TUESDAY 6 FEBRUARY 2001
  
                               _________
  
                           Members present:
              Mr Derek Foster, in the Chair
              Ms Candy Atherton
              Judy Mallaber
              Mr Patrick Nicholls
              Mr Stephen Twigg
  
                               _________
  
  MEMORANDUM SUBMITTED BY THE DEPARTMENT FOR EDUCATION AND EMPLOYMENT
                       EXAMINATION OF WITNESSES
  
                 RT HON TESSA JOWELL, a Member of the House, Minister for Employment,
           Welfare to Work and Equal Opportunities, Department for Education
           and Employment, MR LEIGH LEWIS, Chief Executive, Employment Service,
           examined.
  
                               Chairman
        179.     Minister and Leigh, you are very welcome.  You have no
  objection to us calling you Tessa and Leigh, have you?
        (Tessa Jowell) Certainly not.
        180.     I begin to think that so frequently do we meet we shall have
  to continue meeting like this.
        (Tessa Jowell) It is a pleasure for me.  
        181.     Would you like the opportunity to make a statement to begin
  with?
        (Tessa Jowell) I should indeed.  Thank you very much.  Before I begin,
  however, may I just introduce my colleague, Leigh Lewis, who is known to many
  of you.  Leigh is the Chief Executive of the Employment Service and also Chief
  Executive designate of the new Working Age Agency.  We shall between us do our
  best to answer your questions.
        182.     Would you like our congratulations or commiserations?
        (Mr Lewis)  I will stick to congratulations, but thank you very much.
        (Tessa Jowell) Thank you very much indeed, we are very pleased to be here
  today to give evidence to your inquiry on the evaluation of the New Deal for
  Young People programme.  One of the key features of the New Deal for Young
  People has been the transparency of the evaluation and I hope that is
  something which has become clear to you in the course of the inquiry.  Perhaps
  as importantly, the part that evaluation has played in the continuous
  improvement and development of the programme since it became a national
  programme in April 1998.  That is all part of our aim to ensure that the
  programme is grounded in the best available evidence of what works. 
  Evaluation so far has proved that the New Deal for Young People has made a
  tangible difference to the lives of young people, to the recruitment patterns
  and satisfaction levels of employers and to the efficiency of the labour
  market and the national balance sheet.  Last November we met our pledge of
  helping 250,000 young unemployed people move from welfare into work, helped
  by the New Deal.  We have for the first time the prospect of an end to long-
  term unemployment among young people with now only 33,600 people who have been
  unemployed for more than six months, the lowest level for over 25 years and
  fewer than 5,000 unemployed for a year or more, which is the lowest level for
  30 years.  This improvement in the young people's labour market has been due
  to a combination of economic stability and the New Deal:  not one or the other
  but the two together.  The National Institute for Economic and Social
  Research, who gave evidence to you just before Christmas, showed in their
  report, that the New Deal for Young People has both cut unemployment and
  raised employment, some of its key findings being 25,000 more young people in
  work because of the New Deal, total youth unemployment down by 40,000 due to
  the New Deal, half as many young people unemployed for six months or more, due
  to the New Deal.  They also estimate that the overall economy is richer by
  500 million a year thanks to the net investment of 150 million a year by the
  Government in the New Deal for Young People programme.  In overall economic
  terms, the New Deal has easily paid for itself and it has proved in turn a
  good deal for the country.  These positive results are only the early results
  of what a programme building on long-term investment and with long-term
  ambitions will show.  What the New Deal aims to achieve is radical improvement
  in the employability of young people, giving them the necessary skills which
  in turn become personal assets, not just to get a job but to stay in work for
  the rest of their lives.  There is also good evidence to show that people who
  do return to unemployment are leaving at least as quickly as short-term
  unemployed people.  Even people who have been on the New Deal, who lose their
  jobs, who return to unemployment, are less disadvantaged than they would have
  been had they not had the benefit of the New Deal programme.  The evaluation
  has also confirmed that the basic model is the right one for helping long-term
  unemployed people.  The key elements which are now entrenched in our labour
  market policy comprise personal advisers and unprecedented levels of
  individual help in the first gateway period, the something-for-something
  approach embodied in the delivery of a programme which offers no fifth option
  of a life continuing on benefit, and flexibility in the light of local labour
  markets and individual need.  These lessons have been translated in a slightly
  different form to the strengthened and intensified New Deal for Older
  Unemployed People, which will be becoming a national programme with effect
  from the beginning of April this year.  The evaluation has also identified
  where we need to do more and improve the programme still further.  I am sure
  you will want to cover some of these areas in this session.  All that we do
  to develop the New Deal is based on evidence from the evaluation and the
  evidence has been shared widely and that evidence is indisputable.  Evidence
  that there are now fewer than 5,000 on benefits for a year or more, compared
  to 300,000 in the mid-1980s.  Against the background of our discussion about
  quantitative and qualitative evidence, the impact of deadweight, additionality
  and all the other ways in which we examine and apply tests to judge the
  effectiveness of labour market programmes, I think that some of the most
  compelling evidence comes from young people themselves.  Over the past few
  weeks, I have had the opportunity to meet hundreds and hundreds of young
  people on the New Deal and the vast majority of them are absolutely clear that
  it has been the experience of the New Deal, the relationship with their
  personal adviser, that has enabled them to make the journey from unemployment
  often for the first time into work.
        183.     When we embarked upon this study, which was really entitled
  the New Deal Two Years On, we agreed that the New Deal, certainly for the 18
  to 24-year-olds has been the most well-resourced and comprehensively evaluated
  programme, certainly in my political lifetime.  We certainly value the
  continuous improvement philosophy that the Employment Service has been
  employing.  You would not expect us to let you escape without some fairly
  probing questions about the evaluations and also about the future direction
  of the New Deal.  Let me begin.  Is your current estimate of the total cost
  of the New Deal programmes to March 2002 significantly different to the
  1.5 billion that you estimated last time you gave evidence to us in May 2000? 
  If so, why has the estimate changed?
        (Tessa Jowell) I am just looking for my schedule of costs.  The short
  answer is no, the estimate of cost for the programme is not significantly
  different.  We anticipate the estimate of the total cost for the programme to
  2001 to be 1 billion for 18 to 24-year-olds, one quarter of that for 25+. 
  Looking retrospectively, the cost of the programme, as you will know, has been
  less than anticipated for two and a half principle reasons.  The first reason
  is that the fall in unemployment has been faster and more substantial than
  expected.  The second is that when the programme was originally designed, the
