Examination of Witnesses (Questions 200
WEDNESDAY 15 MAY 2002
200. We will come to joined up government later.
If, on the one hand, you are setting up this magnificent service
to support small business and help people start it up and, on
the other hand, the Department for Work and Pensions is trying
to get people into work and you say there are mechanisms, you
are half of that mechanism. If the other half may have systems
and they do not know about them or how to access business link,
there is not much point in providing the service, is there?
(Mr Beatson) It is important to make sure that awareness
201. What are the mechanisms?
(Mr Beatson) Local discussions between business links
and Jobcentre Plus.
202. That happens in these disadvantaged areas
as well as more generally, does it?
(Mr Beatson) There are ways to ensure that that is
203. That is not what I asked you. There may
be ways to ensure it happens but does it happen?
(Mr Beatson) If you want a fuller answer, I will have
to come back to you.
204. Would you like to do that? Can I go on
to the other aspect of small business which is small business
as an employer for established small businesses. How is your agency
helping small businesses engage with the long-term unemployed
and other hard to place, out of work groups? What are you doing
to help the Government's employment strategy through helping them
engage with New Deal or whatever?
(Mr Beatson) One of the roles of the business link
operators is to know about good practice in their areas in reaching
and helping businesses. One of the Phoenix Development Fund's
purposes is to provide examples of innovative approaches to stimulating
enterprise. They are also supposed to know about the demography
in their area, to ensure that all the target groups within it,
including the disadvantaged, can be helped to find work. When
they are engaging through their day-to-day activities with the
small business community, they will also bear in mind, when talking
to them about skills issues, the particular nature of the local
205. Last week, we heard about the prejudices
against people who are unemployed per se and a fortiori
people who are long-term unemployed or who have particular employment
difficulties. That prejudice was from big to small employers,
with a reluctance to take on people in those categories. How are
you engaging small business to persuade them that these people
have something to offer? What exactly is happening on the ground,
rather than in general?
(Mr Beatson) When business link operators engage with
business, to a large extent, they have to deal with the problems
and issues which businesses seek advice on. One of those issues
will be, particularly in many parts of the country, about how
to acquire skilled labour.
206. The problem we have here is that most of
the people we are talking about are unskilled or have child care
responsibilities or disabilities or they may not be particularly
skilled. How are you engaging with the Government's employment
strategy through small businesses to try to deal with that problem?
(Mr Beatson) The problem may start off as being a
perceived lack of skill but one of the potential responses to
that is to say that there are people in the labour market who
have been either long-term unemployed or who have particular needs
and opportunities. Having thought about it, this is a potential
solution to your problem. Indeed, the Government can help through
its employment policies in improving the employability of people
to meet those business needs.
207. Is the answer to this the Learning and
(Mr Beatson) The Learning and Skills Councils (LSCs)
are also part of the local area solutions. The DTI and the Small
Business Service work closely with the Learning and Skills Councils
208. How do you engage, from your end, with
the Learning and Skills Councils to make sure that they are training
people for the vacancies that small businesses try to fill?
(Mr Lauener) You are right about the importance of
the links between the local Learning and Skills Councils and the
Small Business Service. When the Learning and Skills Council was
set up, it covered England. It has 47 local arms but it is one
organisation. One of the things we decided to do at the start,
which was very important, was to try and ensure that, as far as
possible, there was a good match between the 47 local Learning
and Skills Councils and the business link areas for the Small
Business Service. It is not a one to one match but it is pretty
close. That makes the basis for working together quite good to
start from. In addition, the Small Business Service Chief Executive
has the right to attend meetings of the Learning and Skills Council,
which is valuable in ensuring that there is a part of the process
to help build in a level of common thinking. One of the reasons
for doing that was the history of the Learning and Skills Council.
One of the predecessor organisations was the network of Training
and Enterprise Councils (TECs) and many of the Training and Enterprise
Councils ran the predecessor of the Small Business Service local
franchises. In a sense, we were starting from the basis that it
was quite well integrated and we were seeking to preserve that
in the new arrangements.
