Examination of Witnesses (Questions 80
WEDNESDAY 13 MARCH 2002
80. May I quickly keep flogging this horse,
evaluation, a little bit more and hopefully kill it? I am content,
from what I read in the National Audit Office Report, that more
could be being done to measure and evaluate and it seems to me
odd that you would set up a programme the fundamental aim of which
you could not measure from the outset. It does say in the National
Audit Office Report in paragraph 2.18, "The quality of information
on the programme's performance and outcomes would be improved
if the Employment Service was better able to identify the subsequent
labour market activity". I am looking forward to hearing
the greater detail that you say will hopefully come as a result
of the Employment Bill. One quick question about paragraph 2.13
which says, "Thirty per cent of leavers from the programme
have no recorded known destination". What happens to them
or what do you think happens to them and why do you lose them?
(Ms Lomax) A lot of them go into jobs but they are
not recorded as jobs, for reasons which Leigh can explain.
(Mr Lewis) We do know a great deal and we have done
two major surveys.
81. Do you mean you know a great deal about
the flow out?
(Mr Lewis) Yes; about the 30 per cent of leavers to
so-called unknown destinations. It is worth saying that this arises
because when someone stops claiming a social security benefit
they are not required to tell us what has happened, where they
have gone. They can just stop claiming and no longer appear in
our offices. We have conducted two major surveys in 1999 and 2001
and they have both involved an extensive programme of surveying
people who had left, trying to contact them to find out what had
happened to them.
82. Would you mind sending us a note with a
bit more detail about that?
(Mr Lewis) Yes, I will. The headline figure is that
in each case 56 per cent of those people had gone into jobs.
83. Paragraph 3.19 of the Report says that the
Treasury allocated £3.15 billion for this programme and that
". . . for every £5 spent on the New Deal for Young
People about £3 is returned to the Exchequer through savings
on benefits and increased tax revenue". I make that that
for every £3.15 billion you spend you get £1.89 billion
back leaving a net cost to the Exchequer of £1.26 billion,
which I do not square with £140 million. Does that mean that
not all the £3.15 billion has been spent yet?
(Ms Lomax) It has not all been spent yet and also
the £140 million is a per annum figure and not a total.
84. Yes, but over the five years of this Government
it is £700 million.
(Ms Lomax) How much have we spent? About half. On
a UK basis it is about £1.2 billion so far.
85. One other question about the cost of evaluation.
It says in the Education and Employment Committee Report, admittedly
a year ago, that £4 million to date has been spent on evaluating
the programme, representing some £7 per New Deal participant.
That was a year ago. Could you say what the total cost of evaluation
so far is to date?
(Mr Wells) It is the same number. That was the cost
of the evaluated programme.
86. When you say it is the same number, do you
mean there has been no evaluation in the last 12 months?
(Mr Wells) No, but the money was spelt out in the
£4 million. The £4 million includes the continued evaluation
87. So when this was published in March 2001
and it said "The total cost of the Government's evaluation
programme to date", presumably to March 2001, "has been
(Ms Lomax) My understanding is that that £4 million
applies to the budget for the evaluation over the period 1998-2002,
which will be an ongoing programme. It may well all have been
committed by March 2001 but the research is ongoing.
88. Seven pounds per New Deal participant sounds
quite cheap. If you are spending £3.15 billion, £4 million
is obviously very, very small. If a charity were spending that
proportion on administration they would be hymned to the rooftops,
would they not? Have you thought about spending a bit more on
evaluation to get some more accurate data? The NAO criticises
the Employment Service for not having enough data.
(Ms Lomax) We are spending more all the time. Basically
it is not administration, this is on top of administration, this
is evaluation. It is an enormously elaborate programme by the
standards of most evaluation. The results have been fed back into
policy as we went along. We will spend what we need to spend to
improve the policy.
89. I want to place on record that I am not
very satisfied with the answers about measuring employability.
While I accept a lot of what has been said, it does seem to me
that there are many characteristics of employability which can
be measured, like literacy, numeracy, IT skills, qualifications
and so on. It is disappointing to me that more of that was not
done from the outset. I hope that more will be done from now on.
(Ms Lomax) May I elaborate a little on what I said
before the break, which is that in order to obtain this information
it has to be got from someone somehow, by surveying firms, by
requesting information from individuals? It is not information
which naturally comes to the Employment Service once someone has
gone into work. There is a real issue about what is an appropriate
burden of requests for information, particularly from small firms.
Mr Bacon: I accept that, but £4 million
out of £1.5 billion spent so far does not sound like a huge
burden as a percentage. I only make the point in conclusion that
there is an old saying "If you can't measure it, you can't
manage it". It seems to me that should be there at the inception
of any Government programme involving this sort of expenditure.