  expectation was that about 40 per cent of young people would leave at the
  gateway stage within the first four months and 60 per cent would go onto the
  more expensive training options.  In practice that ratio of proportion has
  been revised and about 60 per cent of young people now leave the programme
  within the gateway period;  only 40 per cent then go on to the options.  The
  options themselves have turned out to be rather cheaper than we expected.  We
  shall want to watch these costs very carefully indeed because all the evidence
  is that young people coming onto the programme now are significantly more
  disadvantaged than those who joined the programme at the beginning.  Certainly
  the training period is therefore having to help young people with acute and
  unless they are remedied insuperable obstacles in many cases to their being
  able to hold down sustained jobs.
        184.     In the 2000 Spending Review, it was announced that New Deal
  would become a permanent feature of Government policy.  It is going to be
  funded by the creation of an Employment Opportunities Fund.  What effect do
  you think the creation of this Employment Opportunities Fund will have on the
  delivery of the programme?  Will it be available for groups such as the
  economically inactive rather than giving priority to those registered job
  seekers?  What resources, other than remaining windfall tax receipts are being
  channelled into the Employment Opportunities Fund?
        (Tessa Jowell) The Chancellor in the Pre-Budget Report indicated that
  over the next three years the allocation to the Employment Opportunities Fund
  will be 1,040,000,000 in 2001-02, over the CSR period, 1,390,000,000 in
  2002-03 and 1,370,000,000 in 2003-04.  There is also a small
  remaining underspend from the windfall levy which is in the process of being
  bid against as part of the budget process.  In response to your two questions: 
  what difference will the Employment Opportunities Fund make?  It is important
  to be clear that the fund provides the money to deliver the policies which I
  hope are pretty clear.  Yes, I think that in the second stage of the New Deal
  programmes, there will be a major emphasis on two areas:  first of all,
  reaching out more to those who are presently inactive;  secondly increasing
  support and help for the most disadvantaged.  We are at the moment in
  discussion with the Treasury about a number of proposals to strengthen both
  the New Deal for Young People, the New Deal for People over 25 in order to
  meet what we see as the emerging needs.  I think that last time I came to give
  evidence to you, I made clear our view that the New Deal needs, in order to
  meet the sustainability test - breaking the cycle of unemployment, or no
  employment, that many unemployed people come onto the programme with - to
  focus on the skills which are described as work readiness or employability
  skills.  All the evidence shows that unless you are numerate, literate and
  increasingly have a measure of IT competence, have the sort of soft skills
  which increasingly a service-dominated labour market requires and you have had
  some work experience, then the likelihood of being able to learn and then
  progress in work or to stay in work is substantially diminished.  We are
  increasing the focus on ensuring that unemployed people have the opportunity
  to acquire these skills.  We are also concerned about those young people who
  are at the moment beyond the reach of the New Deal.  They do not necessarily
  meet the labour market conditions which mean they are eligible for the
  Jobseekers' Allowance, but we believe that we must do more to bring them to
  a point where they are close to the labour market, close to meeting the labour
  market conditions of JSA and in a position where they can benefit from the New
  Deal.  This will be a real challenge for joined-up government, because the New
  Deal is not a drug treatment agency, it is not a mental health service, it is
  not a housing department but these are young people who need the help of the
  programme and whose lifetime prospects will be greatly enhanced if they can
  get a job, and getting a job for them means sorting out many of the other
  problems in their lives as well.  That is the shape of the future and the
  future will be driven much more by policy than the renaming or the replacement
  of the windfall tax by the Employment Opportunities Fund.
        185.     From the figures you gave us, annual figures, I think you
  said 875 in the first year going up to 1.4 billion in 2003-04, the 875 is
  round about 200 million more than we are currently spending.  That is
  interesting that you should be allocating 200 million more than we are
  currently spending.  Can you explain why that is thought to be necessary?
        (Tessa Jowell) For the 18-24 programme the estimate for 2001-02 is
  420 million, that being the single year cost.  The figures I gave you were
  cumulative figures to cover the spend on all the New Deals but also including
  other labour market programmes like action teams for jobs, the proposed job
  transition service, one pilots, modernising ES.  This is the total welfare to
  work spend which will be included in the Employment Opportunities Fund.
        186.     So really the amount of money you are spending on the New
  Deal for the 18-24s currently is about the budget you are building in for
  future years. 
        (Tessa Jowell) It is about the same;  we shall expect to see the numbers
  fall but the clients of the programme need more intensive care.  We may spend
  broadly the same amount of money but I would expect, all the signs are this,
  that the level of spend per individual may well rise.
        187.     Because we have allocated another 400 for the intensive
  gateway.
        (Tessa Jowell) The gateway to work course is more than that.  From memory
  the gateway to work courses are costing 700 per person, but already the early
  indications are, and these are early indications, that we are seeing a faster
  rate of young people moving into work as a result of the gateway to work
  courses than was the case beforehand.  We shall also want to look at the
  impact on retention of the improved gateway training.  You will remember that
  these were programmes which were established very much in direct response to
  the demands employers were making of the programme.
        (Mr Lewis)  We are also resourcing the personal adviser service more
  richly.  We are taking account of the fact that overall numbers have dropped,
  so on average each person tends to face more barriers, tends to need a more
  supportive environment, more help from more skilled advisers.
        188.     Your employment forecasts lead you to believe that we shall
  be needing more intensive support beyond the next election.  As the last two
  ILO figures began to rise, certain people were forecasting that the USA
  recession might impact here.  Are we still expecting that we shall be mainly
  dealing with those most disadvantaged?
        (Tessa Jowell) We do not formally forecast employment or unemployment. 
  We put in place a range of measures to provide the assistance which is deemed
  to be necessary.  Our intelligence about the prospective demands on the
  programme come from three sources:  from employers, from the experience of
  personal advisers and the Employment Service and from the impact of
  evaluation.  As we have discussed in this Committee before, also, the evidence
  is that the pattern of unemployment may well change.  We are seeing high
  unemployment on a region by region basis, but very marked contrasts in
  employment rates within regions, which is why the efforts of the New Deal have
  been fortified both by employment zones and very particularly by action teams
  for jobs, which are addressing on a very local basis the obstacles that people
  in the districts in the country with the lowest employment rate are facing to
  getting into jobs. 
  
