Session 2010-11
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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 472-i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

WORK AND PENSIONS COMMITTEE

YOUTH UNEMPLOYMENT AND THE FUTURE JOBS FUND

WEDNESDAY 27 OCTOBER 2010

DAVID COYNE, TONY HAWKHEAD and JACKIE MOULD

NEIL CARBERRY, TRACY FISHWICK, PROFESSOR PAUL GREGG and EMMA WATKINS

Evidence heard in Public

Questions 1 - 104

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Oral Evidence

Taken before the Work and Pensions Committee

on Wednesday 27 October 2010

Members present:

Miss Anne Begg (Chair)

Harriett Baldwin

Karen Bradley

Richard Graham

Kate Green

Mr Oliver Heald

Sajid Javid

Stephen Lloyd

Examination of Witnesses

Witnesses: David Coyne, Executive Director, Glasgow Works, Tony Hawkhead, Chief Executive, Groundwork, and Jackie Mould, Director, Be Birmingham, gave evidence.

Q1 Chair: I welcome our three witnesses for this first formal evidence session of our inquiry into the Future Jobs Fund and youth unemployment. Will you briefly introduce yourselves for the record?

Jackie Mould: I am Jackie Mould. I am from Be Birmingham, which is part of Birmingham City Council.

Tony Hawkhead: I am Tony Hawkhead from Groundwork UK.

David Coyne: I am David Coyne from Glasgow Works.

Q2 Chair: Will you speak up a bit? The room is a bit echoey. Although the microphone picks up your voices for broadcasts, we cannot necessarily hear you. Unfortunately, the microphones do not help us. Harriet, you have a declaration.

Harriett Baldwin: Thank you, Chair. I wish to declare that I am vice-chairman of the Social Investment Business, which has a 10% stake in 3SC, which provided jobs to the Future Jobs Fund.

Q3 Chair: Thank you. As has been pointed out to us, the three of you have been in organisations that have been delivering the Future Jobs Fund, so obviously you have a vested interested in that.

Before my colleagues ask more specific questions, may I ask you a more general question? How do you rate the Future Jobs Fund in comparison with other schemes that have been put in place to try to alleviate youth unemployment? This must be the last of a number of various things that have been tried in the past. Will you give us an historical sense of where you think it rates against other interventions that have been used, to a greater or lesser extent, to get young people into work?

Jackie Mould: I think it has been very positive on a number of fronts. The big positive, and the feedback that we have had from the young people who have been involved, is that it’s a real job. If you’re an unemployed young person and you haven’t had a job, or you’ve been unemployed for quite a while, to be able to have a real job that you can put on your CV makes the difference between getting a job and not getting a job when you are trying to move up. That’s been a big bonus.

The other positives have been the creativity and the opportunities that the programme has created, particularly in the voluntary and community sector. That’s what we have found. They’ve been able to create some innovative and interesting jobs for people, which has helped to develop their business as well, so that’s been really positive. We are just monitoring our people who have left the programme. So far, it’s looking as though around 51% have gone into employment or full-time education. Compared with previous programmes, that is a very good outcome for us.

On the less positive side, it is an expensive programme, because you’re essentially paying wages for the young person for six months. However, if that person then goes into a job, you can soon start to benefit in terms of that person coming off benefits and paying into the system instead of taking out of it. Also, it’s not been particularly good for attracting private sector employers. Although we have had a lot of private sector employers locally wanting to be able to help and offer opportunities to young people, this programme has not really been for them. It hasn’t been able to give them that opportunity.

Q4 Chair: We will have more detailed questions on that later. You said that 51% in terms of job outcomes was comparatively good. What were the job outcomes for some of the other things that have been tried?

Jackie Mould: I don’t have those statistics on me, but I have a background in running these kinds of programme over the past 15 or 20 years. My experience is that the rate of people going into real jobs is often a lot lower than that.

Q5 Chair: Is it 30% or 20%?

Jackie Mould: It would be between 20% and 30%. That’s what you would aim for. We haven’t interviewed everybody yet, so we haven’t completed the process, but we have been surprised by the success in terms of people going into jobs-pleasantly surprised.

