Memorandum submitted by Tomorrow's People
1. Introduction and summary
1.1 In 1998 the Government launched the
New Deal, with the objective of addressing unemployment, and hence
deprivation issues. This, and subsequent Welfare to Work policies,
aim to provide support, training and work placement to the unemployed,
as well as access to job opportunities. Jobcentre Plus rolls out
nationally in 2002, with services delivered by demand-led intermediaries.
From April 2002, pilots of the Job Transition Service run in six
areas of large-scale redundancies, and focus on the long-term
unemployed. Reforms to reduce structural barriers to employment
have also been introduced.
1.2 Economic slowdown, caused by general
global downturn and specifically the aftermath of 11 September,
has affected unemployment levels in the UK. Evidence of the number
of people applying to the Getting London Working initiative bears
this out: 850 registrations from January to June 2001 increased
to 1,100 over July to December. Since summer 2000 jobs have been
cut in manufacturing, agriculture and service sectors. Unemployment
rose in the last quarter by 35,000 to a total of 1.546 million,
and the rate increased slightly by 0.1 per cent to 5.2 per cent
in January 2002. The employment rate has increased, driven by
an expanding labour supply, with more jobs in the public sector,
construction and retailing; the claimant count fell in January
and February 2002. Greater numbers in the labour pool creates
more competition for available jobs, which impacts on those already
1.3 Gradual economic recovery is forecast
for 2002 and 2003, but with UK prospects linked so closely to
US and world events, it is arguable that the Government should
plan for a less optimistic employment scenario medium term.
1.4 Tomorrow's People is a specialist charitable
trust, with 18 years' experience in helping unemployed people
from welfare to work. Through training, advice and support, Tomorrow's
People has been instrumental in changing the lives of thousands
of people who had resigned themselves to long-term, if not lifetime,
1.5 Understanding specific regional and
local labour market issues is vital to the success of any programme.
Tomorrow's People believe that the best way to tackle unemployment
is to help employers. An employer-led service, that provides one-to-one
support for both the employer and the unemployed person, is the
most effective way to match jobs to employees. Critically, the
service does not stop when the match is made, but continues with
an aftercare support service for both the employer and the placed
employee. We would recommend the Government seeks to work with
local delivery partners who have a profound and demonstrable understanding
of local employers and their needs, to ensure that resources are
used to maximum effect. Provision of targeted training in basic
skills and sector or job specific skills is essential, as is the
opportunity to gain relevant, work-based experience.
1.6 Tomorrow's People recommend that the
Government reviews the capabilities of its service providers in
terms of sustained employment delivery. Minimising repeated returns
to the New Deal would free up resources to support the increasing
number of unemployed people.
1.7 Additionally, a review of the allocation
of funding is recommended, to ensure the outcomes of any initiative
2. Current Government Employment Strategy
2.1 The New Deal programme has expanded
to encompass a wider range of core target core groups since its
inception in 1998, and has undergone substantial revision. New
developments will be rolling out in 2002.
2.2 Whilst the New Deals have been successful
in getting people into employment, and some 560,000 people have
found work through the New Deal since 1999, the context of strong
UK economic growth is also partly attributable. The NAO reported
in 2002 that of the 700,000 18-24's in the New Deal for Young
People only 20,000 would not have been able to find employment
2.3 The job retention record for those
passing through the New Deal should be noted: 25 per cent return
to benefits within three months, whilst 40 per cent return within
six months. A copy of the "Getting London Working" independent
evaluation is attached, which shows that Tomorrow's People are
achieving 80 per cent rates of sustained employment over twelve
months for the programme.
2.4 There is an established correlation
between duration of unemployment and decreasing likelihood of
returning to work. This is critical for those who have been out
of work and on benefit for long periods of time, such as the 12
per cent of claimants who have been on benefit for over two years.
Particular attention needs to be given to these people, to ensure
they receive the necessary support over a sustained and sensible
period to prevent a lifetime cycle of benefit payments.
2.5 The DWP and Treasury paper "The
Changing Welfare State: employment opportunity for all",
November 2001, identified economic inactivity as a priority issue.
Specific groups such as lone parents, disabled people, the over
50's and ethnic minorities demonstrate higher than average rates
of economic inactivity. Inactivity amongst men, particularly the
over 50's who have entered inactivity involuntarily, is a key
2.6 It is likely that with increasing numbers
of recently "in work" unemployed people entering the
labour supply, the economically inactive, and those already suffering
social exclusion will be pushed further away from the available
jobs. It is also possible that these people will develop feelings
of scepticism about the use and relevance of the New Deal and
other services, as the chances of finding sustainable employment
are reduced, and therefore they will be less willing to enter
2.7 The Jobcentre Plus approach is not yet
fully fledged, but is likely to face greater demand from several
(a) Increasing numbers of newly unemployed
people as job cuts take effect, who are closer to being "job
(b) Those already within the system,
who are likely to remain there longer as fewer jobs are available,
the "nearly job ready".