                              Mr Nicholls
        189.     As we understand it something like 22 per cent of all moves
  into jobs from the New Deal for Young People actually last for less than 13
  weeks.  Of those who are counted as having entered sustained employment, can
  you tell us what proportion are still in employment after six months?
        (Tessa Jowell) We estimate that about three quarters are still in work
  after three months and 80 per cent are not back on benefit after six months. 
  These were figures which were identified in the National Institute's report
  which looked at the macro-economic impact of the programme.
        190.     Why did you use a different definition of sustainability for
  the Innovation Fund?  Is there not a case for still using the 26-week
  definition more widely?
        (Tessa Jowell) We discussed this at some length last time I appeared
  before you when I indicated that taking a 26-week period for the Innovation
  Fund was part of piloting a longer period.  The standard measure of
  sustainability under this Government and previous Governments has been 13
  weeks.  We are placing increasing importance on retention and people not just
  getting into a job but staying in work and that is why, as part of the
  piloting and the experimentation of the Innovation Fund, we are looking at a
  longer sustainability period or retention period.
        191.     I ask that question because it seemed to me it flowed neatly
  on from what you were saying in your opening statement, which I think I could
  characterise as really making two essential points.  One of them was that you
  felt the whole of the New Deal programme had been good value for money and
  that secondly it had made a real difference.  Would that be a fair way of
  describing the two key points of your initial statement?  You thought it had
  been good value for money on the one hand and had done the job on the other?
        (Tessa Jowell) Yes.
        192.     What I find some difficulty with is actually squaring that
  with some of the other facts we have already had put to us.  You will be aware
  that we produced a short report some little while ago and in that report we
  said, amongst other things, that we noted the average cost of unsubsidised,
  sustained jobs, which the New Deal participants would not have obtained
  without the help of the programme, would be much higher than 4,000.   So
  although we would not be ad idem, I have to tell you, and you will not be
  surprised, on both sides of the Committee about precisely what the cost would
  be, there was a general view it would be higher than 4,000.  I just wondered
  whether, in the light of the exchange which we had last year, you would want
  to revise that figure or whether you still think it does amount to simply
  4,000.
        (Tessa Jowell) The most recent confirmation of that figure came from the
  National Institute report, which concluded that if you include the voluntary
  sector and the Environmental Task Force work experience programmes, the cost
  per job is about 4,000;  7,000 if you exclude those.  It is important to be
  clear that as a Government or as Employment Ministers, there has been
  consistency about the way in which the cost per job for the programme has been
  calculated since the programme was launched, which is to take the spend on the
  programme and to divide it by the number of young people who get into jobs. 
  It was made clear at the beginning that while we would count all jobs and
  sustained jobs as a figure within the jobs total, the New Deal programme is
  about getting young people into work.  That does not mean we are not also
  concerned to maximise the numbers that get into a job and stay in work and do
  hit the sustained job target.  The fact is that that is how we calculate it. 
  We have made it clear to this Committee, we have made it clear to Parliament
  in Parliamentary Answers.  I am sure there are all sorts of way of calculating
  it to produce higher or even lower figures, but those are the rules of
  engagement that the Government has set.
        193.     I should certainly be interested - I say that with all the
  insincerity I can command, which is considerable, Chairman, I am grateful for
  your support - in a calculation which would get at lower than 4,000;  that
  would be remarkable.  However, one does not really have to work too hard to
  find it might be substantially above that.  Anyone can appreciate this;  I
  think it would be common ground between us.  If someone is only in a job for
  a very short period of time the fact that they have been in that job will
  hopefully have done something for them which they would not have got had they
  not been in that job.  The fact is, using figures which you gave us when you
  appeared before us before, you said on one occasion that you thought something
  like 800,000 had been spent on NDYP.  That would in fact mean that you then
  assumed 60 per cent deadweighting - and I shall come back to how I
  substantiate that figure in a moment.  We would then be looking at a cost per
  job of something in the region of 17,873.  I know this has been the subject
  of correspondence between us before and in due course the Committee will
  doubtless come to a view on these things.  I really would press you on this. 
  I really do not think you are going to be able to find a figure which is less
  than 4,000.  You may not want to come up with 17,873, but I need to know and
  I am sure the Committee do, whether it is your last offer that it really does
  come out at about 4,000 per job.
        (Tessa Jowell) On the basis of the calculation, which is the agreed basis
  on which we calculate the cost per job, yes.  I would add to that that the
  Opposition, in a press release publishing their Britain Works proposals last
  July, conceded precisely the same point.  They said in notes to editors that
  they estimated that Britain Works would cost about 3,000 per person, that is
  about 1,000 less than the New Deal.  So there appears to be a broad agreement
  about cost per job.  I would only reiterate that the basis on which we
  calculate it is the simplest one available and that is the sum we get.
        Chairman:   I think this is something of a blue herring, if I may say so,
  as opposed to a red herring which would come from our side.  This is very
  interesting and we have trawled all over this before.  The authoritative
  statement from the National Institute, which is independent of Government said
  4,000 on one basis 7,000 on another and frankly going beyond that is not all
  that relevant, if I may say so.  I am more than happy to let you continue with
  questions but that particular line is a bit unfruitful.
        Mr Nicholls:   With respect, you may find it unfruitful, but I find it
  relevant and after all there are two sides to this Committee even if my side
  happens to be in something of a minority just at the moment.  I do not want
  to throw blue herrings too far but there is just one further point, if I may
  crave your indulgence.
        Chairman:   One further point.
  
