Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 304 - 319)




  304. Good morning, ladies and gentlemen, may I call the Committee to order and welcome the Minister for Work and Pensions, Nick Brown, together with Leigh Lewis, who is the Chief Executive of Jobcentre Plus. They are ably assisted by Michael Richardson, who is Director for Work and Welfare Strategy in the Department for Work and Pensions. Gentlemen, welcome. We do have some important implementation issues and we do understand the scale of the departmental change and implementation measures are there for all to see, but I do think—and I only speak for myself here—that in the course of the evidence we have taken we have not seen any coherent objections to or differences with the strategic direction which the Government are taking. I suspect that the report we will publish as a result of this inquiry will probably reflect that. That is not to say that there are not still some very important, significant questions we should like to probe you on today. Would you mind if we go straight into questions?

  (Mr Brown) No, that is absolutely fine by me.

  305. I want to start with two questions. One about departmental co-ordination and one about Plan B if the economy goes wrong. We took some important evidence—and thank you for assisting in organising it—from some of your sister Departments. It is clear to us that one of the elements of success if this employment strategy is to work out the way we would all want it, is that the departmental co-ordination throughout Whitehall has to be as good as it possibly can be. You are obviously the lead Department. Could you just tell us a little bit about the network you have underneath the Department for Work and Pensions to give you the confidence that you need to have as a Minister that all the co-ordination that can be made to work is being made to work at the moment, or whether there are bits and pieces which you still have to do by way of improvements. Could you say a little bit about that, please?
  (Mr Brown) Let me say a few words about the ministerial arrangements and then I will ask Leigh to say something to you about the arrangements between our officials across Government. Our relationships with other Departments of Government are absolutely crucial. Of course most important are those which we work most closely with, that is the Treasury and the Department for Education and Skills. Co-ordination between the training programmes and our own endeavours to get people into work is absolutely crucial. There is a formal ministerial committee on which I sit, along with the Minister with responsibility for skills in the Department for Education and Skills and the responsible Minister from the Department of Trade and Industry as well, because they also have programmes which operate at regional level.

  306. How regularly does that meet?
  (Mr Brown) Quarterly at ministerial level, but of course there is an enormous amount of follow-up by officials. It is a new formal arrangement within Government and I think absolutely necessary, not least because the drawing together of the Employment Service and the work of the former Benefits Agency has necessarily fractured that working within a single department between the Employment Service and those with responsibilities for skills. That is not all there is to it. There are regular bilaterals between myself and Lord Falconer as it was, looking at the regeneration programme, the single regeneration budget, and those important mostly urban initiatives focussed on areas of deprivation. Although the initiatives are area based, whereas the service we offer is of course people based, we are focussed on making sure that where the need is the greatest we have the programmes in place to meet that need. We are also looking at rehabilitation, reaching out to those who feel they could do some work, if the necessary support were available. That involves meetings at ministerial level between myself, the Department of Health and the responsible Minister in the Department of Health and the responsible Minister from the Department for Local Government and the Regions as the sponsoring Minister for the Health and Safety Executive. We are looking at that range of issues as well. Underneath this ministerial structure, there is a whole network of officials who are working alongside each other to prepare papers for the meetings and also to make sure that where we have a joint interest we are making representations within Government jointly.

  307. Perhaps Leigh Lewis could expand a little on co-ordination at official level.
  (Mr Lewis) This operates very much at a number of different levels. At national level, Jobcentre Plus is a young and new organisation, still less than three months' old as a national organisation, but very much seeking to establish strong working relationships with other arms of government, both Departments and executive and delivery organisations at national level, taking on and following through the kinds of relationships that both the former Benefits Agency and the former Employment Service had. For example, very strong relationships with the Learning and Skills Council at national level, in another area very strong relationships with the Prison and Probation Services in relation to ex-offenders. The other level at which this is absolutely vital is on the ground because it is on the ground, nearer to the point of delivery where so much of the co-ordination needs to take place in a practical sense. There, while it is impossible to say that every single link is perfectly in place, you will find that in particular our 90 District Managers are increasingly very much tied in to local strategic partnerships, to regeneration partnerships, to a whole range of issues and a whole range of co-ordination programmes and machinery. That is very much in keeping with the ethos and values which we are trying to instil into our still very new organisation.