Q6 Chair: Can I ask you to be a bit more historical about what things were in place before and how this measures up? Just in general; as I said, we will come to the more detailed stuff in a minute.

Tony Hawkhead: The first thing I would like to say is that we have had only a third of our cadre of 6,200 people, which is what our partner, the National Housing Federation, is providing in placements. Only a third have completed. It’s probably too early to be truly accurate or even to estimate how effective it’s been at getting people into jobs and further training. The numbers for us at the moment are quite varied, ranging from about 35% in some groups up to about 60%. We are now doing a lot more work, having got the programme up and running, in back-tracking and seeing where we are. I would be much better able to answer the question in about six months’ time when we’ll probably have two thirds of the people through.

Picking up the point about historical issues, Groundwork has been delivering a variety of schemes aimed at tackling unemployment right back to the mid-1980s with what was then called the Community programme. This scheme looks to me most like the work we developed with our colleagues from Wise back in the late 1990s, which ran for about 10 years-the intermediate labour market programme. That had a very similar aim, which was providing a job, a wage and work experience. Frankly, it was at a similar cost. The way that Groundwork at that time was running it was to knit together, in a classic Groundwork approach, a lot of different funding-European, local authority and sometimes private sector-to create the means to underpin the funding that we could get then from what is now called the Department for Work and Pensions. I would argue that the benefits of the Future Jobs Fund, which you raised and with which I agree, were similar to what is called the ILM model.

We have found it a bit easier to link to employers, because we have been doing it for a long time. I think we will come to this later, but there has been a problem with the community benefit test-we need to be honest about that.

Chair: We will ask questions on that later.

Tony Hawkhead: We have found it particularly valuable on environmental projects. A lot of our work is around that-both for us and for our housing association partners-and much of it would otherwise be marginal or not feasible. The Future Jobs Fund has allowed us, literally, to give people a job in which they feel motivated and proud because they have a job, and they are therefore much more productive in working on those environmental projects.

In terms of how it feels, we are getting feedback from people. This is now anecdotal, which I need to make clear. What we are certainly picking up is that people are much happier on this programme than, for example, on some of the benefits-based programmes of the past. All our experience-I suspect you will hear this from all of us-is that the sense of being in work and being able to put that on a CV is critically important.

Q7 Chair: We had intermediate labour market schemes in the late ’90s.

Tony Hawkhead: And they ran through for about another 10 years.

Q8 Chair: Did they continue all the way through until the Future Jobs Fund?

Tony Hawkhead: No.

Q9 Chair: Why did they fall out of favour?

Tony Hawkhead: Because, under the last Government, changes were made to the new deal, or the flexible new deal as it became, which made the starting point of contributing for someone to be in a job for six months no longer feasible or possible. The flexibility was good, but it could also be damaging, because we could not get Jobcentre Plus to commit to a six-month period of matched funding.

Q10 Chair: It was not to do with the cost.

Tony Hawkhead: I would argue that, if one is good at raising funding and at knitting it together, there has always been funding. It is true that Governments of all persuasions have tended to be sceptical of the intermediate labour market model, because of the cost.

Q11 Chair: It is the intermediate labour market intervention that is the expensive element to deliver?

Tony Hawkhead: Again, I would argue that it is more costly than some schemes. The Future Jobs Fund paid a wage, and you have to be careful if you compare it with other programmes, which do not include the cost of benefits or the cost to the taxpayer of not having tax paid. I do not think the model is expensive if you see our success rates. We were running at 60% into jobs from the intermediate labour market. That is an enormous success-we work with very hard-to-reach people-in comparison with, to give one example, the Environment Task Force. It was probably peaking at about 18%, which is really quite weak. In getting very hard-to-reach people into work, we believe that the ILM/Future Jobs Fund is a very good one and that it is arguably cost-effective.

Q12 Chair: David, have you anything else to add or do you think we have covered it, looking at the historical side of this?