                              Mr Nicholls
        194.     Which may have to be subdivided into two.  You mentioned a
  moment or two ago, I am sure in a way which was designed to be helpful, the
  National Institute for Economic and Social Research and indeed the Minister
  herself referred to that a few moments ago as well.  I detect an assumption
  underlining this that every time jobs come down and the New Deal is in
  operation, the assumption is easily made by Government that one thing must
  have caused the other.  The fact is that in information published by the
  Department themselves, 12 July 2000, the National Institute for Economic and
  Social Research concluded that 60 per cent of the jobs created would have been
  created anyway.  Is that simply wrong or irrelevant?
        (Tessa Jowell) First of all, the New Deal is not and has never claimed
  to be a job creation programme.  When the New Deal is judged against the
  extent to which it has created jobs, I frankly discount that.  The report
  published just before Christmas showed an additionality of about 15,000 jobs. 
  That is a macro-economic calculation which I suspect has more to do with
  macro-economic calculation than real life.  The fact is that what the National
  Institute report did show was that young people through the programme were
  leaving benefit more quickly, over 200,000 leaving benefit more quickly, that
  the labour market generally was benefiting from a higher level of skill from
  which employers could recruit and that long term unemployment among young
  people would be double its present rate were it not for the programme.  As I
  made clear in my opening remarks, it is the combination of economic stability
  which has generated more jobs and the New Deal which is equipping previously
  unemployed people to take those jobs which is the essence of the success. 
  Just before we move from this, I was challenged a moment or two ago by
  Patrick  Nicholls as to whether or not the figure of 4,000 per job might be
  reduced.  At last count 269,210 young people had moved from benefit into work. 
  Those were the latest figures we published.  We also published, and you may
  have seen this last week, a survey we conducted into what are called unknown
  destinations, about 30 per cent of young people leaving the New Deal go into
  unknown destinations, and we are as concerned and interested to find out what
  happens to them as I suspect you are.  What the survey has shown is that we
  have almost certainly undercounted the number going into jobs by about 75,000. 
  Of those who go into unknown destinations, about 56 per cent, the same
  proportion as from the main programme, go into work.
        195.     Are you saying that therefore accounts for the fact ---
        (Tessa Jowell) That is arithmetically how you get to below 4,000.
        196.     Is that how you would also seek - and you raised this, I did
  not, I was mindful of the Chairman's strictures - to account for the fact that
  if you in fact refer to the Office of National Statistics, the known estate
  base, the UK youth unemployment 18 to 24-year olds claim account, if you
  actually look at what has happened, you can see that for a long time, with
  occasional seasonal blips, youth unemployment has been declining and in fact
  the rate of decline has tailored off during the time of New Deal.
        (Tessa Jowell) In 1986, if we take six-months-plus unemployment among
  young people, you can fall very fast if you have very high numbers and in 1986
  you had very high numbers:  more than half a million young people had been out
  of work for six months or more.  In 1990, 176,000, in 1997, 169,000, in 2000,
  33,500, a fall of 80 per cent.
  
                              Ms Atherton
        197.     One of the fascinating parts of the New Deal is the role of
  the employer in recruiting young people.  Some disappointment has been
  expressed by some employers that not enough of the New Dealers are job ready
  when they come for interview.  As a Committee we were very, very impressed
  with some of the programmes like Wildcat in New York where a lot of work goes
  into getting a young person or an older person job ready.  What action do you
  plan to take to tackle some of the criticisms which a few employers have
  raised that the young applicants are not job ready enough in some cases?
        (Tessa Jowell) As I indicated earlier, the gateway to work courses which
  were introduced in June last year, were introduced in direct response to the
  expressed view by a number of employers that young people were being referred
  who were not "work ready".  Secondly, the focus on these core work readiness
  skills again is ensuring that young people have the generic employability
  skills that employers are looking for.  As part of our performance monitoring
  we have judging how well the programme and indeed the Employment Service was
  doing, we have a target against which the Employment Service performs as
  measuring employer satisfaction.  We have over 80,000 employers who have
  signed up to the New Deal and in 12 of our large cities we have employer
  coalitions which really do drive employer leadership of the programme.  This
  is not a new development but over the last two years we have seen an
  increasingly what would be described as demand-led approach to the programme,
  which no doubt you have heard Wildcat talk about, and that essentially means
  identifying the needs of the local labour market and ensuring that unemployed
  people coming through the New Deal are trained in order to have the skills
  that those employers need to fill the jobs which are available.  Let me just
  give you a couple of very specific examples.  I have been travelling the
  country as part of the New Deal tour, meeting employers, meeting young New
  Dealers, meeting the community organisations which are involved in training
  them and job centre staff.  Last week I was in Birmingham and visited the
  Birmingham City Hospital Trust who when they are recruiting entry level
  administrators always now have a New Dealer on their short lists.  What they
  say is that New Dealers are work ready, trainable on the job, but highly
  motivated.  That is the sort of endorsement of the New Deal that we want to
  see right across the piece.  We are clarifying the sectoral approach within
  which New Deal operates.  You have the development and the implementation of
  the work readiness programme, but then also the acquisition of further sector
  specific skills, working as Wildcat has been doing with the financial services
  sector, IT, in order to lock together the skill needs that employers have with
  the training that the New Deal can deliver.  We see this as an enormously
  important part of the long-term sustainability of the programme.  What I want
  to see employers saying about the programme is that there is a kitemark
  standard of quality which they can take for granted in young people they
  recruit and that the New Deal is a preferred programme for recruiting to their
  vacancies.  Leigh is very close to the operational delivery of this and may
  want to add to what I have said.
        (Mr Lewis)  Just to say of course that we have had the opportunity to
  discuss the efforts we have been making in the Employment Service to improve
  our service to employers.  As you know, I am the person more than any other
  who is not satisfied and never satisfied that we are delivering as good a
  service yet as we can, though I do believe it is improving and we need to go
  on improving it further.  It is worth saying that the evaluation evidence on
  New Deal has told us quite a bit about the responses of employers who have
  recruited through New Deal and a great deal of it is actually very positive. 
  For example, around 85 per cent of employers who have recruited through New
  Deal said that the person they recruited met their job spec either fully or
  pretty well and that is not a bad level at all.  It would be better if we can
  make it better, but it is not a bad level to be starting from.
        198.     In some ways Wildcat acts as a personal adviser to the
  employer as much as a personal adviser to the person looking for the job. 
  Have you thought about actually saying to the employers, here is your personal
  adviser in this process?
        (Tessa Jowell) This is very much the relationship the Employment Service
  is now developing with employers which I shall ask Leigh to tell you about.
        (Mr Lewis)  I do have great sympathy with the question.  One of our four
  employer service commitments now is that every time an employer entrusts us
  with a vacancy - and I use the word "entrust" very deliberately - one of our
  standards is that there should be a named contact in the Jobcentre who stays
  in touch with that employer until that vacancy is filled to their
  satisfaction.  That is in terms of the one-off vacancies which are our bread-
  and-butter business, day by day.  At a national level we have moved to
  institute an account management function.  So if the big major employers, the
  big organisations in this country want to deal not with 20, 30, 40 separate
  Jobcentres but want to deal with one person, their account manager, who can
  deal with their requirements literally from John O'Groats to Lands End that
  is a service we shall provide as well.  We have to get yet better at doing
  that but in a way we are moving towards the equivalent of a personal adviser
  per employer.
        199.     It has been argued that the increasing case loads of the New
  Deal for Young People might have compromised the effectiveness of some of the
  advisers.  As more and more young people are involved and the New Deal has
  expanded it has been suggested that some of the personal advisers are
  effectively burning out like social workers and doctors.  What strategies do
  you have in place to tackle this?
        (Tessa Jowell) First of all, there is no evidence that personal adviser
  case loads are increasing.  We have also taken steps to offer greater
  opportunities for career advancement.  Personal advisers are crucial to the
  success of the programme:  what we do not want is for personal advisers to
  feel that the only way they can secure advancement is to move off into
  management and move away from working directly with young unemployed people,
  which is what most of them are so gifted at.  
        (Mr Lewis)  It is absolutely crucial, as you say, and if our personal
  advisers become overstretched or become overstressed, then of course they are
  less effective.  We are very much concerned about ensuring that does not
  happen.  One of the big advances we are making and introducing and rolling out
  now, is the role of what we are calling a senior adviser.  One of the problems
  born of success is that our advisers have been so successful in many cases
  that they have secured promotion within the Employment Service and have ended
  up doing jobs other than as personal advisers.  Great for them, not as good
  in a sense for New Deal.
        200.     Is that counted in turnover?
        (Mr Lewis)  No, we do not count that as turnover.  Turnover in our terms
  is when people actually leave the Employment Service, though in a sense it has
  the same result, the advisers are not in their job.  One route we are using
  for that is to create a new role of senior adviser, one level up in our
  structure, so that there is a promotion route, an advancement opportunity for
  good advisers who will go on advising, they will still be advisers because
  they will still have their case loads.  In addition they will take on an
  enhanced mentoring role towards less experienced and newer advisers.  We have
  over 50 of those senior adviser posts already in place.  We are going to be
  rolling them out nationally through the year and the ratio, certainly in the
  adult New Deal, of about one senior adviser post to seven adviser posts more
  generally.
        (Tessa Jowell) Some young people who have been on the programme come
  through and they are taken on by the Employment Service and they themselves
  become personal advisers.  One of the really interesting bits of feedback
  which has come from the consultations we have been holding on the New Deal
  tour has been the appreciation of young people of that;  those whose personal
  adviser has come through the same route as they have obviously acts as a good
  role model but also they feel that they are talking to somebody who really
  understands what it is like to be them.
  