  308. For example, the issue of childcare is important. I want to come back to the substance of that later, but explain to me briefly how the structures you have described at the moment would effectively deal with proper provision of a service like that.
  (Mr Lewis) In terms of childcare, we would operate very closely with other organisations and departments which are operating in that field. A key partner is actually the Treasury because an awful lot of the funding for childcare arrangements comes now through the tax credit system and so on. We will also at local level through the New Deal for Lone Parents have a great many contacts with organisations and providers who deliver childcare. For a lone parent whom one is seeking to help back to employment, often one of, if not the major barrier which a lone parent can face is getting and being able to afford and putting in place adequate childcare.

  309. So there are links at central and a local level.
  (Mr Lewis) Exactly so.

  310. What happens if the economy goes wrong? I do not think anybody would be expecting you to change the strategy at all; maybe you would say you have enough trouble trying to make sure the system works when the economy is reasonably stable as at the moment. Do you have any special provisions or is anybody doing any thinking about what to do if the economic indicator starts to indicate that the economy is approaching a difficult period? Would you do anything differently? Is there any fallback position if the economy starts making it more difficult to create more jobs, as it has been arguably over the last few months and years?
  (Mr Brown) I think the answer is that we would do more rather than do anything which was radically different. The first point to make is that whatever the international uncertainties, the United Kingdom economy has come through very well indeed. It is a matter of fact that there are more people in work in the United Kingdom economy than ever before. That does not mean we should be complacent, but it does suggest that the macro-economic framework and the proactive intervention of the labour market are showing every sign of being the right policy and working very well for our country. I do not think we would change it. If there were jobs fallout, which is what your question is about, in other words if jobs were to be lost in the economy, would there be new jobs there as well? If there were, then clearly we would redouble our endeavours to get people into them. Certainly there would be an upturn in people signing on for Jobseeker's Allowance. The Government's response would be to try to get them back into the labour market as quickly as possible. I guess the only other point is what about our programmes for the hardest to help, because they are usually the people most affected by a loosening of the labour market. No, we would press ahead with our programmes for social inclusion reasons as well as wanting to make absolutely certain that everybody who could work had the opportunity to do so.

  311. That is fine. I do not want to put words into your mouth, but would it be right to say that if things started to look as though they were going to get more difficult, you would not wait for it to happen before you started strengthening your efforts.
  (Mr Brown) No, the structure is pretty robust. It could certainly cope with increased numbers.

  312. Would you be pretty confident that your colleagues in Government, your ministerial colleagues, particularly in the Treasury, would understand, if things started to look as though they were getting a bit troubled from an economic point of view, and that you would get extra consideration if you went in and said you wanted more money?
  (Mr Brown) The crucial point would be whether there were still vacancies in the economy we could help people into. There will be caveats about precisely where they are located and which industries the fallout had come from and which sectors the new jobs were available in. Having said that, the present programmes we are pursuing would be the right ones, even in such circumstances.