209. Have you achieved that?
(Mr Lauener) One of the key indicators impacts particularly
on your point about working with the unemployed. I will come back
to that later on in relation to Jobcentre Plus, but in relation
to the Investors in People, which is one of the main areas where
the Learning and Skills Council has a strategic responsibility
for reaching a national target, the Small Business Service provides
the local contact with small businesses and in some cases deals
with the larger employers as well on contracts for the Learning
and Skills Council. That has gone reasonably well. I could find
the figures but the targets for achievements have been quite good.
(Mr Beatson) One of the processes is that business
link operators are expected to contract with their local Learning
and Skills Council in terms of agreeing delivery of services for
workforce development in general, which obviously includes a wider
range of issues than simply taking on and helping the unemployed.
210. Later on, I would like to address some
more issues about the Learning and Skills Councils but, given
what has just been said, can you tell me whether or not the Learning
and Skills Councils have direct responsibility for upskilling
unemployed people in the way that the old TECs did? I am not entirely
clear who has the direct responsibility. You said that the Learning
and Skills Councilsit is in your memorandum as wellhave
responsibility for the delivery plans but do they have a direct
responsibility for delivering the service or is it part of this
(Mr Lauener) The Training and Enterprise Councils,
one of the predecessor organisations for the Learning and Skills
Council, did have direct responsibility for the funding and delivery
of the main programme for training unemployed people which has
been called several things but then was called "Training
for Work". At the point of transfer and setting up of the
Learning and Skills Council, the Government decided it was better
to brigade that stream of funding alongside the New Deal stream
of funding. In England, that money, about a couple of hundred
million or thereabouts, was transferred over to the then Employment
Service, now Jobcentre Plus, and was part of the overall package
of programmes that Jobcentre Plus has available to help unemployed
people get back to work. There are still substantial funds that
the Learning and Skills Council is directly responsible for, about
£2.5 billion of funding for adult learners, and that includes
most of the funding to meet the basic skills target, the 750,000
by 2004. The Learning and Skills Council has to work particularly
closely with Jobcentre Plus for two reasons. One, a lot of the
unemployed do not have basic skills needs and there are new procedures
to screen the unemployed at the six month point to identify whether
basic skills problems are causing difficulties in their getting
back to work and then to feed them through either to the Jobcentre
Plus funded provision or the Learning and Skills Council funded
provision. More generally, there are a lot of other unemployed
people who may not have basic skills problems but they have free
access to mainstream, further education funded programmes in colleges,
although they still need to be available for work.
211. On the issue of employment legislation,
we have had complaints from small business that the restrictions
on employment are inhibiting them creating jobs. What policy does
the Department adopt in relation to trying to address those concerns
when preparing employment legislation?
(Mr Beatson) In reaching decisions about minimum employment
standards, one has to take into account the benefits and the costs.
Employment legislation can have benefits in terms of providing
a clear framework of conditions of employment or to have better
standards for procedural fairness in the workplace. Also, there
may be costs involved, for example, in increasing the terms and
conditions of employees or possibly in terms of administration
and the like. A judgment has to be made about the balance of those
benefits and costs. How that is articulated in public is through
the regulatory impact assessment process. As with all other Government
Departments, when we prepare new proposals for legislation, we
have to prepare an impact assessment which addresses a number
of issues, starting with what are the objectives and what does
the Government aim to achieve. What are the alternatives to regulation
and why is the regulation required? Also, to provide an assessment
of the benefits as well as the costs and, in terms of those costs,
we have to look at the costs if there are issues about improving
terms and conditions of employment. For example, on the national
minimum wage, some employees gained higher pay as a result and
that had to be paid for by employers. We need to look at issues
surrounding the administration issues. These regulatory impact
assessments are published throughout all stages of the policy
process and are open to comment and debate. That is the process
answer to your question. In terms of what has happened so far,
we are conscious the business surveys tend to suggest that there
is some concern about the potential costs or effects of employment
legislation. My reading of that literature would suggest that
in particular concern tends to be focused on the perceived administration
of it, the processes of finding out how to comply and, if necessary,
making any changes to policies and practices and paperwork and
also then feeding through into possibly extra calls for advice.