David Coyne: I would reinforce what Tony has said. From the mid-’90s for a decade, we had a comprehensive Glasgow Works programme, which was on the ILM model, achieving about 60% outcomes into work for long-term unemployed people. That was successful in the context of the time-we were seeing the beginning of a buoyant period in the labour market. The question whether it is affordable has to be seen in that historical context. If the alternative to an ILM scheme is that the person does not get a job at all, it looks less expensive; if the labour market is more buoyant and there are other, less financially expensive, mechanisms that can be used to achieve a job outcome, you need to move on. Effectively, that is what happened in the mid-2000s-policy moved on from ILM schemes. Since the downturn in the labour market in 2008, we are once again in a position where the best way of preparing people for work in the open labour work is effectively to simulate work in an intermediate labour market, using a mechanism like the Future Jobs Fund.

Q13 Kate Green: You have already touched a bit on the outcomes you have had so far from the programme. Can you say more about the elements and components of the programme that have helped to achieve such levels of sustainable employment as you have seen so far?

David Coyne: The average job outcome rate today for the Glasgow Works programme is coming in at around 30%, but within that average figure there is a huge variation. Our best performing strand within the programme is achieving a sustainable 62%, and the lowest performing is at 6%. We understand the reasons why there is that variation.

One of the more strongly performing strands is an environmental estate maintenance programme, with one of our largest volumes. It links to housing renewal and community regeneration and to social landlords who have an interest in improving the quality of life for their tenants. It is the children of many of those tenants who are taking the jobs in the estate maintenance programmes, so you achieve a self-reinforcing programme of community renewal and job entry. Those social landlords themselves are recruiting young people from Future Jobs into estate management and housing assistant-type roles within those communities. We believe that where you link a mechanism such as Future Jobs to a process of regeneration or renewal, which you are undertaking on a more widespread, strategic basis, you can achieve that linkage.

In the situations where people are simply creating temporary work for individuals and hoping that they will pick up transferable skills in that work, and not linking it to anything in the wider environment, we are seeing the lower outcome rates.

Tony Hawkhead: Again, it is going to sound as though we are all in complete and violent agreement, but I think that we need to keep emphasising the sense of it being work. That, for me, is the single most important point.

The other thing that was powerful about the Future Jobs Fund was that, unlike any other scheme that I have ever seen, it-for the first time, really-allowed the voluntary sector to get involved in a way that was not risk free, but was much less risky than some of the other programmes with which Groundwork has been associated in the past. That meant that work could be created rapidly, because most charities are always in need of people to help, particularly to do practical work on the ground.

The other thing that really worked for us was that Groundwork made a decision at an early stage to take only a tiny amount of money to run the programme in our centre-to do the admin-and passed virtually everything across to our deliverers. That meant that they could invest heavily, right down to an individual level, to support each person who was involved.

I do not think you can exaggerate the importance of personal care; it is one of the things that is emphasised about the Work programme, which, if it can be delivered, is really important.

Jackie Mould: I agree. There have been several successful elements: the fact that it is a job makes the difference; it has had an impact on the voluntary and community sector; and it is linked, as Tony said, with wider renewal, so people are very much involved in their own communities-they are doing useful work, so they feel valued. The scheme lasts six months, which is a productive length of time, so the organisations that are involved have the opportunity to get some benefit from the person.

We have also been able to identify the transferable skills from that. For example, we had a young person working for a credit union who has now gone to work for a bank. So, although we could not get the placement in the bank, we were able to make that link. We have quite a few case studies that show where we have been able to do that.

I agree with what Tony and David have said. Quite often we are dealing with people who have complex and chaotic lives, who might have other problems that they need to sort out-they might have debt or housing problems. Because the scheme is six months, and because pastoral care is built in, those things can be sorted out while they are on the programme, so they get their life in order before they move on.

One of the case studies that we were looking at the other day was of a young woman of 21. She became pregnant at the age of 13, had a baby, dropped out of school and did not get any qualifications. Then she joined this programme. She had never been to college or had a job or anything, but in those six months she was able to sort her life out, sort out what she wanted to do and get her child care sorted, and now she has a job. Her life has completely changed. That combination of pastoral care, real job experience and having that routine and discipline has made a big difference.