  313. It is true that the availability of vacancies is an important question, but there are regional variations in that.
  (Mr Richardson) May I just add a quick gloss to the Whitehall co-ordination among officials? There are six areas which I regard as being crucial to making a success of Welfare to Work and vice-versa, mutually reinforcing: regeneration, health, skills, employer relationships, transport and childcare. Unless you are getting those right as well as delivering Welfare to Work effectively you are running to stand still. There is a whole network of officials, some regular meetings, some ad hoc, and informal contact all the time on all these areas, designed to try to ensure that the development of major national strategy and local implementation are as mutually reinforcing as they possibly can be in areas where the neighbourhood renewal fund works, in England and comparable areas in Scotland and Wales, for example on crime so that the Home Office's initiatives and the street crime initiative take as full advantage as possible of the contribution Welfare to Work programmes can make and Nick is much involved in that at ministerial level too. On skills, both Ministers and groups at official level groups and working with the Learning and Skills Councils. On transport, because of the importance of transport and being a barrier to work for these people, the Social Exclusion Unit is actively engaged on that as well. On childcare, there is an inter-ministerial group as well as co-ordination at the local level between Jobcentre Plus and the Early Years Development Partnerships to try to ensure that the supply of childcare places keeps pace with the expectations we have of the employment of single parents and others with children. It really is pretty intensive. I am sure it can be further improved and we are constantly working at it, but the intention is very much there in all these fields.

  314. Will these groups meet quarterly as well?
  (Mr Richardson) In some cases more regularly. I am a member of steering groups in the DfES looking at skills and childcare strategy and vice-versa. There is an interconnecting network. I am on the board of the Health and Safety Executive's Securing Health Together ten-year strategy to look at ways in which we can improve occupational health and rehabilitation activities and so on. I do not want to be too complacent, because I am sure we could do better, but the intention on the part of all the relevant officials is to make those areas as mutually interlocking and reinforcing as possible.

Ms Buck

  315. Can you tell us a little bit about how you see the inter-regional, sub-regional differences in the way the labour market is performing at the moment? How are you monitoring and shaping the strategies to deal with this? Clearly there is a national policy and in your memorandum you are upbeat and positive about it and quite rightly so. Clearly there are significant and sharpening regional and sub-regional differences in some of this. Can you tell me how you are monitoring that strategically and where you think that is taking us?
  (Mr Brown) There is a range of issues here. The core problem relates to the employment base of the regions and in particular with the substantial fallout from employment in the more traditional heavy industries, mining, ship building, steel, where communities have been very reliant on a single large employer and that employer just is not employing the numbers they used to. That has had a dramatic effect on local communities and often accounts for the differences in employment levels within regions as well as between regions. The good news is that the claimant count is falling fastest in the regions of traditionally high unemployment and that the gaps, though they are still there, do seem to be narrowing slightly. In terms of numbers in work and numbers claiming unemployment benefit, we cannot be complacent. Each region has been asked to produce their own employment and skills framework strategy to inform regional policymaking and we believe that the Great Britain policies which the Department pursues are sufficiently flexible to take into account local situations.

  316. I am completely sympathetic to the point you are making about the areas traditionally dependent on single industries. However, if you look at where your memorandum accepts that unemployment has risen, and the three areas where it has risen are in London, in the South East and in Scotland, there are very different patterns behind certainly two out of three of those. In London and the South East you also have the complementary problem of skills shortages and bottlenecks. What is the strategy? You chose to talk about the traditional model of high claimant count areas. What is the strategy for dealing with this extraordinarily difficult problem?
  (Mr Brown) Take London as perhaps the best case, it is true that there is a slight rise on the ILO measure for London. It is also true that the number of people in work in London has grown and the reason for that is that the population of London as a whole has grown. The real question seems to me to be this. Why in what is a relatively tight labour market in London and the South East are there pockets of real deprivation and pockets of long-term unemployment? Why is it that although the labour market is tight, there are people who work within the travel-to-work areas who just cannot get into the jobs? There is a range of reasons for that: the skills match, the skills the people who are out of work have and the skills which are sought in the labour market are part of the issue. Transport is part of the issue. Travel to work and the cost of travel to work and the time it takes are part of the issues which need tackling. There are also some other frankly pretty unhappy factors and it would be wrong of me not to mention race. All the evidence suggests to me that there is still real racial discrimination in the labour market and that ethnic minorities are disadvantaged in the labour market for other reasons not directly connected to race but still disadvantaging them. In our newer New Deals we have a programme which I think we will learn some lessons from, but it ought to be able to have an impact on this situation. Our work with employers as well is as important as our work with those who have responsibility for training, in other words making sure that those who are out of work have the skills to get them into the jobs we know are there. In other words, there is no simple answer to this, it requires a pretty robust intervention, outreach work, proactive work from ourselves.

