Examination of Witnesses (Questions 120
WEDNESDAY 13 MARCH 2002
120. If you are on the New Deal and you get
a job you just break out.
(Ms Lomax) Yes; you go. That is one reason why you
might not go all the way through.
121. It seems to me the two basic values of
the New Deal are firstly preparing people and getting people to
get a job through getting them into work habits, giving them skills,
getting them into a job; secondly, increasing their productivity
in the labour market itself. Do we have any reliable measures
of added value productivity in terms of moving people from this
level to that level, or is that rather difficult?
(Mr Wells) It is rather difficult. An attempt was
made in the National Institute and they did suggest that there
may be an increase in productivity in the future. However, it
was very much that sort of caveat ridden conclusion.
122. When you do your cost benefit analysis
how do you compare this person now going into low wage employment
with a situation where they are benefit recipients and you get
these net gains? If you subdivide these into different groupings
and you take, for argument's sake, people who have come from prison,
my understanding is that people in prison are costing £34,000
a year, then within a couple of years of coming out of prison
25 per cent of the men re-offend, etcetera, and there are the
costs of crime and this sort of thing. If you look at that category
of people who have been in prison, there must be an enormous value
in getting them back into work and an enormous cost if they do
not go into work. In the figure work we have seen, are those sorts
of costs factored in or not?
(Ms Lomax) No.
(Mr Lewis) We have not done that very detailed kind
of analysis. What I would say actually is that within the overall
framework of the New Deal, we have worked very closely with the
Prison Service and other organisations like NACRO precisely to
try to ensure that young people in this age group, leaving a custodial
sentence, are able to come straight onto the New Deal.
123. What I guess I am moving towards is that
there would be a strong argument for differential investment levels
in problem cases, in particular those who have a very high social
cost if left to go down the wrong track in terms of drugs and
crime and that sort of thing. Am I right to say that given the
success in the easier to manage people and at an easier to manage
time we are now re-focusing the actual level of investment at
these hard cases? I do not know whether you have any information
about prisons but are you putting extra resource into prisons
versus normal people?
(Mr Lewis) Yes, we are in one absolutely key sense
and that is normally people will not be able to benefit from the
New Deal during their first six months of unemployment. That is
not the case with someone leaving a custodial sentence, who is
able to join the New Deal straightaway. In other ways we will
be putting in differentially increased investment.
124. Is it correct that you can only start your
New Deal after you have left prison?
(Mr Lewis) No.
125. Can they start straightaway or do they
start in prison?
(Mr Lewis) Actually the programmes we have been piloting
with the Prison Service have been helping people from before they
actually step out through the prison doors so that in their last
few weeks and months in the prison serving a custodial sentence,
they are already working in ways which can help them.
126. Good. What about before they step through
the prison doors? What I mean is that 75 per cent of people in
prison have been permanently excluded from school. They get about
five or six hours education a week. Obviously this is a bit premature,
but some of them are hanging around nicking mobile phones some
of the time. Has any thought been given now, as we have got rid
of a lot of the New Deal people successfully and put them in the
market, and you have these training resources, institution, which
actually work, to somehow refocusing on some of these other cases
which would be socially valuable?
(Mr Lewis) One of the initiatives we are taking within
the development of New Deal is to reach out to a group of people
who do not at the moment necessarily even come near the benefit
system and claim benefit but are living in other ways, to try
first of all to make contact with them and secondly to offer them
this kind of support.
(Mr Nicholas) We have done a lot of very good work
with the rough sleepers unit to bring people who are completely
outside the benefit system and at risk into our offices or into
dealing with advisers so that they can become part of the system
and supported into work. The New Deal does not go back into people
underneath the age of 18; there are no proposals for doing that.
127. Is it possible to look at those, or do
you have to have Ministers? You could presumably say you have
all these facilities for helping people, here is a group which
could be helped or would that be inappropriate?
(Mr Nicholas) What we are doing, with the growth of
the Connextions Service, which is the advisory service for 14
to 19-year-olds which focuses particularly on those who have most
disadvantage is to strengthen the links so that people who have
a Connextions Service adviser can move smoothly into support from
the New Deal personal adviser when they get to the age of 18.
