Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 340 - 359)




  340. Some of the targets you have set yourselves in the White Paper, for example for the lone parent 70 per cent over a ten-year period into work and also in the area of disability, again a sensitive area, there is a lot of fighting talk in the tabloid press. They say it is all froth and it is not really inspired by any serious consideration within Government. Can you say to us whether you are expecting any advice to be put in front of you in the near future which would change, toughen or soften the sanctions regime as it currently exists?
  (Mr Brown) I can certainly say that there is no advice in front of me at the moment.

  341. You have no plans. A couple of weekends ago the Sunday press were saying that the Prime Minister was going to get his jacket off and really knock some of these people into shape. It worries people sick, particularly the lone parents and people on Incapacity Benefit. They assume somebody is going to arrive with a big stick.
  (Mr Brown) For what purpose?

  342. To sanction them if they do not take work.
  (Mr Brown) We do that now, do we not?
  (Mr Lewis) We certainly do. For people who claim Jobseeker's Allowance the sanctions regime is in essence the one which has existed for many years. It requires people to be available for work and actively seeking it.

  343. Your body language is answering the point. You look so puzzled about it.
  (Mr Brown) I am not sure what the question is. If you are asking me whether there is any advice in front of me, no, there is not. I cannot sit here and say it will never come.

  344. No and I would never expect you to do that. It is not meant to be a clever question. I am trying to get some reassurance for people who are reading some pretty worrying, for them, tabloid headlines. No active consideration is being given by Government to tightening up any sanction regimes which may exist at the moment. You have said that as far as you are aware there is none.
  (Mr Brown) I can certainly say there is no proposal in front of me at the moment. I cannot say that no proposal will ever be placed in front of me, nor can I keep a running commentary on whatever appears in the tabloid newspapers.

  Chairman: I would never ask you to do that, that is for sure.

Mr Goodman

  345. May I start by asking an expanded version of the question which James Purnell asked a few moments ago because he asked it specifically in relation to education? I want to ask it more widely. Are there any plans at all at the moment to modify the earnings disregard arrangements, particularly with regard to the 16-hour rule?
  (Mr Brown) We have received representations about it.
  (Mr Lewis) No, I do not want to add anything to that at the moment. There is always a balance in this area because on the one hand an awful lot of people would think it right to allow people who cannot secure perhaps the job they want or full-time employment or are not able for various reasons, say they are a lone parent, to work full time to be able nevertheless to engage in some employment and receive some income when they would otherwise not be active in the labour market. On the other hand there is inevitably a balance because that can reduce the incentive on someone to seek a permanent full-time job in the labour market. I am not aware myself that we have plans to make further changes at this moment.

  346. That seems fairly clear. May I turn to some points made to us by other witnesses who have given evidence? Keith Faulkner, who is the Managing Director of Working Links, said that there is insufficient funding "to do new things, to encourage people with new ideas". Do you think that is fair? Do you think more could be done to make funding flexible at the point of delivery?
  (Mr Brown) When I said that relationships between ourselves and our major partners are on the whole good, they are. Probably the largest single issue of contention between the Government and the Department and the organisations which provide services for us, which run our schemes, is about money, about contracts. There are differences of view, as you would expect, between those who are bidding for the schemes and those who have to take proper account of the interests of the taxpayer. On your specific point about whether that is effectively seed-corn funding, money to experiment, I am not aware of there being a specific problem there. I am not aware of a specific problem being put to me in those terms.
  (Mr Richardson) Keith Faulkner is referring most particularly to employment zones and to action team contracts which he has. It is a worry that we get from most if not all our private sector providers. We have a thing called New Deal Innovation Fund which does provide seed-corn money for stimulating innovation in the New Deal and we have now had four rounds of bids for it. The poor level of so-called innovation that these bids have drawn forth has been a grievous disappointment actually. It is not fair to say that there is no money around for seed-corn innovation. What do not seem to be around to the degree we should like to see are fresh ideas which are genuinely innovative.
  (Mr Brown) You see the difficulty. Ministers do not want to get drawn too closely into agreeing specific schemes, saying whether they should be funded or not or sorting out the terms and conditions of the contracts. Frankly it is about public money.

  347. What you are saying is that at the moment you do not have any plans to change this balance between the element of accountability you must have —
  (Mr Brown) No advice has been put to me that I should and I should be pretty reluctant to do it as a political decision.
  (Mr Lewis) It is perhaps worth saying, and I should almost declare an interest because Jobcentre Plus as a proxy for Government is a third owner of Working Links, that Working Links itself is a huge innovation. Here is a public/private partnership successfully operating Employment Zones and other programmes in a way which probably would have been thought of as unimaginable, certainly when I joined the Public Service it would have been thought unimaginable, yet it is working and working well.