                               Mr Twigg
        201.     One of the things we have talked about when you have appeared
  on this subject before is the public sector's role as an employer in the New
  Deal programme.  Can you tell us what sort of progress has been made in recent
  months in increasing the involvement of the public sector, in particular the
  involvement of Government Departments in New Deal?
        (Tessa Jowell) There are two strands in relation to that.  The first is
  to say that eight per cent of young people on New Deal have gone into the
  public sector, but that is not in line with the public sector's share of the
  labour market as a whole.  We should like to see that proportion increase. 
  About 4,000 have gone into the Civil Service and the proportion now is
  1.3 per cent.  It is rising rather than falling.  Perhaps most encouragingly
  and in line with what I told you about earlier, about 1,000 New Dealers are
  now working in the National Health Service.  I think - and I give this as
  evidence from the feedback on the New Deal tour, that there is an increasing
  interest among public sector organisations about the potential benefits of
  involving New Dealers.  The point is that it applies as much in the public
  sector as it does in the private sector.  The motivation for employers should
  not be altruistic, it should be that this is a way of delivering services or
  seeing their business perform better.  That is the sort of message which very
  slowly the public sector is beginning to absorb.  Just before Christmas, I
  took part in a conference which was organised jointly with the Association for
  Local Government (ALG) where local authorities were engaged very directly in
  how to increase the participation of their members in the New Deal and to get
  out the message from those which were already using the New Deal quite
  extensively of its benefits.  I think that if we move to develop more
  transitional labour markets as the programme moves to its next stage, we shall
  build more public sector collaboration as we have seen in the Environmental
  Task Force, the work of Groundwork for example, the ILM in Manchester where
  300 young people are employed by the City Council as part of the City Ranger
  scheme;  short-term transitional employment, working for the local authority
  but the performance in terms of those young people moving into jobs
  subsequently is very encouraging.  We are very heavily engaged in this, but
  the good news is that local authorities are also engaged in this.  There will
  be great benefits to be gained.
        202.     Most of the examples you gave there were local government
  examples.  Are you satisfied that all central Government Departments are doing
  their best?
        (Tessa Jowell) We are seeing the numbers increase and we intend to
  continue to press Government Departments to do what they ought to be doing and
  to benefit from the employment of New Dealers.  That is a process which will
  continue.  We shall continue to chase, to harry, to persuade and also to
  provide the evidence of the benefits, benefits like those I referred to, that
  the Employment Service can show in the employment of New Dealers as personal
  advisers.
        (Mr Lewis)  I am sure the Committee and certainly Ministers would expect
  the Employment Service as an employer to be an exemplar New Deal employer and
  we have sought to be so.  We have taken on more than 500 New Dealers as
  employees of the Employment Service.  The really good news is that well over
  130 have already progressed through the procedures of fair and open
  competition to permanent employment with the Employment Service and that 30
  of those have already been promoted through our normal procedures to at least
  one grade higher.  I am delighted with that but we have not done it out of
  sentiment, we have done it because those people are really good and are
  helping us to deliver the pretty challenging targets and objectives we are
  set.  That is the message I take with me to fellow colleagues elsewhere in
  central Government.
  
