Select Committee on Education and Employment Appendices to the Minutes of Evidence


Memorandum from Prof R. Martin, University of Cambridge, and Dr C. Nativel and Dr P. Sunley, University of Edinburgh[21]

  The degree of variation in local labour market conditions and the significance of the possible effects of such local variations on the operation and outcomes of the New Deal for the Young Unemployed have become contentious issues. On the one hand, some economists and the Government itself have downplayed the extent of differences between local labour markets, and have argued that geographical variations in youth unemployment and job vacancies are relatively small and declining, and that any such variations are easily overcome by local scale labour mobility (Education and Employment Committee, 1997; HM Treasury, 2000). On the other hand, early critics of the New Deal argued that its success would vary considerably across the country and be least effective in precisely those localities where unemployment is most acute. In this view, the supply-side focus of the Programme would mean that it is unable to cope with the variability of employment demand across local labour markets (eg see Turok and Webster, 1998).

  Subsequent research on the NDYP's target group highlighted two features of the geography of youth unemployment. The first was that a broad "North-South divide" exists is the severity of youth unemployment, namely that youth unemployment accounted for a higher proportion of total unemployment in those New Deal Units of Delivery north of a line between the Severn and the Wash than in those south of that line. The area north of this line contained virtually all of those programme areas with youth unemployment ratios of more than 30 per cent. In contrast, areas south of this line tended to have youth unemployment ratios of less than 20 per cent. Thus the relative incidence of youth unemployment was highest in industrial middle and northern England, and in much of Wales and Central Scotland (Martin, Nativel and Sunley, forthcoming). Second, the incidence of long-term unemployment for both all age groups and for the under-25s is more spatially uneven than the general incidence of unemployment. The long-term unemployed are concentrated in the major metropolitan and urban industrial centres (London, Birmingham, Black Country, Sheffield Liverpool-Merseyside, Manchester, Tyneside and Glasgow). As the New Deal Programme was established, four local authority districts (Birmingham, Liverpool, Glasgow and Manchester) accounted for ten per cent of the long-term unemployed under 25, and another seven for another ten per cent (Halsuck, 1999).

  In this context, it is clearly important that the New Deal for the Young Unemployed provided sufficient local autonomy and flexibility, as well as an adequate distribution of resources, to allow Units of Delivery to respond effectively to their specific local labour market conditions. As the OECD (1999) points out, to be most effective welfare-to-work policies need to be able to respond to local circumstances, since by their very nature local labour markets are bound to differ both in terms of the scale and nature of the unemployment problem on the one hand and the ability of employers to create jobs on the other.

  Our research has been focused on the extent to which this has actually been the case, and it has included mapping the core performance measures provided by the Employment Service. Figure 1 shows the percentage of the programme's first seven cohorts (ie those entering the Programme between April 1998 and December 1999) who had obtained unsubsidised jobs by April 2000 (using the Employment Service's Core performance Measure A). While this measure will no doubt partly reflect local variations in Programme implementation and management, it is also likely to be strongly shaped by the availability of entry-level job opportunities and hence the growth of employment demand. A clear geographical difference stands out from the map. On this measure, the NDYP is performing much better in many rural areas than in the major conurbations. All the major inner-city Units of Delivery (with the exception of City Pride Manchester) have the lowest rates of unsubsidised job placement. In contrast, many rural Units have rates of unsubsidised job placement of over 50 per cent.

  There are also some worrying regional features to this map. For example, in Wales and in the industrial Midlands the Programme has evidently been less successful. In the North of England it has been most successful in areas such as North Yorkshire and East Lancashire which had a low incidence of youth long-term unemployment (as a proportion of total long-term unemployment) at the Programme's inception. In Scotland, the reported high rates of job placement in the Highlands must be qualified by an awareness of the small numbers of young people involved. Both here and in West Lothian, the Units of Delivery faced a relatively low initial incidence of youth long-term unemployment. In general, there is a substantial difference between the inner cities where the youth unemployment problem is concentrated and most severe, and other rural and semi-rural labour markets where youth unemployment has been much less visible.

  Figure Two shows the proportion of the first seven cohorts, who had by April 2000 obtained either an unsubsidised job or a subsidised job under the Programme. To some extent, the addition of subsidised jobs clearly changes the pattern of relative success. Some large rural Units of Delivery especially in Wales and Scotland, Cumberland and the West Country appear to have had more success in finding subsidised job placements for Programme Participants. On the other hand, in much of the Midlands and Central Southern England, including parts of Oxfordshire and Bedfordshire, the jobs subsidy appears to have made much less of an impact on job outcomes. However, what is again consistent in the pattern of relative job success between the two maps, is the relatively poor performance of the major conurbations, together with other major cities such as Leeds, Bradford, Sheffield and Nottingham. Further support for this conclusion is provided by Figures 3 and 4 which show the mean percentages of each cohort obtaining both unsubsidised and "all jobs" by the seven types of New Deal "Cluster" defined by the Employment Service. Assuming that the recorded performance measures are correct, there is a trend for these means to decline. The reasons for this are not entirely clear, although it may reflect that the earlier cohorts have had more time to find jobs. However, this decline has not involved a convergence between the majority of the Cluster Types and the inner-city, high unemployment Cluster (G). The Programme has clearly been least effective in this particular group of labour markets. Table 1 also shows that there are variations in the balance of Options taken by participants in different types of New Deals areas. Not surprisingly, participation in the employment option has been lowest, and take-up of the Education and Training option highest, in the inner city areas (Cluster G).