Q14 Kate Green: From what you say, I am wondering whether it is intrinsically difficult for this six-month process to work with a private sector employer, given the emphasis that all of you have placed on pastoral support and how hard these people are to reach, with a complexity of problems and the need for the process to be reinforced by community need and engagement.

David Coyne: I am not so sure that it is intrinsically difficult. We have had some small-scale private sector involvement from the Marriott Hotels Group, which has taken on some trainee chefs. The community benefit angle on that was that they were not only learning their trade in commercial kitchens, but were working with a homeless project in the city, assisting with the soup kitchen and various other things, as well as rehabilitating service users of a homelessness project. There were enormous benefits for that third sector organisation. The Marriott Group believes that it is grooming the next generation of young chefs as part of the process. For the young people, it is an opportunity not only to get into an industry with a career structure at an unqualified level, but to make them much more socially aware and much more rounded.

The real commercial environment is key. Whether it is in a private business or in a voluntary organisation does not matter. The fact that that person has a job and is being paid to do it fundamentally alters the transaction or the relationship between them and their employer. They are not the recipients of policy. They are not the recipients of a training programme. They are working and earning a wage. That makes for a very different learning environment for the individual compared with a training course.

Tony Hawkhead: May I say one other thing? It depends on the economic cycle. In our experience, when we had a buoyant economy, when businesses were desperately trying to recruit people, they were much more prepared to go the extra mile-for obvious reasons, because it then becomes part of their commercial success. At the moment, in what is a very difficult economic climate, the evidence that we have-with one or two exceptions that I will come to later, such as British Gas-suggests that people are inevitably saying, "Well, I might as well take people who were recently employed, because that is a much easier thing for me to manage." That is where people like us come in to do the persuasion job.

Q15 Harriett Baldwin: I want to ask a question about the sustainability of the jobs and the range that you have seen, from 6% to 61% of people moving into sustainable employment. Presumably those jobs are all from a fairly similar background economically, because we are talking about a finite period. You have mentioned some of the characteristics of the jobs that have led to sustainable employment, but were there any characteristics of the young people in the programme that you could draw conclusions from?

Jackie Mould: The thing with the programme is that it depends, because you have such a wide range of people. At one end of the scale, we have had graduates coming on to the programme who are very capable, but who do not have any work experience. Those people could go to a private sector employer and move into a sustainable job. At the other end of the spectrum, you have people doing landscaping and construction work, and you also have many in between the two. One thing that would be worth looking at is an analysis of the different groups of people that have been involved and what is most appropriate for them. It is very varied, and you could probably design something quite specific for those different groups, from the experience we’ve had.

Q16 Harriett Baldwin: Different types of intervention might work for different types of people?

Jackie Mould: They probably could.

Tony Hawkhead: I would argue that the Future Jobs Fund was a child of its time. We must remember that it was set up and announced as a temporary scheme. It was at a time when there was an unprecedented-in our history-rise in youth unemployment that concerned everyone, and it’s strongly arguable that the scheme did a very good job in making sure that a large number of young people had opportunities to experience work that they would not otherwise have had. That should be praised.

I think that the fund is most successful in working with the kind of people we-most of us here, I think-specialise in, which is those who are very far from the labour market and would otherwise have no hope of getting any form of work experience, and therefore no access to a job. I don’t think that the Future Jobs Fund or anything like it, or an ILM, would work well or cost-effectively for people who were close to the job market. It would be too expensive.

Q17 Kate Green: Can we look now at the reactions of the young people who have been through the programme? I know that Be Birmingham has been surveying young people’s experiences. What benefits and drawbacks have they themselves identified?

Jackie Mould: The benefits that they have identified are about the fact that they’ve had a job. I can’t say that enough; it’s come out in every interview that we’ve done, with every single person. Some of them didn’t even know they were on a programme; they just thought they’d got a job. The other benefits have been the confidence and self-esteem that people get from having a job, from feeling valued-that they’ve got something to offer and that they can do it. Yes, the skills element is in there and most of them have developed new skills and gained qualifications, but it’s really the self-esteem and the self-worth that have given people the confidence to think, "Yes, I can get a job. I can sort my life out. I can sort some of my other problems out." Those are the main things that people have said are benefits.