One of the issues which comes up, for example, is the extent to
which small firms have to use legal or specialist advice. At the
same time, the evidence we have collected so far tends to suggest
that these perceptions of cost tend to diminish over time. In
other words, as businesses get used to the new legislation, the
perceived burden of it tends to decrease. It is difficult to see
in the statistics much evidence for the hypothesis that legislation
has caused job losses.
212. One of the complaints that we have picked
up from people who are in jobsearch, one of the barriers to people
taking jobs, is where they do not feel secure or properly looked
after. How do you reflect their concerns and interests when drafting
(Mr Beatson) That is the benefit side of the equation.
One of the issues which we have been considering in terms of looking
at the case for minimum employment standards and one of the potential
benefits for employees and employers is that there is clearly
not perfect information on the job market. Employers do not know
everything about the people they are taking on. Equally, the people
who are looking for work do not know everything about the business
that is employing them. Certain things may be specified in the
job advert, like how much is the pay and what the hours of work
are, but issues like whether you are going to be treated fairly
or arbitrarily are to a certain extent unknown. There is an argument
there for providing either minimum terms and conditions of employment
like a minimum wage or guaranteed standards on hours worked, or
indeed by guaranteeing basic minimum standards of procedural fairness,
such as the right not to be unfairly dismissed after a year, or
for the proposals coming through in the new Employment Bill. There
are minimum standards of procedure in terms of handling disciplinary
grievance cases. There is an argument therefore that, by providing
basic standards, one improves the information and confidence that
both employers and employees have in the jobs market and that
might improve the matching process between employers and workers.
213. Can I look at what assistance the DTI gives
to minority ethnic communities? I understand that the Ethnic Minority
Business Forum has made various recommendations in support of
minority ethnic business activity, much of which is in areas of
deprivation. I wonder what action the Government has taken on
these recommendations, both centrally and through the RDAs?
(Mr Beatson) The DTI Minister for Small Businesses
announced the Government's response to the Forum report in December
and that response has now been published and is available on the
Ethnic Minority Business Forum website. The SBS is developing
new ways of giving guidance to the New Business Link Consortium.
The SBS sent out a clear message to local outlets about the importance
of delivering their service to ethnic minorities and indeed to
other under-represented groups. In one sense, coming out of that
are examples of best practice such as in business link, London
north-west there is a centre of expertise for ethnic minority
businesses. In Birmingham, forging strategic alliances with a
group called 3BBlack Businesses in Birmingham. The Institute
of Asian Business is a means of influencing ethnic minority issues.
There is a long list of those very locally tailored solutions
to working with particular communities. There is also the issue
of access to finance by ethnic minority businesses. We had a Bank
of England report published in 1999 and the Small Business Service
is contributing towards a research project sponsored by the Bank
of England and the British Bankers' Association to look at these
barriers and to identify practical solutions. That project is
due to be completed in the summer of 2002.
214. I am sure we will be able to look at the
website to see that detailed response. Thank you for that information.
However, there is also a concern about the high rate of unemployment
among members of the ethnic minority communities and the DWP wants
to target that. One of the barriers to employment seems to be
the recruitment procedure itself. I wonder what strategies the
DTI has to ensure that when businesses are recruiting they do
not have discriminatory recruitment practices?