So there is no break there. We build on what support they have
had before the age of 18 as well. We try to get a seamless service.
128. I have been putting my questions into how
you could move out your target and backwards in time into the
education system. Conversely, one could argue, in so far as you
are picking up numeracy and literacy problems some of the characteristics
of the people you are dealing with are that they have been failed
by the education system. So you are spending whatever it is, £5,000
a job or £3,500 a person, whatever it is, on these people,
but would that money be better spent in some instances on these
people earlier on in schools? I am not trying to take your budget
(Ms Lomax) The return on spending money is better
the sooner you get them. That is why so much money is going into
SureStart and initiatives like that. You cannot just write off
these people who have reached 18.
129. The advantage we have with your system
is that when they come to you they are individually assessed and
targeted with training and resources, whereas some of these people
have been neglected in the back of classrooms and that £3,500
is being pushed at them when formerly it was just an aggregate
amount of money in a class. Is that a reasonable point?
(Ms Lomax) Some of the education system has not produced
the result it needed to. I also think the other thing the New
Deal is doing, which we have not talked about, is connecting with
employers, what employers want. Sometimes people may have got
basic skills but they are not work ready in many other crucial
ways. One of the key things the New Deal has done is get employers
involved in specifying what they want.
130. I shall move on to that. I am glad you
started talking about that. Basically there is a difference between
the micro interest of the individual, what they need, and the
macro interest of the marketplace, the skills shortage and therefore
how to train these people. To what extent are you getting people
in these Gateways and thinking in terms of market needs of adjusting
that to them rather than saying okay, you have a skills gap here
and let us hope it fits the marketplace.
(Mr Lewis) We are trying to operate in two ways. This
has developed as the New Deal has gone on through the Gateway
to Work courses. We have been trying to ensure that people have
those softer, but absolutely critical skills which employers call
for and require. In one sense skills is almost the wrong word,
it is the ability if the business opens at nine o'clock in the
morning to be there at nine o'clock, to be well turned out, to
be polite to the customer, etcetera. These are absolutely critical
things which employers want and they expect in anyone they are
going to recruit. Those characteristics are not necessarily there
in young people on the day they come through our doors.
131. Basically the idea of work habits and all
the rest of it.
(Ms Lomax) Yes.
132. Normal standards of behaviour in work after
having a long period out of it.
(Mr Lewis) That is absolutely fundamental. What we
have also been doing, without going on at great length, is trying
to work and increasingly we are working with individual sectors
like retail, construction, energy, to tailor our Gateway so that
it reflects the specific needs of those sectors.
133. Page 7, Figure 1 gives a basic list of
problems people may have, criminal records, behavioural or mental
problems, these sorts of things. As we move from the easier to
employ to the hard core people who are more difficult and given
the need for employer involvement and engagement, what guarantees
for compensation can you give to prospective employers who take
on one of your people? Say this person has been in prison, has
had drug problems and you are telling the employer you have added
value and changed them for life, but they might come along and
steal something or mess up the job or whatever it is and cause
a problem and the employer does not want to take a risk. Is there
anything you can give him, if something goes wrong can you compensate
(Mr Lewis) What we have been trying to do increasingly
through the New Deal is have a very grown-up and honest conversation
with employers so that we talk about some of the young people
coming through the New Deal and their backgrounds and their circumstances,
etcetera. There are many more employers than one might at first
sight imagine who are prepared to consider, for example, employing
somebody who is an ex offender as long as they are clear that
that is the case, as long as they are clear that that young person,
through their participation in the New Deal wants to come and
work for that employer.
134. I understand that but if I am an employer
who has taken on this bloke who has been inside for doing various
things and my worry is that he is going to cause problems on the
shopfloor or steal things, if he does, what comeback have I got
against you otherwise I am not going ahead?
(Mr Lewis) No, we do not operate in that way. We do
not operate like that, just as we do not right across our business.
In the end the responsibility lies with an employer.
(Ms Lomax) I absolutely agree with what Mr Lewis has
said. We cannot get into the business of guaranteeing the performance
of people. At the end of the day employers have to take responsibility
for the ones they have. We are not in the business of trying to
shove people onto them that they really do not want. That does
not work. What we have to find out is what they want.