                             Judy Mallaber
        203.     May I turn to gateway?  The recent report by Professor Millar
  for the Joseph Roundtree Foundation found very varied perceptions of the
  gateway period among those people who were on it, either on the young people
  or the long-term unemployed New Deals.  What is your view on this?  Why are
  there those different perceptions?  Do they just reflect differences between
  the individuals involved and their needs and abilities?  Is it about levels
  of competence of the personal advisers?  Why is it that people are
  experiencing the gateway period in such different ways?
        (Tessa Jowell) You would expect that.  Generally the New Deal gets very
  good satisfaction ratings from young people who take part in it.  One of the
  keys to the success or the reported success of being on the programme from
  young people is the relationship with their personal adviser.  Where the young
  person gets on well with their personal adviser, they are likely to feel that
  this has been a success for them.  If they do not get on well, they are less
  likely to feel positive about it.  It is possible to overstate the degree of
  variation in experience and the fact that 60 per cent of young people are in
  work by the time they reach the end of the gateway, the end of the four-month
  period, is a pretty good reference for the effectiveness of that phase.  Young
  people also like the gateway-to-work courses.  We do not yet have any formal
  evaluation of the programme but certainly anecdotally - and it is no more than
  that - they are courses which are received very positively indeed.
        204.     What has been the impact of the introduction of the basic
  skills training in the intensified gateway?  Do you think that is likely to
  have implications for how long people will be in the gateway when they are on
  New Deal, which is one of the continuing issues we have looked at?
        (Tessa Jowell) The basic skills screening is part of the first stage of
  the New Deal and basic skills deficiencies are grounds for early entry to the
  New Deal.  I am keen that we ensure that we activate that entitlement for all
  the young people who need it.  The delivery of basic skills training through
  the New Deal has been part of the programme since the beginning.  As the focus
  on basic skills has intensified, we are looking to much more consistency in
  the early screening of young people, so that we can ensure that all those who
  do not have a level one qualification, cannot reach level one, in other words
  that they are above functional illiteracy, we are not talking about a very
  high level, are given the help they need.  For some young people that is
  through short courses and that is sufficient.  There is also, through the
  full-time training and education option, access to longer term courses but
  they are still a minority of the total courses which are provided as part of
  the full-time training and education option.  My conclusion would be that
  delivering young people onto the labour market with the basic skills they need
  to remain in work is a key objective of the programme.  What we have to ensure
  is that at every level the screening takes place, the support is provided to
  engage young people in the training which is available for them and the length
  of course is commensurate with their level of innumeracy or illiteracy.
        205.     I recall you making at a previous evidence session - I think
  your first one - the very brave statement that you did not want anyone coming
  out of New Deal illiterate and innumerate.
        (Tessa Jowell) Exactly.
        206.     What evidence do you have so far on the effectiveness of the
  training programmes within the gateway programmes.
        (Tessa Jowell) In relation to basic skills?
        207.     Yes.
        (Mr Lewis)  We have to recognise that we are in here for a long haul.  We
  are seeing increasing numbers of young people being successfully identified
  as having a basic skills need by their personal adviser.  We have introduced
  what we call a client progress grid which is a much more systematic assessment
  tool to enable advisers to reach a judgement as to whether the young person
  sitting in front of them does or does not have, at least on the face of it,
  a basic skills need or basic skills deficiency.  We are getting ever better
  at being able to refer those people to appropriate provision in the gateway
  phase of the programme.  We have to get better still in truth.  Anybody who
  has sat with an adviser for any length of time, as probably members of the
  Committee have, will know that where a young person has a really fundamental
  lack of numeracy or literacy, that is pretty easy to detect, but actually it
  is where their level of numeracy or literacy is above that but still leaves
  a great deal to be desired, that particularly by the time they have got into
  their early twenties young people have often found quite sophisticated coping
  strategies for not displaying that too outwardly.  We have had to recognise
  that our advisers have needed more support and more skill and more training
  to help them assess where there is, at least on the face of it, a basic skills
  need.  We are getting better at that and the numbers going into that kind of
  provision are increasing.
        (Tessa Jowell) The aim remains that young people leave the New Deal
  numerate and literate at a level that means they are capable of not just
  taking on an entry level job but staying in work and then being able to
  benefit from in-work training.  There is a second point that we have learned
  in delivering basic skills training.  That is that it is more acceptable to
  young people if the training is provided in work as part of work experience,
  as close to work as possible.  The week before last when I was in the Wirral
  I met with a small group of young people on the New Deal, all of whom are
  undertaking basic skills training.  These were 19, 20-year-olds, who had moved
  beyond the point where this was a guilty secret.  I hope that next time I come
  before you I can provide you with some evidence on the degree of progress
  which we are making in this area, but you will be aware that the New Deal and
  the work we are doing on basic skills through the New Deal, is a small part
  of the Department's much broader basic skills strategy in which a very high
  level of investment is being made to deal with the level of illiteracy which
  affects seven million adults in this country.
        208.     Are you yet getting any feedback, or is it too early, from
  employers on whether this intensification of that skills training is making
  them have more job-ready applicants coming to them?
        (Mr Lewis)  That was one of the key motivations behind the introduction
  of the gateway-to-work course in the gateway.  It is the case that in the
  early days of New Deal we did have some employers saying that some of those
  young people referred to them did not have that basic level of skill which
  would enable them to be readily employable.  That is one of the reasons why
  the gateway to work course is now a much more systematic system to ensure that
  young people who are referred to employers do meet their key skill
  requirements.  That is also why of course we have been developing a number of
  sectoral gateways in industries such as construction, retail, security and so
  on, so that we can pin down much more definitely and clearly the minimum skill
  requirements which employers in that sector need, even for entry level jobs,
  and ensure that those young people referred to them do increasingly have those
  minimum skill requirements.  This is of course in the end not a science;  you
  cannot absolutely guarantee that you can achieve this with 100 per cent of
  young people on every single day, but I do absolutely believe that we are
  getting seriously better at this and that is reflected in the employer
  feedback we are getting.
  
                               Mr Twigg
        209.     Has the Government made any assessment of the impact the
  programme has had on the employability of those young people who leave the
  programmes and do not go into unsubsidised employment? 
        (Tessa Jowell) The evidence is that retention is actually higher among
  young people who go through the subsidised employment route.  It tends to be
  higher but they also tend to be the less disadvantaged young people on the
  programme.  This links back to what I was saying earlier about linking basic
  skills training or positioning it as close as possible to work.  We are very,
  very keen to build on the subsidised employment route and to expand the extent
  to which the employability training I have described to you is built into work
  experience.  All the evidence is that that is how you maximise participation
  and you strengthen the likelihood of retention.
  
