Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 120 - 139)



  120. If you are on the New Deal and you get a job you just break out.
  (Ms Lomax) Yes; you go. That is one reason why you might not go all the way through.

  121. It seems to me the two basic values of the New Deal are firstly preparing people and getting people to get a job through getting them into work habits, giving them skills, getting them into a job; secondly, increasing their productivity in the labour market itself. Do we have any reliable measures of added value productivity in terms of moving people from this level to that level, or is that rather difficult?
  (Mr Wells) It is rather difficult. An attempt was made in the National Institute and they did suggest that there may be an increase in productivity in the future. However, it was very much that sort of caveat ridden conclusion.

  122. When you do your cost benefit analysis how do you compare this person now going into low wage employment with a situation where they are benefit recipients and you get these net gains? If you subdivide these into different groupings and you take, for argument's sake, people who have come from prison, my understanding is that people in prison are costing £34,000 a year, then within a couple of years of coming out of prison 25 per cent of the men re-offend, etcetera, and there are the costs of crime and this sort of thing. If you look at that category of people who have been in prison, there must be an enormous value in getting them back into work and an enormous cost if they do not go into work. In the figure work we have seen, are those sorts of costs factored in or not?
  (Ms Lomax) No.
  (Mr Lewis) We have not done that very detailed kind of analysis. What I would say actually is that within the overall framework of the New Deal, we have worked very closely with the Prison Service and other organisations like NACRO precisely to try to ensure that young people in this age group, leaving a custodial sentence, are able to come straight onto the New Deal.

  123. What I guess I am moving towards is that there would be a strong argument for differential investment levels in problem cases, in particular those who have a very high social cost if left to go down the wrong track in terms of drugs and crime and that sort of thing. Am I right to say that given the success in the easier to manage people and at an easier to manage time we are now re-focusing the actual level of investment at these hard cases? I do not know whether you have any information about prisons but are you putting extra resource into prisons versus normal people?
  (Mr Lewis) Yes, we are in one absolutely key sense and that is normally people will not be able to benefit from the New Deal during their first six months of unemployment. That is not the case with someone leaving a custodial sentence, who is able to join the New Deal straightaway. In other ways we will be putting in differentially increased investment.

  124. Is it correct that you can only start your New Deal after you have left prison?
  (Mr Lewis) No.

  125. Can they start straightaway or do they start in prison?
  (Mr Lewis) Actually the programmes we have been piloting with the Prison Service have been helping people from before they actually step out through the prison doors so that in their last few weeks and months in the prison serving a custodial sentence, they are already working in ways which can help them.

  126. Good. What about before they step through the prison doors? What I mean is that 75 per cent of people in prison have been permanently excluded from school. They get about five or six hours education a week. Obviously this is a bit premature, but some of them are hanging around nicking mobile phones some of the time. Has any thought been given now, as we have got rid of a lot of the New Deal people successfully and put them in the market, and you have these training resources, institution, which actually work, to somehow refocusing on some of these other cases which would be socially valuable?
  (Mr Lewis) One of the initiatives we are taking within the development of New Deal is to reach out to a group of people who do not at the moment necessarily even come near the benefit system and claim benefit but are living in other ways, to try first of all to make contact with them and secondly to offer them this kind of support.
  (Mr Nicholas) We have done a lot of very good work with the rough sleepers unit to bring people who are completely outside the benefit system and at risk into our offices or into dealing with advisers so that they can become part of the system and supported into work. The New Deal does not go back into people underneath the age of 18; there are no proposals for doing that.

  127. Is it possible to look at those, or do you have to have Ministers? You could presumably say you have all these facilities for helping people, here is a group which could be helped or would that be inappropriate?
  (Mr Nicholas) What we are doing, with the growth of the Connextions Service, which is the advisory service for 14 to 19-year-olds which focuses particularly on those who have most disadvantage is to strengthen the links so that people who have a Connextions Service adviser can move smoothly into support from the New Deal personal adviser when they get to the age of 18. So there is no break there. We build on what support they have had before the age of 18 as well. We try to get a seamless service.

