the full service?
  (Mr Tollyfield) Again I think I would go back to what Leigh Lewis said to you, in that we do not see ourselves competing with private agencies but see ourselves working in collaboration or partnership with private agencies. So in developing our internet service we welcome the opportunity to work with the Recruitment and Employment Confederation and to bring their vacancies into our data base, not on a competitive basis, but it opens up our vacancies to them and their vacancies to us. We feel that is a more satisfactory way, if you like, of ensuring our job seekers get better access to what is available in the labour market.

  Mr Pearson: Was it not a political blunder for the Conservative Government to privatise PER in 1988 and did that not create massive problems when we had the recession in the early 1990s? Have they not let down a generation of 45 to 60 year old professional people?

  Mr Nicholls: If so, will you therefore reverse it? Indeed, why have you not done so already?

  Mr Pearson: You were involved in it anyway!

  Mr Nicholls: I know but I am not asking the question.

Chairman

  284. We are involved in a question and answer session not a debate. Tessa, have you got an answer?
  (Tessa Jowell) Yes, yes, and we will see!

  285. A terribly controversial reply, if I may say so!
  (Tessa Jowell) Exactly. I think there are two things. First of all, I have made clear our wish to ensure that the Employment Service is a service with a wide reach across a wide range of vacancies but never losing its distinctive role in helping the most disadvantaged job seekers to find work. Secondly, on the point about privatisation, the Employment Service—and the new Working Age Agency—is a public service agency and there is a very important role for the public sector in job search and job matching. There is, however, plenty of opportunity for partnership with the private sector so I think we have probably moved on from the agenda of the early 1980s, which was more ideological in looking at the boundary between the private sector and the public sector, to one where we would like to build on productive partnerships which help us to get the more disadvantaged people into work and stay in work.

Mr Pearson

  286. Can I move on to the on-line services which have already been mentioned? When we interviewed Leigh Lewis a fortnight ago, I explained to him that I had problems with accessing their service and it took me one hour and 43 minutes, I think, to get some fairly rudimentary information on a vacancy. I have tried since and there are still problems with the on-line service. It is not to my mind at all user-friendly. What mechanisms have you got in place to ensure this new service is constantly re-evaluated and is as user-friendly as possible?
  (Tessa Jowell) I think the first point, which is one really of clarification, is to say that what will be in job centres will be touch screens, so job seekers coming into job centres will not be expected to navigate the internet. I looked at the site last week and got on to it actually fairly easily but I am very happy to receive complaints about difficulty of access and regard it as the kind of useful consumer feed-back that we need to have at what is a fairly early pilot stage. Let me just make two further points on that. I think that some people will come into job centres and feel alarmed by the technology, because people always are if they are unfamiliar with it, but there will be help in order for them to use the touch screens. I hope that before long, using a combination of touch screen technology and the internet, the idea that looking for a job as something you do between 9 and 5 will be a thing of the past, that people will be able to look at vacancies while they are in the pub or before they go to see a movie or whatever it may be. The second thing, of course, is that many of the people who come into job centres will have a range of skill gaps which are obstacles to their work readiness, and the guided utilisation of technology as part of using the services at the job centre will be one way of shedding the demon of technology which a lot of people feel. But, obviously, we are going to monitor this very closely indeed and I am serious in saying that if you have feed-back about the difficulty of using the site, we would like to know about it, but I did not have a huge amount of difficulty, although I did have somebody helping me, so I had better own up!

  287. Thank you very much. Maybe I will get back to you on that.
  (Tessa Jowell) Or get somebody to help you.

  288. Can I raise the question of the efficiency of the Employment Service in filling the vacancies it handles? There is some evidence which suggests that around a third of the vacancies which it handles are filled. The Employment Service itself was suggesting to us that just over 50 per cent is a more accurate figure. Some private sector agencies achieve figures above 80 per cent, although there are perhaps reasons for that. Either way, it means the Employment Service is not necessarily as efficient at filling vacancies as it could be. Do you think this could be improved and, if so, what action are you taking to achieve this?
  (Tessa Jowell) First of all, I know that you went through quite a lot of this with Leigh Lewis and Peter Shaw. The Employment Service does fill half its vacancies within two weeks. The analogy with private employment agencies is not really comparing like with like. I think it is as much as 80 per cent, maybe slightly higher, of the vacancies which are notified to private agencies are temporary jobs, whereas only about a quarter of the vacancies notified to the Employment Service are temporary jobs, so clearly there is an important difference there. Filling half the vacancies within two weeks is I think by general consensus, and certainly the feedback we get from employers confirms it, a satisfactory rate at which to fill vacancies. What perhaps concerns me more and what we are mapping quite carefully is where you get structural vacancies and jobs that simply do not seem to move. There are 30,000 vacancies at the moment in London in the catering industry, for instance, and when you have vacancies at that sort of level they are not all Employment Service vacancies. In labour market terms those are the numbers of vacancies. When you have that kind of vacancy level you potentially have a constraint on the efficiency and growth of the sector. I do not, in the list of things I am concerned about, rate the speed at which the Employment Service fills vacancies as a matter of concern and nor do the employers we are working with.