(Mr Beatson) First of all, the Committee may be aware
that the Cabinet Office's Performance and Innovation Unit (PIU)
are conducting a project on ethnic minorities which will be looking
in particular at employment issues. There is already some very
interesting material on the PIU website on the interim findings
about the scale of the problem. The responsibility for discrimination
on grounds of race is not a DTI responsibility. One of our responsibilities
is to coordinate implementation of the Article 13 Employment Directive
which covers tackling discrimination under a range of issues,
including gender, disability, race, sexual orientation, religion
and age. The Department is responsible for implementing legislation
on age, religion and sexual orientation but not on race. Part
of business link operators' briefing in the course of looking
at and getting to know their local labour market and advising
businesses is to keep a careful eye on this issue. Also, if businesses
are seeking advice on their procedures, ACAS
may be a source of advice to them as well.
215. I am interested that there is some collation
of information here. I want to know how accurate it is. To what
extent do you think people are genuinely coming forward and saying
that they have been discriminated against, or are there a lot
of people out there who do not come forward, who do not feel able
to come forward? Is it only a small number who seek redress? How
valid are these statistics that are being produced?
(Mr Beatson) Most of the statistics are looking at
the outcomes. The PIU report on the interim data on the website
focuses on the low employment rates. Ethnic minority groups as
a whole have lower employment rates than whites and some ethnic
minority groups in particular have very low employment participation.
For those in work, they tend to be under-represented in many high
level occupations. There is a potential disadvantage there in
terms of access to work and in terms of issues in the workplace
216. That means I think that there is a tension
between the commitment to reduce the gap between ethnic minorities
and the general population and the area based priorities for employment,
the 30 local authorities with the worst initial labour market
position, virtually none of which are districts with high ethnic
populations. I have always thought this was an extraordinary way
of approaching it because, if you look at the list, only five
of those local authorities have significant ethnic minority populations.
I do not see that it is possible to do the two. I wonder if you
are conscious of that tension and how we might overcome it.
(Mr Beatson) The decision to focus on disadvantaged
wards was taken on some of the broader criteria of employment
and other measures of disadvantage. The mix of ethnic minorities
in those areas is not uniform. At the same time, the Government
has clear commitments to narrowing the disparity between different
ethnic groups and there are a lot of policy instruments which
address those areas, not least the law on race discrimination.
Ms Buck: I accept that. I am just keen to establish
if you think there might be a tension between the two sets of
priorities. I think there is.
217. Can I ask about the Phoenix Fund? Have
the four pilot projects been evaluated yet and, if they have,
what is the result of the evaluation?
(Mr Beatson) The Phoenix Fund comprises a number of
different elements. I will not describe these at length. There
is a development fund to promote innovative ways of supporting
enterprise in and amongst disadvantaged communities. There is
financial support for community development finance institutions,
a community development venture fund and a network of business
volunteer mentoring. City growth strategies and also a development
fund for rural renewal. The pilot phase of the Business Volunteer
Mentoring Association has been evaluated. The development fund
is being evaluated and the interim report will be available shortly.
Evaluation of support for community development finance institutions
is being proposed but arrangements for evaluating other elements
of the funding have yet to be settled. In terms of the outcomes,
it has already been decided that the Business Volunteer Mentoring
Association will go national.
218. When you say these evaluations will take
place shortly, do you know what the timetable is?
(Mr Beatson) I can come back to the Committee on that
219. Are you satisfied that this initiative
which is aimed at boosting employment in disadvantaged areas is
coordinated properly with the plethora of other initiatives which
aim to do exactly the same thing?
(Mr Beatson) That is one of the issues that the evaluations
will have to seek to address themselves in terms of looking at
the process on the ground. The results from the first stage of
that business volunteer mentoring have suggested a positive response
and that is why the Department has decided to implement the scheme
Mr Goodman: If you could let us know the dates
as soon as possible, I am sure we would be very grateful.
3 Please refer to the supplementary memorandum submitted
by the Department of Trade and Industry (ES 16), Ev 143. Back
Please also refer to the supplementary memorandum submitted by
the Department of Trade and Industry (ES 16), Ev 143. Back
Advisory Conciliation and Arbitration Service. Back
Please refer to the supplementary memorandum submitted by the
Department of Trade and Industry (ES 16), Ev 143. Back