                             Judy Mallaber
        210.     May I go back over some other questions we have talked about
  on a number of occasions and specifically about the Environmental Task Force
  option, just go over an update on where you think we are on all those issues
  we have discussed before?  First of all, why do you think that fewer people
  are entering employment from the Environmental Task Force option than from any
  other option?  What progress has been made in developing the use of
  intermediate labour markets within the option and what are you now thinking
  about in relation to whether we could transfer that option and the voluntary
  option into intermediate labour market schemes providing participants with a
  wage?  They are all issues we have discussed before, but maybe you could tell
  us how you are currently viewing those issues?
        (Tessa Jowell) In relation to the Environmental Task Force, in the
  context of the Innovation Fund we have been involved in discussion with
  Groundwork particularly about the scope for the development of intermediate
  labour markets.  There is also evidence that the young people who go onto the
  Environmental Task Force tend to be among the most disadvantaged and therefore
  may well be the young people who will benefit most from a longer period of
  paid work and training in the way that an intermediate labour market will
  provide.  The evidence from intermediate labour markets is that the critics
  say they are expensive.  However, in the absence of an enormous amount of
  evaluation of the evidence, if you look at the experience of intermediate
  labour markets on a case by case basis - I just want to check the figure for
  the Groundwork ILM - given that they are working with some of the most
  disadvantaged young people, they are securing into-work rates which I think
  are very encouraging:  40 per cent and higher.  The figure is even better than
  that.  Groundwork say that 60 per cent of participants at the end of their ILM
  are moving into full-time employment at the end of their placement and I think
  it is fair to say - and you can make these judgements, I am sure you have met
  young people on the Environmental Task Force, as I have - that these are young
  people who would not have got into work had they not had the benefit of this
  very intensive period of help and support.  Just to give you some illustration
  of the sort of ILM programmes which are running, the projects range from
  regeneration and environmental work to the restoration of furniture and white
  goods for local people, specifically Groundwork projects include the
  renovation of a very rundown housing estate in Leeds, improving home energy
  insulation in Nottinghamshire and improving local parks and gardens in the
  Black Country.  I referred earlier to the City Ranger programme which
  Manchester City Council run, where they act as city centre guides, they
  provide an alert when there are broken paving stones and street lights and so
  forth, being useful citizens and improving the quality of the environment. 
  This is a range of programmes.  The candidates for the Environmental Task
  Force will be beneficiaries of the more intensive focus on employability which
  I described earlier.
        211.     What has been the impact of making 20 per cent of the
  payments to Environmental Task Force providers dependent on participants
  obtaining employment?  Is that likely to influence drop-out rates?
        (Tessa Jowell) This is a lesson we are applying across the board in
  tightening and focusing contracting.
        (Mr Lewis)  We have certainly seen a substantial increase throughout 2000
  month by month in the proportion of entrants to the Environmental Task Force
  who have been going into jobs, either directly on leaving the option or after
  a period on follow-through.  That is pretty encouraging.  It is not yet as
  high as we should like.  Just to be absolutely clear, we want it higher and
  Ministers want it higher, I want it higher.  It has gone up by approaching
  50 per cent over the last year.  When you consider that we are dealing
  inevitably with a group of people entering the Environmental Task Force who
  tend to have yet more barriers to employment on average than that group which
  enters the New Deal, 60 per cent of them leave the gateway-into-work, the
  Environmental Task Force tends to take on board some of the people who have
  some of the most severe disadvantages.  The figures we are seeing are
  beginning to encourage us.  We want to see them still higher, but we have seen
  a consistent movement over the last year in the right direction.  To come to
  the heart of the question, one ingredient, not the only ingredient but one
  ingredient in that, has been to increase the degree of incentive for providers
  in terms of job outcomes.
  
                               Chairman
        212.     What about the wage aspect?  How important is that to the
  success?  It was one of our recommendations two years ago that the
  Environmental Task Force and the voluntary sector option would benefit from
  something like a wage.
        (Mr Lewis)  Yes.
        213.     Do you agree with that assessment?  Do you have evidence that
  that is part of the more recent success you were quoting?
        (Mr Lewis)  It has certainly been an option from the very outset as you
  know that both the environmental and voluntary sector options can be provided
  on a waged basis.  It can make the options more expensive to deliver in
  individual cases but there is a lot of evidence that it also boosts
  participants' motivation and morale.  I would not like to say off the cuff
  whether we have seen that as one of the key ingredients.  It is certainly
  something we have always been very ready to encourage.
        214.     Let me turn briefly to the full-time education and training
  option.  There seems to be a persistently high drop-out rate, well over
  80 per cent in some areas.  Why is this figure so high?  Is it purely because
  of the nature of the client group or other problems with poor provision would
  you say?
        (Tessa Jowell) It is important to just get the figures clear about full-
  time training and education.  About 40 per cent of young people on the
  programme go onto the full-time training and education option.  The drop-out
  rates are certainly not at the level that some of the wilder claims have made,
  the point being that some young people do leave the programme while they are
  on it, they leave their course in order to get a job, but 45 per cent actually
  complete their course and of those a proportion, about 35 per cent, will get
  jobs while they are actually on the programme.  That figure increases if you
  include the impact of the full-time education and training option with the
  impact of follow-through where the proportion going into work then rises to
  about 40 per cent.  It is reasonable to assume that very few young people who
  leave university get a job on the day they graduate.  By and large they will
  go on to do something before applying for jobs and so forth.  Making a
  judgement about the effectiveness of the full-time training and education
  option at the moment at which a young person leaves, whether they step into
  work the day after the finish their course, is almost certainly not fair.  All
  that said, I have expressed to you before my concern about the variation in
  the quality of the full-time training and education option.  We are seeing a
  substantial improvement in the performance of the option already, the
  proportion going into jobs as evidence of this rising from 31 to 35 per cent,
  on the back of strenuous efforts to improve performance.  We are proposing to
  publish performance league tables so that the contractors are aware of the
  performance.  We are very keen to build on the leadership of colleges which
  become the kind of beacon that Lewisham College has become in its association
  with NewTech, where what you get is a college which is taking what employers
  want seriously and moulding and shaping their courses and their training to
  what the labour market needs and what employers want.  That is the journey of
  change that we are on and that is where we want to get to.  We shall withdraw
  contracts and I can certainly give you the figures already for contracts which
  have been withdrawn from full-time training and education providers which are
  simply not up to scratch and are not delivering to an acceptable standard.
        215.     That is a very clear statement which I welcome.  May I put
  that perhaps a slightly different way?  Could it be that the programme's
  emphasis on getting people into jobs actually conflicts with the ability to
  construct courses which have validity in educational and training terms in
  their own right?
        (Tessa Jowell) What we should like to see is more flexibility in the way
  in which courses are delivered.  I do not think that a young person should be
  faced with a choice of taking a job or continuing with their course.  Colleges
  which are really attuned to the reality of their local labour market will look
  at more flexible ways of delivering the teaching, in the evenings, Saturday
  classes, ways of continuing to engage those young people so it is not a choice
  between going into work and leaving the course half way through or giving up
  the opportunity now of going into work in order to finish the course.
        Chairman:   I had another question on funding which we might correspond
  with you about.
  