  348. May I move on to something else Mr Faulkner said to us even though he may not have said it to you?
  (Mr Brown) I hope he does not sound too negative about this. I am a big supporter of Working Links.

  349. He was concerned about people "bouncing along at the bottom of the labour market". I think what he meant by that was people who move in and out of work but are not being supported sufficiently to keep them in work. Do you think there is this group of people and what more can be done to help them get in to work and stay in work?
  (Mr Brown) The question is really more about keeping them in work than getting them in work.
  (Mr Lewis) Any group which works with people who have been out of the labour market for a long time will recognise this phenomenon that there is a group of people one can help into work, but they tend not to stick in those jobs very long. They tend, for whatever reason, to fall out of those jobs and they appear therefore through your doors quite frequently. If there were a simple magic wand to wave as to how to ensure that people not only obtain jobs but sustain those jobs, we would all have waved it by now. An awful lot is about being realistic about expectations and getting the match right in the first place. If you get the match right between the job and the individual, all the evidence shows that it is much more likely that they will then be able to sustain that job. There is something else as well which all of the employment zone providers, and they have a retention target built into the way they are funded, have been operating very successfully. All the evidence available to me is that it is the first few weeks which are absolutely critical. It can sometimes be the first couple of days, where somebody goes into a new job, particularly if they have been out of the labour market for a long time and it just goes wrong and it falls apart. It is in that early stage where an adviser who is still working with the individual and the employer can just keep it on the road, keep it on track. Then, if that employment relationship begins to endure beyond one week, beyond two weeks, beyond three weeks, it starts to endure on average for much longer.
  (Mr Brown) Two important aspects to this: the relationship with the employer, that the employer is aware that the employee needs proper induction into the work and making sure that they can cope with all the tasks. The other idea which seems to bear some fruits is mentoring, having a buddy system so that a work mate can just be there to help people along, show where things are and all the social interchange that we perhaps too easily take for granted.
  (Mr Richardson) We are also piloting eligibility for New Deal for people who have been unemployed 18 months out of the previous 36 because there almost certainly are people who bounce in and out and who never clock up enough sustained period out of work to qualify for New Deal support. That may well teach us quite a lot about the group you describe.

  350. What is the timescale for those pilots?
  (Mr Richardson) From memory they are due to start in October. We shall look at them over a year to 18 months.

  351. When we were in America last week we visited one of 100 community investment funds in the city of Philadelphia, the Reinvestment Fund of Philadelphia. What it does basically is take money from investors and put it into community projects, housing, workforce training, etcetera. It seemed to me, and other members of the Committee I am sure, that this is a terrific way of getting private money in to help very disadvantaged people and levering them into the labour market. Do you have any plans to try to develop similar institutions here? There must be terrific scope for this sort of enterprise.
  (Mr Brown) What we do at the minute is perhaps similar. There are area-based initiatives with specific funding behind them which work alongside the services the Department provides. In the areas where the outlook is the hardest, almost all of those are covered by one special programme, either an employment zone or an action team or Jobcentre Plus or some other specific programme designed to enhance the services we provide. Remember we are a people-based set of services rather than an area-based one. It is how we draw these things together that we have put quite a lot of energy into.

  352. How far are you working at expanding those tighter schemes in such a way as to get more private money in?
  (Mr Brown) There are certainly area based initiatives in the areas of inner city deprivation. I am not sure how far the private sector element parallels what happens in the United States. I am not familiar with the American experience.

  353. Since you are not familiar with it, do you not think it is something you should be more actively interested in?
  (Mr Brown) Shall I go on a visit to America as well?
  (Mr Richardson) There is activity of this sort going on, sponsored by DTI and Treasury as part of the follow-up to one of the action team reports after the Social Exclusion Unit's report on social inclusion about three years ago to try to stimulate more community based activity and loan funds particularly. You get a combination of public and private money which can then be recycled to local enterprises in order to facilitate business start-ups in areas where no banks will lend money. The DTI's Phoenix Fund is also trying to do the same thing. You took evidence from the DTI, so you will have heard something about it. It is fair to say that there is embryonic activity of that sort around and about the place which will be part of the network of reinforcing mechanisms which I was trying to describe earlier taken alongside the efforts we are making directly with individuals.
  (Mr Brown) The principal role of the Department, if new jobs were to be created, would be to encourage local people into them.
  (Mr Lewis) May I just correct one thing which was said? The pilots which Michael Richardson referred to which will test people where someone has been unemployed for 18 out of the last 36 months will start in April 2003.