90. I thought employability was quite an acceptable
concept in so far as it was to meet a market demand for a skill
at the required level and at an agreed price. What variables we
have in that are pretty easily categorised. From the time I have
spent with the Tamworth office on the New Deal I can only say
that the New Deal transformed the morale of the staff and the
level of motivation of the staff. No longer were they just giving
someone a number and saying "Stand in line"; they believed
they were doing the job they had been employed to do, helping
young people. I am not surprised young people liked it because
maybe for the first time in their life they had someone who sat
down, listened to them and had total interest in them and were
there to assist them, so this feedback is to be expected. The
big difference of course is that unemployment numbers are down.
In some respects I find it churlish if someone says that the economy
is doing well. Yes, but that was not an accident, we had to work
hard at it, so let us take credit on both fronts, shall we? We
did get the numbers down through a number of competing programmes.
I hope literacy and numeracy will be better in future, because
I hope that when the primary school programme is transferred into
the secondary school we do not get the numbers leaving with such
a poor level of numeracy and literacy. One of the things I do
find difficult and I cannot find in the Report and no-one has
asked it yet, is that unemployment is about the number of jobs
available and it is a lot harder to find a job in some of the
Yorkshire coal mining areas than it is in some of the peripheral
towns around London like Slough or Swindon. When you say that
one third of the youngsters have barriers to employment, yes,
but some of those barriers are that there are no jobs in their
areas or region so it is very, very difficult to get young people
into work. If there are employers who want employees they will
take people with lower levels of skill to fill the jobs. There
are certain areas where schools do better at retaining youngsters
to the sixth form and sending them off to university. To me it
seems fairly obvious and should be part and parcel of the programme.
I notice in the programme there are subsidised jobs or subsidised
work opportunities when we get to the harder people to place.
I remember a few years ago people working for the local authority
were almost ring-fenced; they were people we would now call educationally
sub-normal, illiterate, innumerate and they had jobs in the local
authority and they did very, very good jobs. They turned up regularly
and they were very worthwhile employees. Then the rules changed
to become more competitive and they could not compete and they
were put on the scrap heap and that is what happened to us as
a society. So even with this small amount of money we cannot cure
all society's ills. I think we should say that loud and clear.
Do you think as a society, as a Government, we should start to
look at creating ring-fenced employment opportunities within our
(Mr Lewis) In many ways that is a question for Ministers
and Parliament and not for us as civil servants. One thing I would
say is that I would just echo a great deal of what you said in
your question about the impact on the motivation of staff and
on the motivation of young people. I do not think many of the
young people I have met on the New Dealand I have met a
great manywant in a sense to be characterised as a problem
person. They want to feel that they are going to be given an opportunity
to show what they can do. The great strength of New Deal has been
that with the more active support of personal advisers and other
members of staff and other organisations than we have ever been
able to offer before, more young people have been able to demonstrate
to employers that they have what it takes on merit to get the
job with that employer and retain it and leave on a Friday evening
with their pay, with their heads held high. That has been the
great strength of the New Deal and I do not think there are that
many people who want to be put into a category marked "problem
91. When these people disappear without trace
and for all you know they could go into prison and come back a
couple of years later, that is a difficult one which you maybe
cannot know, but one thing you can know is when they disappear
onto another benefit, a disability benefit. Do you not ask yourself
why they are on the New Deal to start with?
(Mr Lewis) Yes, we tend to do that. Sometimes it is
because genuinely people's circumstances change. To give an obvious
example, a young woman may come onto New Deal and then may become
pregnant and may qualify for Income Support as a lone parent;
people's circumstances can change. There are instances where people
might not have been on the right benefit to start with because
they might not have been available for work or actively seeking
it. One facet of the New Deal has undoubtedly been that in some
cases it has helped people to qualify for the benefit they were
more accurately entitled to receive.
(Mr Wells) I should say that the numbers going on
to benefit are a gross number. There will always be people moving
between benefits and that is a feature of all benefits. It does
not necessarily mean that because people move onto another benefit
it is because of the New Deal.
92. I do not want to ask questions which will
elicit fairly self-congratulatory responses, because it is axiomatic
that the New Deal, at least in my philosophy, was a good thing.
I do think that there are unacceptable variations across the country
in the performance of your officials and I want to try to tackle
that. The first thing to say is that there is obviously a correlation
between the difficulty of a particular labour market and the performance
of the units of delivery which you are using to deliver the New
Deal. Even taking that into account, the table on page 38 indicates
very substantial variations and I want to ask how you account
for those variations and whether you think they are as unacceptable
as I do.