  128. I have been putting my questions into how you could move out your target and backwards in time into the education system. Conversely, one could argue, in so far as you are picking up numeracy and literacy problems some of the characteristics of the people you are dealing with are that they have been failed by the education system. So you are spending whatever it is, £5,000 a job or £3,500 a person, whatever it is, on these people, but would that money be better spent in some instances on these people earlier on in schools? I am not trying to take your budget away.
  (Ms Lomax) The return on spending money is better the sooner you get them. That is why so much money is going into SureStart and initiatives like that. You cannot just write off these people who have reached 18.

  129. The advantage we have with your system is that when they come to you they are individually assessed and targeted with training and resources, whereas some of these people have been neglected in the back of classrooms and that £3,500 is being pushed at them when formerly it was just an aggregate amount of money in a class. Is that a reasonable point?
  (Ms Lomax) Some of the education system has not produced the result it needed to. I also think the other thing the New Deal is doing, which we have not talked about, is connecting with employers, what employers want. Sometimes people may have got basic skills but they are not work ready in many other crucial ways. One of the key things the New Deal has done is get employers involved in specifying what they want.

  130. I shall move on to that. I am glad you started talking about that. Basically there is a difference between the micro interest of the individual, what they need, and the macro interest of the marketplace, the skills shortage and therefore how to train these people. To what extent are you getting people in these Gateways and thinking in terms of market needs of adjusting that to them rather than saying okay, you have a skills gap here and let us hope it fits the marketplace.
  (Mr Lewis) We are trying to operate in two ways. This has developed as the New Deal has gone on through the Gateway to Work courses. We have been trying to ensure that people have those softer, but absolutely critical skills which employers call for and require. In one sense skills is almost the wrong word, it is the ability if the business opens at nine o'clock in the morning to be there at nine o'clock, to be well turned out, to be polite to the customer, etcetera. These are absolutely critical things which employers want and they expect in anyone they are going to recruit. Those characteristics are not necessarily there in young people on the day they come through our doors.

  131. Basically the idea of work habits and all the rest of it.
  (Ms Lomax) Yes.

  132. Normal standards of behaviour in work after having a long period out of it.
  (Mr Lewis) That is absolutely fundamental. What we have also been doing, without going on at great length, is trying to work and increasingly we are working with individual sectors like retail, construction, energy, to tailor our Gateway so that it reflects the specific needs of those sectors.

  133. Page 7, Figure 1 gives a basic list of problems people may have, criminal records, behavioural or mental problems, these sorts of things. As we move from the easier to employ to the hard core people who are more difficult and given the need for employer involvement and engagement, what guarantees for compensation can you give to prospective employers who take on one of your people? Say this person has been in prison, has had drug problems and you are telling the employer you have added value and changed them for life, but they might come along and steal something or mess up the job or whatever it is and cause a problem and the employer does not want to take a risk. Is there anything you can give him, if something goes wrong can you compensate him?
  (Mr Lewis) What we have been trying to do increasingly through the New Deal is have a very grown-up and honest conversation with employers so that we talk about some of the young people coming through the New Deal and their backgrounds and their circumstances, etcetera. There are many more employers than one might at first sight imagine who are prepared to consider, for example, employing somebody who is an ex offender as long as they are clear that that is the case, as long as they are clear that that young person, through their participation in the New Deal wants to come and work for that employer.

  134. I understand that but if I am an employer who has taken on this bloke who has been inside for doing various things and my worry is that he is going to cause problems on the shopfloor or steal things, if he does, what comeback have I got against you otherwise I am not going ahead?
  (Mr Lewis) No, we do not operate in that way. We do not operate like that, just as we do not right across our business. In the end the responsibility lies with an employer.
  (Ms Lomax) I absolutely agree with what Mr Lewis has said. We cannot get into the business of guaranteeing the performance of people. At the end of the day employers have to take responsibility for the ones they have. We are not in the business of trying to shove people onto them that they really do not want. That does not work. What we have to find out is what they want.

