Select Committee on Work and Pensions Third Report


III.   Regional Features and Variations

26. Within the generally acceptable national economic situation and encouraging employment statistics there are some quite wide regional variations. This is particularly the case in areas with a historically high proportion of employment in industries that have been in decline, such as manufacturing. As Mr Andy Westwood of the Work Foundation told the Committee:

    "If we really want to crack full employment now then we have to do it via a more regional route. ... we have the highest employment levels for 30 years, the highest number of jobs in the economy ever. I think it is slightly difficult to say on the one hand this is a remarkable success story, ... and also to admit that in essentially deprived areas...there is a problem and there needs to be a hell of a lot more done in particular parts of the country."[18]

Mr Nathan of the Work Foundation agreed "that a lot more needs to be done at regional level".[19] Mr Westwood drew attention to the fact that:

    "the greater problems experienced by particular people in particular parts of the country, particular parts of cities and towns have been exposed more and more as the people who are relatively easy to help have been helped into work via the effect of the current economic cycle. What has been exposed are the harder to help both in terms of individuals and in terms of particular locations within the country."[20]

27. There has been a tendency for the Government to downplay the regional variations. Mr Webster of Glasgow City Council when asked for potential solutions to the regional differences said that:

    "The most helpful single thing that the UK Government... could do would be to stop saying that there are not any important local jobs gaps and start saying that they expect all levels of government to promote maximum employment growth in the areas which have the most difficult labour markets."[21]

Mr Reeves, Chairman of Tomorrow's People, felt that the Government did not have sufficient flexibility at local level:

    "They are too tightly constrained. There is not enough flexibility. It is almost inherent, when we are dealing with Government money. It is almost inherent in the process that nobody trusts anybody."[22] Mr Charlesworth, Managing Director of the Shaw Trust, agreed.[23]

28. Another worrying aspect of the local variations is the effect on local communities when a large employer closes or is forced to make large numbers of workers redundant. In order to establish how well the Government's strategy had coped with such a sudden surge of unemployment we took oral evidence from the Trades Union Congress, the Transport and General Workers Union, the East of England Development Agency (EEDA) and the Luton Vauxhall Partnership, concentrating on the measures taken following the announcement of the closure of the Vauxhall Luton Car plant, resulting in the loss of some 3,000 jobs in the Luton area. There was general acceptance that the arrangements which had been made were good. The Luton Vauxhall Partnership had been set up with four main aims:

    "to look at re-training and re-skilling the Vauxhall workers. Second, to look at the effect on the supply chain and local businesses. The third aim was to create new job opportunities to replace those lost at Vauxhall in the supply chain. The fourth was to get external funding to do it."[24]

29. There had been some difficulty in accessing the necessary funds for the last of those aims and the Partnership had encountered one major problem as described by Mr Hart:

    "in terms of rapid response...we got into a Catch-22 situation at Vauxhall. Vauxhall did not want to issue compulsory redundancy notices, final notices. We had agreed at European level and with the company that they were going to do everything possible to avoid compulsory redundancies; whether by redundancy terms, movement to a plant next door or volunteers, they wanted to avoid any person being made compulsorily redundant, so they did not want to issue compulsory redundancy notices.... That meant that the monies could not be triggered because that required a redundancy notice. So Vauxhall was doing the good thing and this was causing problems in getting a lot of the things off the ground. That standoff lasted for some time and it really does seem absolutely daft that that happened. If there is one thing you ought to have a good look at, it is whether there are ways of short-circuiting that. A factory was closing, there was no two ways about it, it was going to close and it had been announced. That apparently was not good enough to trigger the money from the Rapid Response Service."

30. We agree that similar situations should be avoided in the future. We would expect the Government to have appropriate policies to deal with large-scale redundancies such as those experienced in the steel and car industries. In particular, the current "Catch-22" situation which means that the full range of Government assistance can only be given once redundancy notices have been issued, should be urgently reviewed.

31. Looking at the wider picture of local and regional differences, the Minister agreed that:

    "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."[25]

Each region had been asked to produce their own employment and skills framework to inform policymakers. The Minister believed that "the Great Britain policies which the Department pursues are sufficiently flexible to take into account local situations".[26]

32. We welcome the acceptance by Government that within the generally positive employment situation, there are areas which are doing less well. We recommend that the employment and skills frameworks produced by the LSC and the RDA should be used to anticipate the skills and support required in these areas, and allow greater funds for Jobcentre Plus to go to those areas likely to experience, or experiencing, greater problems.

33. Another symptom of local differences is the situation which applies in some major cities such as London where there is a rapidly growing population, but also high levels of non-employment at the same time as a tight labour market with skills shortages and bottlenecks acting as a drag on the local economy. Mr Brown drew attention to the improvements likely to result from the roll-out of Jobcentre Plus, but accepted that much of the outreach work was new for the Government and agreed that the Department would learn lessons which might well have wider impact.[27] We drew the attention of the Minister to the poor take-up in London of the Working Families Tax Credit and he agreed to look at the problem:

    "I have to confess that the take-up point in London is new to me and I will have a look at that myself. It may need something simple like a take-up campaign or making sure it is properly explained if there is an issue there with lone parents, which is a possible explanation, then I will make sure we have a hard look at that as well."[28]

34. We welcome the Government's commitment to investigate the question of poor take-up in London of the Working Families Tax Credit. As the new tax credit arrangements come into effect, we recommend that detailed monitoring of take-up in London continues, until this regional variation is fully explained and eliminated.

18   Q. 36. Back

19   Q. 36. Back

20   Q. 32. Back

21   Q. 71. Back

22   Q. 142. Back

23   Q. 143. Back

24   Q. 173. Back

25   Q. 315. Back

26   Q. 315. Back

27   Q. 318. Back

28   Q. 321. Back

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