(Mr Lewis) Let me say something first. We have spent
a great deal of time since the programme was initiated looking
at variations in performance between units of delivery and we
have gone to great lengths to try to ensure that we were comparing
like with like by putting units together in what we have called
clusters of similar labour market conditions. There is no doubt
that there have been some underlying variances in performance
and, as the Report from the NAO points out, we have gone to great
lengths to try to even those out and bring poorer performers up
to the level of the best. I do not want either to engage in self-congratulation.
I know better than anyone that there are areas where we can still
improve and should. What I do take comfort from is the conclusion
in the NAO Report that actually the action taken by the Employment
Service to improve performance has reduced local variations to
the extent possible and the programme had largely reached its
limit for a reasonably attainable improvement by March of last
93. So you find a 15 per cent differential between
the best and the worst acceptable. It seems to me that for those
poor people out there, the long-term unemployed youths, to be
served by an office which is under-performing by as much as 15
per cent relative to the best is a rather upsetting prospect,
is it not? I think your response is somewhat complacent.
(Mr Lewis) I should not like to make clear that that
was not what I was saying in any degree, because I do not think
it is acceptable for a single person to be long-term unemployed
if we can seriously do something to help them address that. The
issue is at one level below that. It is to what extent those variations
in performance are because of unacceptable differentials in performance
between different units of delivery and to what extent they reflect
other factors underlying labour market conditions. I think what
the NAO Report is saying is that it is the latter much more than
the former which gives rise to those differences in performance.
94. I am not sure whether it is saying that
or not. There has been an attempt to take out the significant
variables so that we are comparing like with like and there are
still substantial differences. Since government is really about
prioritising I just want to try to understand one thing, which
is the following. The normal way that an accountant or an auditor
would measure the performance of a unit of delivery such as these
would be to apply some financial calculations as well as outputs,
because at the end of the day if we are spending a lot of money
to achieve an output relative to another organisation, we are
not necessarily very effective. I wonder whether I can ask the
National Audit Office whether or not they bothered to make an
analysis of the cost per unit. No, you did not. Why not?
(Mr Jones) The cost does not vary very much between
units. We were just looking at the performance in terms of putting
people into jobs.
95. Is that correct?
(Mr Lewis) Inevitably there are some costs which do
vary between different units of delivery where we are putting
in place more intensive provision. What I would say, without seeking
for one moment to suggest we have been complacent about this issue,
is that the Report sets out on page 24 a whole set of means by
which the Employment Service sought to stimulate improved performance
by individual units of delivery. I do not think I have ever lived
through a period in which we subjected units of delivery and individual
leaders and managers in the organisation to more intense scrutiny.
96. Nevertheless, you do have these variations
which I think are unaccounted for. I want to try to understand,
because I represent an area which is an extremely difficult labour
market, the differences in financial provision. It is much easier
to get people into work in some areas than in others. I just want
to understand whether there are variations because the NAO seem
to say that there were no substantial variations between different
units of delivery presumably working in very difficult conditions
and some in less difficult conditions. Without giving me a-long-winded
answer can you try to explain to me how that differential distribution
of finances is calculated?
(Mr Lewis) The very simple answer is that in areas
which have much higher levels of unemployment, there is increased
provision both in terms of the number of personal advisers, in
terms of the amount of provision under the Options. So more will
be spent in those areas than in areas where unemployment is seriously
97. That implies that the average cost per job
at between £5,000 and £8,000 or between £4,000
and 7,000 varies considerably between labour markets. Is that
(Mr Lewis) No, it is not necessarily because that
is saying we will put more provision into area A than area B but
that will normally reflect that there are more young unemployed
people in area A than in area B. It does not necessarily imply
that the units will be different.
98. It seems to me that this is crucial to the
governance of this whole project and its capacity to deliver or
not. Are financial allocations made relating to the number of
long-term unemployed rather than to their employability or lack
(Mr Lewis) The basic allocation is made in respect
of the number of long-term young unemployed people in an area.
That is the starting point.
99. That might account for some of the variations
here, might it? Not wishing at all to denigrate the people I represent
who I think are wonderful, as we all do in our constituencies,
we have acute problems in my constituency. Am I to understand
that the amount of money per young person in an area like mine
would be the same as the amount of money allocated for each young
unemployed person in a place in the more affluent South East?
(Mr Lewis) No. What I was saying was that that is
the starting point of the allocation process but is not necessarily
the finish point of the allocation process. In an area which has
a higher concentration, for example, with people with particular
problems, say homelessness or addiction or whatever it might be,
then we would tend to have greater provision available in that
area. That greater provision tends to have a high unit cost and
that would tend to mean that there would be a higher expenditure
per individual in that area.
2 Ev 21-22, Appendix 1. Back