  135. Let us say you have got someone you believe is a person who is fit to work and is a reliable person but has had an unfortunate background maybe due to an unfortunate family background and all the rest of it and who has come good through the New Deal. You have spent all this money on them and you are trying to place them in employment and people just say they do not want to know anything about it. What do you do?
  (Mr Lewis) One thing we do have to offer and we have offered it increasingly as part of the New Deal programme and more widely is the work trial programme which allows an employer to take someone for three weeks. They remain on their Jobseeker's Allowance, they do not become an employee, but the employer has three weeks' experience of that individual actually working for them. That has been one of our successful programmes with a very high number of young people taken on as employees at the end of that period.

  136. Is there any ethnicity issue by region in general terms?
  (Ms Lomax) This is not a question which can be answered briefly. It is quite a difficult question. On the face of it yes, the job outcomes for ethnic minorities are not as good as for white participants. If you correct for where ethnic minorities live, it is much closer: something like 97 per cent of the outcome for whites. I would not be complacent about that and I would not be satisfied with it. There is an ethnicity issue, but the scale of it is something you can debate.
  (Mr Lewis) I sense the Committee is not at this moment looking for a long exposition of this. Let me simply say that this has been an issue which has been absolutely very high on our agenda from the very early days of New Deal, how to try to ensure that New Deal participants from ethnic minorities do secure at least the same outcomes as their white counterparts. We have gone to enormous lengths in a whole variety of ways to try to secure that outcome.
  (Ms Lomax) That is actually one of the novel features of the New Deal. Previous employment programmes have not had that focus on the ethnic dimension. It is fairly early days.

  137. Are you saying that other things being equal we get the same sort of outcome, or other things being equal we do not?
  (Mr Lewis) I know you would like a yes or no answer to that. The answer is more complex and this is a very complex subject. On the face of it young people from ethnic minorities do not secure the same level of outcomes, particularly in terms of job entries, as people who are not from ethnic minorities. When you correct that for some of the other factors, where they live and those labour markets, then it appears to become more equal. Everyone who has worked on the New Deal would say that that is not a reason why we can afford to take our eye off this issue and become complacent about it. We are going on looking to try to ensure that the outcomes which ethnic minority young people secure on the programme are genuinely the equal of their white counterparts.
  (Ms Lomax) Of course it varies from ethnic minority to ethnic minority and according to gender and all the rest of it. A huge tome came out from the Cabinet Office a couple of weeks ago, which we were involved in producing on research into the labour market and ethnicity. It is a very complicated story on which we are doing research and need to do more.


  138. There was a report on the News at Ten yesterday that there is a particular problem for educationists with young Caribbean men and that we needed not to be politically correct about this but realise the problem and concentrate more resources on them. What do you say to that?
  (Ms Lomax) Yes, the evidence is that young Caribbean men, Pakistani and Bangladeshi women are particularly disadvantaged in the labour market. Indian men, for example, and Afro-Caribbean women do rather well. It is not an homogeneous group.
  (Mr Nicholas) We are putting more money into that and new provision for Outreach to work with communities is coming into play next month, focused particularly on the five conurbations with the biggest concentrations of ethnic minorities.

Mr Davidson

  139. May I raise the question of the fifth Option and the numbers who have chosen that? We have been congratulating ourselves, I think quite rightly, on all the successes but the Government made it clear that they did not want to have a fifth Option. It is certainly my impression in my constituency that there are many youngsters who have just dropped out altogether. Could you give me a feel for the numbers involved and the distribution?
  (Mr Nicholas) There are two issues there. The first is that there is no fifth Option of remaining on Jobseeker's Allowance and not doing anything. There is the Option of course of signing off and we talked earlier on about the follow-up we have done to see where people go and the proportions who go into work. We have a series of sanction triggers for people who try to stay on Jobseeker's Allowance and not take advantage of the New Deal and those were strengthened almost two years ago. There is a small proportion of people, 0.2 per cent of people, who have been on the programme who have suffered a series of benefit sanctions so that they cannot take the decision to stay on JSA and not take part. In the research we have done a number of them said that the threat of losing their benefit was the impetus.

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