(c) The high number of people returning
to benefits who do not sustain their employment, and are not job
2.8 The Job Transition Service is being
piloted in six areas of large-scale redundancies from April 2002,
therefore efficacy of helping the long-term unemployed via this
service is as yet untested.
2.9 Training is increasingly important,
to improve skills and job prospects and ensure continued participation
in the workforce, and enable the UK to remain competitive in the
global economy. The Learning and Skills Council has a budget of
£6 billion to tackle low levels of basic literacy and numeracy
amongst adults, and improve overall qualifications. The DfES has
identified six key skills: communication, ICT, applied numeracy,
working with others, improving own learning and performance, and
problem solving. The CBI suggests that of these, applied numeracy
and literacy are the most fundamental skills to acquire because
they form the basis for all further skill development.
2.10 Specific sectors have lower commitment
to training, such as manufacturing and primary production, and
therefore those facing redundancies in these sectors are less
likely to be equipped for an easy transition to alternative employment.
The Government's approval of "mature apprenticeships"
pilots, such as that for the over 25's in construction, aim to
address sector skills shortages.
2.11 Employment Bond initiatives have been
successfully launched in Sheffield (1999), Newcastle (2001) and
in the City and East London from 2002. The raising of funds through
zero interest Employment Bonds enables partnerships to deliver
social and economic benefits to deprived individuals and communities.
The physical environment and social fabric is regenerated through
re-development of sites, creation of employment, and support for
business and community organisations. The "Getting London
Working" in East London programme is part of the Employment
Bond, and provides one-to-one counselling of unemployed individuals,
tailored matching of individuals with employers, employer preparation
and support for entrepreneurial talent.
3. Non JSA Benefits
3.1 In addition to the likely squeeze in
the Welfare to Work system, it is important to also review the
situation for the large numbers of people of working age claiming
out-of-work sickness and disability benefits who also comprise
30 per cent of the economically inactive population.
3.22. 7 million people claim out-of-work
sickness and disability benefits. Of these 1.4 million would like
to work, but face barriers in terms of making work pay.
3.3 Incapacity Benefit and lone parent claimants
have trebled in the last twenty years, and the Incapacity Benefit
claimant count now stands at 2.3 million.
3.4 Gaining proximity to the labour market
is extremely difficult for these people. Not only do these groups
generally lack qualifications (in 1998 17 per cent of 25-54's
with no qualifications claimed these benefits, in contrast to
only 1 per cent educated to degree level) but problems are further
compounded by duration of time on benefits.
3.5 Some 75 per cent of Incapacity Benefit
and 60 per cent of Disability Benefit claimants have been on benefits
for over two years. As with JSA claimants, the relationship between
duration of unemployment and likely return to work is proven,
and requires specialist intervention to break the cycle.
4. Conclusions and Recommendations
4.1 Tomorrow's People recommend working
with partners who offer an employer-led one-to-one service, and
can demonstrate the best understanding of the specific needs of
local communities and the socially excluded.
4.2 Additionally, Tomorrow's People would
recommend that the Government review the capabilities of the intermediary
partners in terms of sustained employment delivery, to ensure
the most effective deployment of funds. Tomorrow's People are
able to deliver both added value and value for money, and an average
of 85 per cent of placed employees are still in work one year
4.3 Every effort should be made to address
needs of key economically inactive groups to prevent further disenfranchisement,
isolation and social exclusion.
4.4 The significant numbers of disabled
people who want to work need attention and appropriate interventions.
Tomorrow's People would recommend that the Government brings together
a small dedicated task force of leading intermediaries, with specialist
skills in working with the disabled, to develop and implement
a strategy which is tailored to the needs of this group.
4.5 With regard to Incapacity Benefit, Tomorrow's
People would recommend establishing a pilot study of one-to-one
interviews with claimants, independent of the health and benefits
systems, to understand the true nature of barriers to employment.
A confidential, non-prejudicial interview would enable an intermediary
to find ways of assisting claimants. Tomorrow's People have a
proven record of helping individuals to return to work so they
are no longer claiming Incapacity Benefit.
4.6 During economic uncertainty, businesses
look first to employ people who can add commercial value to their
operation, and veer away from the risk of employing the lower
skilled or long-term unemployed. Victims of social exclusion continue
to be left outside the labour market. Tomorrow's People therefore
recommend the establishment of a Community Employment Initiative
so that people who would otherwise struggle to add a consistent
level of commercial value to a business are able to contribute
value to their community. Businesses could adopt a local scheme,
and could be incentivised through tax relief to create entry-level
jobs for those people who would otherwise be excluded. A kite-marking
scheme could be developed as part of this initiative, accrediting
companies that commit to ethical, community-focused values.
4.7 To conclude, Tomorrow's People would
urge the Government to engage the private sector in interventions
that are business-led, community focused and individually tailored.
Government investment in accelerating the Employment Bond will
provide both commitment and capital for supporting such schemes.
Tomorrow's People believe these strategies will help people maintain
and develop their skills and hence their employability, and to
be ready to take advantage of improvements in the labour market
as the economy returns to growth.