  289. Can I follow up the point you made about the number of vacancies from private agencies being temporary vacancies? Some of the private agencies who have contacted me have expressed some strong concerns about the Government proposals to abolish the fee that they might charge for temp-to-perm contracts and they say that this will make it far more difficult to recruit and employ people and they have given a number of case studies of people who have been taken on on a temporary basis and they have got very good jobs afterwards. Obviously we are under pressure to reply to them. What is the Government's view and what is the justification for this?
  (Tessa Jowell) This is, with great respect, a matter which is being handled by DTI Ministers. If I can deal with an issue which is related to that which underlines the sensitivity of the private employment sector but also the importance of working together, what distinguishes the Employment Service from them is that they charge a fee, they earn their living by charging a fee. The Employment Service is a free service. There were proposals that the Employment Service might increase its work in helping to recruit or organise the recruitment of temporary staff for parental leave and maternity cover. That may be part of the point that is being raised with you. In fact, we have had a very successful collaboration with the private employment companies which has produced a jointly promoted set of guidance on how to manage temporary vacancies. That is at the moment out for consultation around the country. There is plenty of scope for collaboration. The point about a temporary to permanent fee is a matter which is being handled by the DTI.

  290. I understand that the matter is being handled by the DTI but I am sure DfEE must have a view on this because if, as is claimed by these organisations, it will have an adverse impact on the recruiting of unemployed people, then it is surely legitimately a responsibility of your Department to make representations to the DTI on the issue? I suppose what I am probing is, has there been a DfEE view on the abolition of this fee and is it making representations to the DTI?
  (Tessa Jowell) I go back to what I was saying earlier, which is that the private employment agencies and the Employment Service are to a great extent dealing with different sectors of the labour market and the private employment agencies are dealing with a considerably larger proportion of temporary vacancies. We would obviously be concerned if there was any obstacle placed in the way of getting unemployed people back into work. That is our bottom line and that is the test that we would apply to any change in the regulations that govern private employment agencies.

  291. I was reading recently a Policy Action Team on jobs report and I understand that 40 Employment Service action teams have recently been established. I assume that that has got something to do with responding to the issues of the Policy Action Team on jobs report. I was wondering if you could say in what ways are the new Employment Service action teams addressing issues such as discrimination on grounds of postcode, length of unemployment and ethnic minority background because these are some areas where there is certainly a lot of evidence that employers are saying, "We do not want to recruit from certain postcode areas, we do not want to recruit people with certain backgrounds". Presumably this is something that the action teams are directly addressing.
  (Tessa Jowell) Yes, it is. What the action teams are doing—and they are very much the evidence of implementation on the recommendations of the Policy Action Team for jobs—is working in the areas where the employment rates are lowest in the country and identifying the obstacles to people who live in those areas getting into work. In some cases that clearly means working with the New Deal and the specialist labour market programmes that are already operational, but in areas like that it means they will be moving beyond that, picking up some of the issues that you raised in one of your earlier inquiries to which I gave evidence, on the issues of jobs and demand, looking at the indices of mobility, looking at this paradox that people may be living a bus ride away from an area where the employment rate is 15 or 20 per cent higher than their own. The second point in relation to ethnic minorities is that one of the performance measures for the New Deal for young people is achieving parity of outcome for ethnic minorities and we are as yet some way from achieving that target but we are determined that the New Deal will deliver equal outcomes for ethnic minorities and white job seekers. As many as 30 out of the 40 action teams for jobs have as one of their top line objectives increasing job entries for people from ethnic minorities in order that we can address both the structural and the more circumstantial obstacles that people face, taking together employer discrimination, postcode discrimination, lack of skill, disconnection from the labour market, lack of networks, all the factors which, when you combine them, create disproportionate labour market disadvantage.