Andrew Selous

  354. This particular fund in Philadelphia Paul Goodman was referring to had raised $20 million from banks and insurance companies, big employers, private money which had come in to work alongside what the State was doing. I just wanted to give you an idea of the scale of it. We are not talking about £50 donations from local banks. It was being invested on behalf of investors who were prepared to get a less than market rate in order to help people back into work. From the evidence we were given, it was making a very serious impact in Philadelphia. May I press you again to look at that area and learn lessons from the United States?
  (Mr Brown) I promised to take an interest in it, but actually these are questions which would be more properly put to a DTI or Treasury Minister. It is not really in the remit of my Department.

  355. Its specific remit was to get people back into jobs, so I would suggest that it is something your Department should take an interest in, because it was specifically work focussed.
  (Mr Brown) Yes, I shall take an interest in the schemes Michael has described and also see whether there is something from the American experience you described which would help us in our regeneration policies. We are as committed to that as the other Departments of Government are. I must say again that we are not the Department for a scheme of that kind.


  356. I was also very impressed by the Reinvestment Fund that we saw in Philadelphia and what it did. We have brought back some material and we can send it along to you, if you would not mind.
  (Mr Brown) No, that would be very useful.

  357. You are probably right that the focus may be in other Departments but the whole area of corporate and social enterprise and all the rest of that could give more of a lead, perhaps via other Departments, to open doors.
  (Mr Brown) I am not ideologically opposed to the idea. I have an open mind on the subject. I must just be careful to stick to my own ministerial remit.

  Chairman: You are allowed to do that.

Mr Dismore

  358. One of the things you emphasised was that one of the purposes of the whole thing was to get people into sustainable work. Leigh just mentioned that people do tend to fall in and out of jobs. What you said was that if you get the match right, the evidence shows that people can sustain jobs. One of the concerns I have is that when New Deal first came along, I went to my local Employment Service as it then was and was astounded to find there were no real statistics taken of people who were placed in jobs and how long they kept those jobs beyond three months. That was a point also made by Mr Faulkner, that there were no real mechanisms available for measuring job sustainability after 13 weeks. What are we doing to try to keep statistics on job sustainability? What are we doing to try to improve job sustainability? You made that statement but on what evidence do you base it if you do not keep statistics to prove it?
  (Mr Brown) We will; we are not in a position to do it yet. We will at some time in the future as the technology is upgraded be able to know a lot more about the labour market, people who are in work as well as people who are out of work, than we do now. The reason for the deficiency is obvious. All the while you are providing services, you know that people who are claimants are there and when they cease to be claimants or coming in for the services, you are not entirely sure what has happened to them. It is possible to trace where people are from other information which is available to other Government Departments. For reasons of compatibility of the computer systems and the legislative framework, we cannot do that at the moment. I understand that it will be a practical possibility in the not too distant future, although there is clearly still an issue to be discussed about how far departments should share information, even if it is anonymised for the statistical purposes you are perfectly properly referring to.
  (Mr Lewis) Let me say what we do know and what we do not know, which is perhaps helpful. We have a proxy measure, not a perfect measure. We know whether someone, in particular someone who has been claiming Jobseeker's Allowance and ceases to claim because they enter employment, comes back on Jobseeker's Allowance within a given period. We know whether they come back within four weeks or 13 weeks or 26 weeks. That is a fair proxy, because it is a reasonable assumption that if people do not come back onto Jobseeker's Allowance, they have sustained employment, but it is not a perfect measure because people can do other things. They can drop out of the labour market or move or whatever. It is difficult actually to measure whether once somebody has gone into a job, they actually stay in that job and we do not have perfect computer systems which talk to one another. You ask me on what basis I can make the statement that the match works and somebody is in that job for a week and two weeks and three weeks. The basis for that statement is what my own staff tell me as I go round and talk to them. I spend an awful lot of time doing precisely that. They are very close to the people they are seeking to help and to local employers and that is overwhelmingly their perception.

  359. That is an empirical view rather than one based on firm evidence.
  (Mr Lewis) It is not a view I would put forward as based on statistically provable evidence, but I have quite a lot of trust in the people who work for me and they know about these things.
  (Mr Richardson) There is some evidence from survey work. The problem in this is the virtual impossibility of tracing people on any statistical basis once they have left the benefit system. There is legislation before the House at the moment which will enable us and the Inland Revenue to talk to each other so that we can trace people's employment record over a long time frame and that will for the first time enable us to get a handle on this. It will take some time for it to come into effect.

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