Examination of Witnesses (Questions 340
WEDNESDAY 26 JUNE 2002
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.
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
(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
(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
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
(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
(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.
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
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
(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.
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
(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
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
(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.