135. Let us say you have got someone you believe
is a person who is fit to work and is a reliable person but has
had an unfortunate background maybe due to an unfortunate family
background and all the rest of it and who has come good through
the New Deal. You have spent all this money on them and you are
trying to place them in employment and people just say they do
not want to know anything about it. What do you do?
(Mr Lewis) One thing we do have to offer and we have
offered it increasingly as part of the New Deal programme and
more widely is the work trial programme which allows an employer
to take someone for three weeks. They remain on their Jobseeker's
Allowance, they do not become an employee, but the employer has
three weeks' experience of that individual actually working for
them. That has been one of our successful programmes with a very
high number of young people taken on as employees at the end of
136. Is there any ethnicity issue by region
in general terms?
(Ms Lomax) This is not a question which can be answered
briefly. It is quite a difficult question. On the face of it yes,
the job outcomes for ethnic minorities are not as good as for
white participants. If you correct for where ethnic minorities
live, it is much closer: something like 97 per cent of the outcome
for whites. I would not be complacent about that and I would not
be satisfied with it. There is an ethnicity issue, but the scale
of it is something you can debate.
(Mr Lewis) I sense the Committee is not at this moment
looking for a long exposition of this. Let me simply say that
this has been an issue which has been absolutely very high on
our agenda from the very early days of New Deal, how to try to
ensure that New Deal participants from ethnic minorities do secure
at least the same outcomes as their white counterparts. We have
gone to enormous lengths in a whole variety of ways to try to
secure that outcome.
(Ms Lomax) That is actually one of the novel features
of the New Deal. Previous employment programmes have not had that
focus on the ethnic dimension. It is fairly early days.
137. Are you saying that other things being
equal we get the same sort of outcome, or other things being equal
we do not?
(Mr Lewis) I know you would like a yes or no answer
to that. The answer is more complex and this is a very complex
subject. On the face of it young people from ethnic minorities
do not secure the same level of outcomes, particularly in terms
of job entries, as people who are not from ethnic minorities.
When you correct that for some of the other factors, where they
live and those labour markets, then it appears to become more
equal. Everyone who has worked on the New Deal would say that
that is not a reason why we can afford to take our eye off this
issue and become complacent about it. We are going on looking
to try to ensure that the outcomes which ethnic minority young
people secure on the programme are genuinely the equal of their
(Ms Lomax) Of course it varies from ethnic minority
to ethnic minority and according to gender and all the rest of
it. A huge tome came out from the Cabinet Office a couple of weeks
ago, which we were involved in producing on research into the
labour market and ethnicity. It is a very complicated story on
which we are doing research and need to do more.
138. There was a report on the News at Ten yesterday
that there is a particular problem for educationists with young
Caribbean men and that we needed not to be politically correct
about this but realise the problem and concentrate more resources
on them. What do you say to that?
(Ms Lomax) Yes, the evidence is that young Caribbean
men, Pakistani and Bangladeshi women are particularly disadvantaged
in the labour market. Indian men, for example, and Afro-Caribbean
women do rather well. It is not an homogeneous group.
(Mr Nicholas) We are putting more money into that
and new provision for Outreach to work with communities is coming
into play next month, focused particularly on the five conurbations
with the biggest concentrations of ethnic minorities.
139. May I raise the question of the fifth Option
and the numbers who have chosen that? We have been congratulating
ourselves, I think quite rightly, on all the successes but the
Government made it clear that they did not want to have a fifth
Option. It is certainly my impression in my constituency that
there are many youngsters who have just dropped out altogether.
Could you give me a feel for the numbers involved and the distribution?
(Mr Nicholas) There are two issues there. The first
is that there is no fifth Option of remaining on Jobseeker's Allowance
and not doing anything. There is the Option of course of signing
off and we talked earlier on about the follow-up we have done
to see where people go and the proportions who go into work. We
have a series of sanction triggers for people who try to stay
on Jobseeker's Allowance and not take advantage of the New Deal
and those were strengthened almost two years ago. There is a small
proportion of people, 0.2 per cent of people, who have been on
the programme who have suffered a series of benefit sanctions
so that they cannot take the decision to stay on JSA and not take
part. In the research we have done a number of them said that
the threat of losing their benefit was the impetus.