Table 1


Full-Time Education
and Training
Environmental Task Force

  Note:  Figures show mean percentages of all Options taken.

  Source:  ES CPMB.

  Figure 5 maps another key performance indicator: the proportion of those obtaining jobs via the Programme and not returning to claiming benefits after 26 weeks (this measure relates to the first six cohorts only). It is a measure of job retention and provides some indication of whether participants are experiencing a "revolving door" or high turnover between work placements and benefits. This map appears to reflect local labour market conditions quite closely, as the majority of Units of Delivery in the highest categories are found in South and Central England. Job retention is more of a problem in labour markets elsewhere, especially in Northern England, but also in Cornwall, parts of Wales and Central Scotland.

  Finally, Figure 6 shows the proportion of participants in Cohorts 4 to 7 who have left for destinations unknown to the Employment Service. In general, these rates are surprisingly high and other research findings have suggested that most of these untraced movements are participants leaving to take up work (Hales and Collins, 1999). While this may be true in some of the Units near London, it is noticeable that this criterion tends show a correlation with a relatively poor performance on the job measures. For instance, it again shows a relatively poor performance in London, Birmingham and parts of the Midlands, Leeds, Bradford, and parts of the South Coast. In such areas, therefore, the unknown destinations figure may well include many participants who have become disillusioned with the Programme and leave without proper record.

  It is not the intention of this paper to comment on the aggregate success of the NDYP. Rather, we have focused on its local impact, on the geographical variations in some of its key outcomes. There is clear evidence that, even in the context of a highly favourable macro-economic climate, the Programme has been least effective in many of the major industrial conurbations and localities dependent on manufacturing industry. Hence, there has been an inverse relation between need and relative effectiveness. The primary reason for this appears to have been the constraints on the Programme represented by local labour market conditions and dynamics, as well as by the path-dependent character of local labour supply.

  For instance, the geography of employment growth in recent years has been highly uneven and biased against many Northern cities and manufacturing areas (Figure 7; see also Turok and Edge, 1999; Employment Policy Institute, 2000). While the Government may be correct in arguing that it cannot create jobs, it is clear that increasing the employability of the young unemployed may not of itself be sufficient to guarantee their (re)entry into active employment. In many of the country's older inner cities and industrial areas, there is simply a lack of suitable jobs. It cannot be assumed that in such areas, supply (of young New Deal participants) will automatically create its own demand (by employers).

  There has been some welcome evidence in recent Government announcements that it is now treating this issue more seriously. However, it seems unlikely that the improvements made to date to the New Deal programme, and related initiatives such as Action Teams, will be adequate to address these urban unemployment concentrations. If the unevenness in outcomes is to be addressed then the future development of the Programme will have to supplement its supply-side focus and consider more fully how Government can raise, stimulate and encourage employment demand in areas of low employment growth.

Professor R Martin,University of Cambridge, and Dr C Nativel and Dr P Sunley, University of Edinburgh

November 2000


  Education and Employment Committee, (1997) Second Report: The New Deal, Volume 1 and Volume 2, Minutes of Evidence. London: HMSO.

  Employment Policy Institute (2000) Tackling the Regional Jobs Gap, London: EPI.

  Hales, J and Collins, D (1999) New Deal for Young People Leavers with Unknown Destinations, London: Employment Service Research and Development Report ES-21.

  Hasluck, C (1999) Employers, Young People and the Unemployed: A Review of Research, London: Employment Service Research and Development Report ES-12.

  HM Treasury (2000) The Goal of Full Employment: Employment Opportunity for All Throughout Britain, London: HMSO.

  Martin, R, Nativel, C and Sunley, P (Forthcoming) The Local Impact of the New Deal: Does Geography Make a Difference? In R Martin and P Morrison, (Eds.) Local labour Markets: Processes, Problems and Policies. London: TSO.

  OECD (1999) The Local Dimension of Welfare-to-Work: An International Survey, Paris: OECD.

  Turok, I And Webster, D (1998) The New Deal: Jeopardised by the Geography of Unemployment? Local Economy, 1-20.

  Turok. I and Edge, N (1999) The Jobs Gap in Britain's Cities, Bristol: The Policy Press.

21   This submission is based on research carried out for the project "Geography of Workfare: Local Labour Markets and the New Deal", funded by the ESRC (Research contract R00023 7866). Back

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