  317. I think we do hardly any outreach work. As someone who represents one of those constituencies with very, very high levels of deprivation, at least in a large part of the constituency, there is virtually no evidence of any outreach work at all.
  (Mr Brown) The new New Deal, the one which is focussed on ethnic minorities, is designed to remedy that deficiency.
  (Mr Lewis) The programme is designed to reach out in particular to people from ethnic minorities who are outside the system, probably operating in the five major conurbations which do have the largest proportions of ethnic minority people living in them. London is predominant amongst them. More generally, just to echo what the Minister has said, what we are trying to do more and more is to be in the business of devising and helping to play our part in local solutions to local problems because a one-size-fits-all approach clearly does not work with a myriad set of labour markets and local circumstances which we face nationwide. There are always going to be some things which are set down and will be rightly the same wherever you go, but there are lots and lots of ways in which we can increasingly tailor what we deliver to meet local circumstances. To give one specific example, simply because I saw it myself, we have put in place arrangements with the British Airports Authority at Stansted Airport, where there is a big demand for people but Stansted sits in an area with very few people actually living in its immediate neighbourhood, with the train company concerned, which is enabling people to move from relatively deprived parts of London to take jobs at Stansted Airport, to cover the travel costs, that is a free travel element and then a reduced travel element, to respond in two ways, to a need for people by employers at Stansted Airport and parts of London where there are people without jobs. That was not a centrally devised programme set down by somebody sitting in London saying "Let's work that out". That was very much an initiative of ourselves and our partners working on the ground.

  318. I absolutely applaud that and there is no question I am an absolutely zealous advocate of regional programmes. We do have some very, very good practice and I have good practice examples locally as well. My concern is that if you take London particularly—and I will be local for a second as a London MP—it is the major economic region in the United Kingdom and the scale of the problem is such that we have a rapidly growing population, we have massive unemployment if you take the region as a whole, at the same time as a tight labour market with the skills shortages and bottlenecks acting effectively as an economic drag on what should be the economic energy of the country. I am not sure, and I am looking for an assurance, that the scale and intensity of those problems are being matched by the scale of the programmes. Talking about local initiatives is excellent but it does not add up to a reflection of the demand for what needs to be done. I am not sure that it does.
  (Mr Brown) The mainstream services of the Department are being enhanced through the Jobcentre Plus rollout. Although it is a programme over a number of years it is remorseless. I think you visited one of the new Jobcentre Plus offices as a Committee and there is a remarkable change in the way in which the services are offered, indeed the physical surroundings as well, from where we were in the past. At the same time we are testing these targeted programmes, and the one for ethnic minorities is perhaps the best example, to try to get at those bits of the labour market which are exactly as you describe. Despite the fact that the labour market overall is tight, groups of people seem to find it intractable and we need to make sure we understand exactly why that is so. Skills will be part of it, the ability to get in through the front door for some of the jobs may well be a part of it as well, the need for support and encouragement and explanation, for advocacy, all of those things will form part of the solution. This is something pretty new for Government. The outreach work we are proposing just has not been done before, certainly not in the systematic way we are going about it. I do think we will learn lessons from this which will not only endure in shaping the response of Government, but may well end up as part of the mainstream service.

  319. Did it worry you at all that programmes such as the Working Families Tax Credit are not taken up in London to anything like the same extent as they are in other poorer parts of the country?
  (Mr Brown) I did not realise that was so. Yes, that would worry me. Working Families Tax Credit (WFTC) is one of our best policies.

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