Q18 Kate Green: What drawbacks, if any, have they mentioned?

Jackie Mould: The main drawback is if there’s nothing at the end of it. Obviously, people want a job. All the people who see the programme through want to work. So, not getting the job at the end is the biggest disappointment.

Q19 Kate Green: Have you any experience of what’s happened to people who have not moved on into sustainable employment or education?

Jackie Mould: Not in detail. They’ve gone back into the system and are signing on. The worry is whether those people will keep that self-esteem and get the support they need to apply for other jobs in the future. The positive side is that at least they have something to put on their CV that perhaps they didn’t have before, and that should improve their chances of getting employment. But it’s early days yet to see whether that has made an impact.

Q20 Kate Green: We’re asking about this later, but one of the things that we’re interested in is the transition from the Future Jobs Fund to the Work programme, which is coming. Picking up that point about people potentially just going back into the system after their six months, have you any advice about how the Work programme might build on what’s been done for those young people?

David Coyne: We packaged the model in Glasgow in such a way that there was quite a lot of employability support for the participants-throughout the experience, but intensively from week 18 onwards. That seems to have had an impact on the individuals in their starting and maintaining an active job search, building on the confidence that they’ve gained through successfully executing a job for four months or so. Capitalising on their increased confidence about the world of work-having been in it once-and having dispelled their own self-limiting beliefs and the myths that they held about what work was like, they were applying for a wider variety of types of job.

Currently, the labour market is not great for young people. Many of them are not successful in making the transition, so we intend to support them over an extended period, post-Future Jobs Fund. Except in the projects that are linked directly to recruitment opportunities, they will not make an immediate transition at the end of week 26 and will require support over an extended period, and that confidence and capacity need to be capitalised on.

Tony Hawkhead: I would say two things. First, we must bear in mind that one of the weaknesses of the Future Jobs Fund was that the only outcome required was a temporary job. There was no necessity to have tracking from the start. That is a critical challenge for the future. We are the only voluntary sector prime contractor on the Community Task Force, for example. That had a tracking record from the start and, as a result, I have excellent data on it.

The second thing is about links to jobs. We recruit, so our aim from the start has been to recruit people from the Future Jobs Fund as much as we possibly can, but also to set up links to other employers, such as our housing association partners. We have a very exciting scheme linked to British Gas apprenticeships where we are basically providing a six-month pre-apprenticeship scheme, linked to 1,000 posts that it is creating. It is linking things to jobs. The more people feel that they have a chance at something real at the end, the better.

Q21 Stephen Lloyd: Excuse me, Chair. Can I ask a question specifically about British Gas? As we know, one of the challenges with the Future Jobs Fund was that a vast majority of temporary jobs were in the public sector and that added issues of stickability. The British Gas thing does look very impressive. Why do you think you managed to get that agreement with British Gas? Why thus far have you been unable to persuade any of the other major private sector employers to come on board in the same way that British Gas did? I like the idea of the pre-apprenticeship. I can imagine a number of major utilities and those across the board which would like that. Why work with British Gas and not the broad sector?

Tony Hawkhead: The simple answer is that the community benefit test made it fantastically difficult to get the private sector involved. If there is a commercial benefit to the company concerned to be gained from taking part in the Future Jobs Fund, we cannot do it-that would be the definition. The reason why we were able to get around that with British Gas was that it was setting up a whole new business in home insulation, for which it committed itself to set up apprenticeships. All we did with British Gas-a very big "all"-was to agree to provide an effective pre-apprenticeship, and it would take people on at the end of it. Jobcentre Plus and the Department for Work and Pensions deemed that there was no commercial advantage for British Gas in doing it.

Q22 Kate Green: A last quick question from me. You have all mentioned that the Future Jobs Fund programme benefited the third sector, and specifically that it stimulated creativity and ways in which employers could think of creating jobs that benefited themselves as well as the young people and the community. Can you talk about any of the specific positive outcomes for both employers and the voluntary sector? How sustainable do you think the outcomes might be?