Chairman

  292. Can I very briefly pursue the previous point that Ian raised? I too have had the same correspondence about the new regulations that the DTI are bringing in regarding private recruitment agencies and I have carried out a long correspondence with the Minister. Latterly I have written to the Secretary of State for Education and Employment saying, is there not a conflict of view between the two Departments here, or should there not be a conflict of view if what the private recruitment agencies allege, that the people who will be deprived of jobs under these new regulations will be the disadvantaged? Surely the Department of Education and Employment ought to be taking an interest in this and perhaps he would give me his view. I am not putting you on the spot now but just registering with the Department that they will be expected to address that issue pretty soon.
  (Tessa Jowell) We would obviously monitor with interest the labour market impact.

Mr Twigg

  293. Can I take us back to the issue of equal treatment for ethnic minorities? You mentioned conversations we have had before in this Committee relating specifically to the New Deal for young people. As I understand it we are now seeing local data published to show progress on achieving the parity of outcome for people regardless of ethnic background which you referred to just now. Would it be possible for this to be extended to the other areas of work of the Employment Service, not simply the New Deal for young people but all the different schemes and activities so that we have similar data publication?
  (Tessa Jowell) Can I be clear about the sort of data that you would be looking for?

  294. Data that indicates progress in terms of eliminating some of the inequalities that you referred to just now and that our previous reports have identified specifically in the New Deal.
  (Tessa Jowell) The Employment Service already conducts systematic ethnic monitoring of the profile of job seekers.

  295. Right the way across the board? That is conducted across the board, not only relating to the New Deal programme?
  (Tessa Jowell) Yes.
  (Mr Tollyfield) It is for all people who make claims to jobseeker's allowance. We register at that stage their ethnic background and we are introducing it also for our other clients who are not JSA clients.

  296. Is that then followed right through to job outcome?
  (Mr Tollyfield) It will be but you have to build up a body of information, that is the problem. It will take time.

  297. So at the moment that sort of information is not available on job outcome but it will be available further down the line?
  (Mr Tollyfield) I would need to check on that, to be honest, but I believe so.
  (Tessa Jowell) What we do know is that while there is a discrepancy between job outcomes for ethnic minorities on the New Deal, young people on the New Deal from ethnic minorities do better than they do in the labour market as a whole. That is the first point. The second point, which is I think a positive one, is the Employment Service's success in recruiting personal advisers from those areas where there are large ethnic communities.

Chairman

  298. Do we have the same problem with the turnover of personal advisers, let us say, in the London experience as compared to the rest of the country?
  (Tessa Jowell) We are still concerned about turnover rates.
  (Mr Tollyfield) We obviously are concerned at rates of turnover but also you recall Leigh Lewis said to you that there is a sense in which the very turnover is a mark of our success because people who have skills developed in the Employment Service are in fact in demand in the labour market and so it is in some senses a backhanded compliment to us that our staff are sought after.

  299. I think Leigh should apply for the vacancy for the Number Ten spin doctor if it ever occurs with an argument like that. I accept it partly. Chris Humphries, Director General of the British Chambers of Commerce, told us that there was concern amongst employers that the Employment Service was not very good in understanding their needs. Is this a fair assessment, would you say?
  (Tessa Jowell) I do not think so, no. It is certainly not the feedback that we get from employers where the indication is of high levels of satisfaction. I think that the Employment Service has developed a more structured and systematic approach to measuring satisfaction. There is now a contract with employers in four parts, two of which include a commitment to providing a named contact and also to providing follow up to help people settle in during the first few weeks of employment. That is important. The Employment Service is very close to reaching its satisfaction target of 80 per cent, which is what has been set in this year's APA. We can always do better and I thought with great candour the Employment Service in their memorandum to you provided two examples of the reaction of employers: what happens when an employer thinks that they have had a good service and what happens when an employer thinks that they have not had a good service. Of course there will be employers who are not satisfied and we need to do better for them. I hope that you accept from everything you have heard so far from me today and from Leigh you could not be in any doubt about the importance that we attach to building the Employment Service on the basis of what employers need and ensuring that as far as possible we get to a point where we may get somebody coming through that door from the job centre and they can be pretty confident about the level of skill and the quality of the screening that that person will have gone through before they come to them.


1   The memorandum submitted by the Department for Education and Employment is printed in HC533-vi, Session 1999-2000, pp.1-97. Back


 
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