Examination of Witnesses (Questions 304
WEDNESDAY 26 JUNE 2002
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 thinkand I only speak for
myself herethat 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
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 evidenceand thank you
for assisting in organising itfrom 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
309. So there are links at central and a local
(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
(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
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
(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
(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.
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
(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
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
(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
particularlyand I will be local for a second as a London
MPit 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