Jackie Mould: We have had some examples of voluntary sector organisations that have used this programme to create jobs. They have brought people into their organisation and essentially developed new services and markets for them. That has been really interesting. We have had a couple of organisations that have actually employed people as fundraisers for the organisations. They have then been able to bring in resources and create new activities from those resources. They have kind of made the job self-sustaining. That is something that we could learn a lot from in the future.

There is a lot of creativity out there. The ideas are out there, but sometimes organisations just need that input of an extra person or some cash to help them to develop an idea. It has helped to do that, especially for quite small organisations. Some of the organisations involved in social care, particularly with the agenda around personalisation, have been able to use the Future Jobs Fund to really develop their capacity to offer social care and personal assistance services to the local authority and to health organisations and actually bid for contracts. Some of those things have been quite innovative.

David Coyne: Some voluntary organisations have used it, similar to the way British Gas have, as a kind of pre-recruitment exercise where they are expanding into a new service area or trying to extend their reach, and doing so on the basis of testing out both the new service model and new employees. They have taken people on into permanent positions, allowing that expansion of services to go more smoothly and to be better resourced. They are now coming back and effectively saying, "Can we have another one of those nice Future Jobs people?" "Sorry, no, you can’t." As a growth mechanism, it was starting to show some potential for a small third sector.

Chair: We are going to move on because we’ve only got through one set of questions and we are more than halfway through your time.

Q23 Sajid Javid: Thank you all for coming. I want to focus on the issue of value for money. A few of you have already mentioned or used that phrase. A couple of points have already been made about sustainability. I just want to understand one thing, because it goes to the heart of value for money. In your submissions, each of you has given percentages of what you think were the number of sustainable jobs that were created-I think an average of about 35%. Just so we fully understand what you mean by a sustainable job, does that mean someone who has completed their six months and then moved to a fully paid job with a full contract and no subsidies?

David Coyne: Yes. It is determined by the DWP claims and monitoring process and the outcome being moving into paid employment.

Q24 Sajid Javid: So that is about a third. From a pure objective of helping young people find sustainable jobs, you would agree that it has a success rate of about one third.

Tony Hawkhead: I would argue that it’s far too early to tell. Across the whole country, we have had only a third of the cadre through. Our rates are too varied to try to draw conclusions at this stage, particularly given the lack of comparison with the programmes, and also taking people through during the deepest recession in this country for 70 years. It’s too early to try to draw conclusions and say that in some ways it’s either better or worse.

Q25 Sajid Javid: I think your number was about 30% in the first phase. How many people is that based on in terms of people having gone through the programme?

Tony Hawkhead: We have done a third, so that’s 2,000. The 30% figure has a big health warning around it. We know for certain that 30% have gone into sustainable jobs. We know for certain that 33% have gone back on to benefits. We are now retrospectively tracking the other 35% or 40% of people. It is extremely difficult to do that unless you have tracking measures built in from the start. We have now put those in. Before you ask why we didn’t do that from the start, the fact is that we were being pushed very hard to deliver Future Jobs Fund at an enormous rate, faster than any programme I’ve ever seen. That is what we focused on doing.

Q26 Sajid Javid: As you all know, the contribution for each job is £6,500. When we look at value for money, that’s the key number we need to look at and the results that that money might bring. Compared to your knowledge of other programmes that have attempted similar things in the past, albeit in different ways, is this a good use of £6,500 or are there more effective ways to do it and perhaps have an impact on a greater number of people?

Jackie Mould: It depends on the client group. If you’re talking about people who have recently left the job market, it is not value for money. But if you’re talking about people who have been unemployed for longer and have multiple complex issues, then it probably is. We have started to do some cost-benefit analysis models, which we are working through at the moment. I’m looking at some real case studies. It depends what you mean by value for money. I have some examples here that we are working through. We have one person who was unemployed for 25 years, for example. We can work out how much that actually costs the state to keep that person on all the benefits that they claim. That person now has a job. If they can keep that job and keep on that positive path, you can start to see the benefits, because there will be a saving from them not claiming benefits any more. They will start to earn money and they will start to pay back into the system.

It would be interesting to look at those in a bit more detail to enable us to really assess whether this is value for money. For those people with complex problems, people who are claiming a wide variety of benefits or people who may be ex-offenders who have been in prison, you start to see that from investing that £6,000 you could get a pretty good return within 12 months, if that person stays in a job. That is the thinking that we are trying to work through at the moment.

