Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 200 - 219)



  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 is high.

Mr Mitchell

  201. What are the mechanisms?
  (Mr Beatson) Local discussions between business links and Jobcentre Plus.

Mr Dismore

  202. That happens in these disadvantaged areas as well as more generally, does it?
  (Mr Beatson) There are ways to ensure that that is happening.

  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.[3]

  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 labour market.

  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 Skills Councils?
  (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 too.

  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.

Mrs Humble

  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 Councils—it is in your memorandum as well—have responsibility for the delivery plans but do they have a direct responsibility for delivering the service or is it part of this collaborative working?
  (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.

Mr Dismore

  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 employment legislation?
  (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.

Mrs Humble

  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 3B—Black 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.[4]

  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[5] 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 as well.

Ms Buck

  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.

Mr Goodman

  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 point.[6]

  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 nationally.

  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

4   Please also refer to the supplementary memorandum submitted by the Department of Trade and Industry (ES 16), Ev 143. Back

5   Advisory Conciliation and Arbitration Service. Back

6   Please refer to the supplementary memorandum submitted by the Department of Trade and Industry (ES 16), Ev 143. Back

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