                               Mr Twigg
        216.     When you appeared on the subject before we talked about the
  impact of New Deal on disadvantaged clients.  I do not want to go into all the
  areas we covered before but focus particularly on reaching homeless young
  people.  I am interested in reading about and taking evidence on the Homeless
  Routeway to Employment Scheme.  Could you tell us a little about the
  relationship between that scheme and the New Deal and how it might perhaps be
  able to reach some of the young homeless, rough sleepers in particular, that
  New Deal has not been able to reach?
        (Tessa Jowell) I actually launched this programme about four months ago. 
  What it is intended to do is to provide specialist advice and help for young
  people who are not currently on the New Deal in order to increase their
  chances of being able to participate in the programme.  It will be through
  community organisations and voluntary organisations that we are going to learn
  more and build more experience of how we reach these young people who are
  homeless or they are drifting - they may not be street homeless, they may be
  staying with friends, no fixed abode - getting hold of them and using the New
  Deal as one step in providing greater stability in their lives.  As I
  indicated, the Homeless Routeway to Employment is just that, working with
  homeless organisations and the Camberwell Foyer who provide the accommodation
  to provide the help with employment.  What the Employment Service cannot do
  is become a multi-purpose agency helping unemployed people.  The key is to
  show flexibility and capacity to collaborate which I think the Homeless
  Routeway to Employment is beginning to show.  Again, as with so many of the
  things we have talked about this afternoon, the drive on basic skills, help
  for the disadvantaged.  We are still at an early stage.  What I would ask you
  to remember is that these are all lessons that the New Deal itself has thrown
  up as part of the continued drive to do more, get to places where help has not
  been previously available and to engage some of the most disadvantaged young
  people who are at the moment beyond the reach of any agency at all.
        (Mr Lewis)  One of the research reports published as part of the
  evaluation programme has been precisely on the degree to which New Deal has
  been able to reach out to homeless people, rough sleepers.  It actually had
  quite a lot which should encourage us there because it suggested that where
  we can reach out, where we can make contact and establish contact and draw
  such young people into the programme, then you can really get some remarkable
  success stories.  Perhaps as you would expect the hardest group though are
  those young people who, however it has happened, are entrenched homeless, they
  have been rough sleepers for a very long time.  The most difficult problem is
  first of all to identify them and even bring them information about the
  programme.  That is something the report made recommendations on and we are
  following up.  There is some real encouragement there that once you can engage
  even young people in that precarious lifestyle with an adviser and on the
  programme you can achieve some remarkable success stories.
        217.     May I move back to an area we talked about earlier on people
  who leave for unknown destinations?  You gave us some quite positive
  statistics on that.  Nevertheless the proportion is still quite high.  What
  proposals are there for reducing the number of people who leave for unknown
  destinations?  Does the high level indicate some sort of wider problem with
  the records maintenance in ES?
        (Tessa Jowell) Let me ask Leigh to deal with the performance and
  operational aspects of recording people and improving our performance there.
        (Mr Lewis)  There are two issues bound up in this question and they are
  both perennially frustrating ones.  The first is a kind of absolute inherent
  part of our whole system of welfare as it has been for a very long time and
  that is that people can simply cease to make a claim for a benefit payment and
  they do not have to tell us or the state or Government in any way why they
  have done it.  They can just cease to claim.  That is terribly difficult when
  people simply stop making a claim and go away from you.  That is something
  which it is very hard to influence.  The other bit which is in essence more
  frustrating is that undoubtedly amongst that group of people whom we record
  as unknown destinations are people where our systems have simply not been good
  enough to capture information which actually someone somewhere has known
  about.  Really somewhere in the system we do have some information about the
  destinations they have gone to;  we simply have not managed to capture it in
  our systems.  There in a whole set of ways we have been seeking to make
  improvements and to try to increase the proportion of people where we do have
  a known destination.  We are making progress.  We are beginning to whittle
  away the group for whom we do not have a known destination.  There is no one
  magical cure-all for that.  It is about in a whole host of different ways
  trying to keep our systems closer to the ground.
        218.     Is it right to say that in the most recent survey, which was
  last year, of those who left for unknown destinations getting on for two
  thirds told the survey that they had told the Employment Service?
        (Mr Lewis)  Yes, indeed, absolutely;  that in a sense is the frustration. 
  They believe that they did tell us, whoever "us" is, something about what they
  were doing next, yet we failed to pick that up.  No doubt in some cases,
  whether they actually told someone and what they told and who they told, you
  could investigate but there is no doubt that in some of those cases where we
  do record an unknown destination, nevertheless some piece of information has
  reached us, has reached a part of the system and what we have done is fail to
  capture it on our systems.  That is what we are trying to improve.  We are
  improving it but it is a long haul.
        (Tessa Jowell) The final key point on this is that the effect of the
  survey we published last week, which has looked unlike previous surveys at
  unknown destinations from every stage of the programme, is that we have
  certainly undercounted the number of young people going into work from the
  programme by about 75,000.  The second point is that the proportion of those
  whose destination is recorded as unknown who go into work is about the same
  as the proportion on the programme as a whole.  It is identical actually as
  a proportion on the programme as a whole.
  
                               Chairman
        219.     I am sure we could keep you a good deal longer but I have one
  final question for you.  We have said how comprehensively evaluated the New
  Deal has been.  Do you know how much the evaluation programme has cost to
  date?
        (Tessa Jowell) Yes, the cost of the evaluation per person is 7 per New
  Dealer, but the total cost to date has been 4 million, which is less than one
  per cent of the total programme expenditure.  We have seen on the strength of
  that about 31 published reports so far.  I hope that what we have been able
  to convey to you this afternoon is the extent to which the evaluation has been
  fed back into the reshaping and the redesigning of the programme as it is
  delivered.
        Chairman:   Thank you very much indeed on behalf of all of my colleagues
  for readily agreeing to come in front of us again and for the way in which you
  have both dealt with the questions.  Thank you.