Q27 Sajid Javid: Do you think that for some people-by definition people are typically on out-of-work benefits prior to joining the programme-the current system of benefits and the disincentives that it creates to take work is having an impact?

Jackie Mould: I think that people are fearful sometimes of moving into a paid job, because they think that they will lose their benefits and be worse off, which is crazy.

Q28 Sajid Javid: The Government’s proposals to create a universal benefit with a single taper relief will cost more money in the short term to put in place. Relative to value for money and getting people back into work, would you say that the universal benefit would be a value-for-money way of giving people incentives?

Jackie Mould: I would say so, yes. If that person changes their lifestyle and gets into employment as a result, the figures that we are looking at suggest that within 12 to 18 months you would start to make a saving.

Q29 Sajid Javid: So in terms of getting young people back into work, do the other two witnesses agree that the universal credit system is a valuable way to incentivise that?

David Coyne: Yes. I think that there are a lot of positives about having higher earnings disregards and a universal and lower taper rate to incentivise work. By getting people into work-even short-hours work-and making them financially better off, you put them in the position of learning how to work while in a job, like the FJF participants did.

Tony Hawkhead: The single biggest and fastest way to transform the poorest communities is to get people into jobs. You can stimulate community activity all you like, but jobs are the key. I think that one of the problems with the system at the moment is not a lack of will to support people, it is just that it is too complex and difficult to understand. Something that is simplified, quick and in real time-which is where I think that the universal credits concept is very important-is to be welcomed. It is a bit early, however, to make a judgment on it. We will have to wait to see it up and running.

Q30 Kate Green: Is that an alternative to, or as well as, the kind of interventions that the Future Jobs Fund has provided? I am particularly interested in pastoral support, which you mentioned earlier.

David Coyne: I would say as well as, because the Future Jobs Fund as designed works well for young people. For older people who have family responsibilities and who are on higher levels of benefit, you would need the disregards and the tapers to make it work financially.

Q31 Sajid Javid: I want to go back to value for money. Hypothetically, if these no state aid rules had not existed, so that there was greater flexibility to offer jobs in the private sector, assuming there was greater willingness as well-going back to your British Gas example, it did not have to create completely new jobs-do you think that the programme would have been more effective?

Jackie Mould: I think that it would have really added to it, because in Birmingham we certainly had a lot of interest from private sector employers.

Q32 Sajid Javid: So, very quickly, do you all think it would have been more effective if these rules had not existed?

Tony Hawkhead: The community benefit test was one of the big weaknesses.

Q33 Sajid Javid: There was also a requirement that 10,000 of the 150,000 places had to be environmentally related jobs-I think that that figure is correct. If that requirement was not there either, do you think that it would have been more effective?

Tony Hawkhead: I don’t think so at all. Time will tell, but I think that you will find that that 10,000 figure will have been considerably exceeded. We are a federation of environmental charities, as it happens, and we do a huge amount of work around green space. It is a brilliant way to get people into work experience and jobs very quickly. With relatively little training, it allows people to access the work experience. So I think quite the opposite. Anything that allows people to get into work relatively quickly and gives them the rewards of working and achieving, of seeing things change before their eyes, is something to support.

Q34 Sajid Javid: But why do you think that the environmental target helped? I think that that was a minimum not a maximum, so presumably if there were 30,000 such places-

Tony Hawkhead: Did the target matter? I don’t know.

Q35 Sajid Javid: Right. So you’re saying that it made no difference.

Tony Hawkhead: I’m saying that I think it was good to encourage the idea of thinking around environmental projects, but whether we needed a 10,000 target is open to question. I don’t think we did.

Jackie Mould: It didn’t make a difference to us.

Sajid Javid: It didn’t make a difference. Okay.

Q36 Chair: Can I clarify something you said, Tony? You said that with the Future Jobs Fund, the £6,500 for six months was the whole amount that it cost the Government for a young person, but that other schemes didn’t include the cost of benefits. When we see that the New Deal for Young People cost £3,480, those young people would have still been receiving benefits so would that have gone on top? The Community Task Force was saying £1,200 per person, but those people would have still been on benefits and therefore that amount is not in the equation. Is that a fair summation, or not?

Tony Hawkhead: I don’t recognise your Flexible New Deal figures, so I can’t comment on those. I can certainly tell you that your Community Task Force figure of £1,200 does not include benefits. You would have to add a minimum of £1,800.

Q37 Chair: So, we’re not quite comparing like with like. You’d have to put all the benefits-the housing benefit and everything-plus all the cost to the state of that person into it.

Tony Hawkhead: Yes.

Chair: Thanks. That’s helpful.

Q38 Harriett Baldwin: Yesterday we did some fieldwork at Centrepoint in Denmark Hill and we heard about the Future Jobs Fund there, but we also heard about a Workwise training programme that they were doing. That programme was two weeks of training those young people up in terms of what to expect from work, what kind of behaviour to have at work and how to talk to their manager-fundamental principles. They were saying how successful that had been. We thought that they could scale that up at about £500 per person for a two-week course.

Chair: Yes, but it cost £35,000 and they’ve got six job outcomes, so I’m not sure-

Q39 Harriett Baldwin: No, no. They were talking about how they could scale it up if they could run it over a year. I just wondered whether you thought that a training programme of that nature for two weeks, before going on to a Future Jobs Fund, would improve the outcomes.

Tony Hawkhead: I am not sure that those two things fit together. The Future Jobs Fund should do that anyway.

Q40 Harriett Baldwin: So, you’d get that during the Future Jobs Fund.

Tony Hawkhead: Yes. I fundamentally disagree with any notion that you can get the kind of people we’re working with ready for work in two weeks. There is absolutely no evidence that you can do that. What you could do is prepare them so that they don’t fail at their work placement on day one. We have on placement in my office someone who defines himself as being on the Asperger’s-autism spectrum. He has worked all the time for short periods of months and weeks, but because his workmates perceive him as "strange", perhaps, it is very easy when times are hard for people to say, "He’s the first out the door." The most important thing that we can do for him is to give him a period of time when he learns a set of behaviours that allow him to function as if he were a normal worker. I am not saying what I think; that is what he says. He was ready for being with us because people had briefed him, but he couldn’t do that in two weeks.

Q41 Harriett Baldwin: But was there a large number of people who joined the programme but didn’t make it through to the end?

David Coyne: Not a large number, but those who didn’t stick to it lost the opportunity to participate. Had we had the opportunity to design the front end of the initiative a bit differently, I think that we could have reduced the drop-out rate. The matching process could, I think, have been done a lot better. We could have had inductions, open days and more informed choices being made.

Jackie Mould: I would endorse that. The idea of having the two weeks would be useful to prepare people for, essentially, a job interview. That was the other thing about the programme: people had to go through an interview to get the job, which was quite challenging for some of the people whom we were working with. Getting that support to do an interview, and learning how to sell yourself in an interview to get the placement, would be a good use of that time.

Q42 Harriett Baldwin: Was the drop-out rate less than 10%?

Tony Hawkhead: I can give you our exact figures: we lost 5% in the first six weeks; three quarters of people completed 24 weeks; and just under 70%-69.6%-did the full programme. So you can assume that 24 weeks is a really good slug at that-and three quarters of people got to that point.

Chair: I realise that we are running out of time rapidly, so all our questions must be short and sharp.

Q43Mr Heald: May I ask you about the construction of the programme as a whole? You talked to Tony about the sort of people whom you normally work with. Normally, with an intermediate labour market intervention, you are talking about people who have been out of work for a very long time, who are difficult to place-people of the sort that you have described. The difference with this programme is that you are providing that sort of intervention for youngsters who have only been out of work for six months, who are very different. So it is an unusual programme in that way, isn’t it?

Tony Hawkhead: That is a really good question. We work heavily with-I hate this phrase-the NEETs group, people who are not in education, employment, or training. Those people are effectively NEETs from the moment that they leave school. All our experience demonstrates that the longer they stay out of work, without ever having the experience of having a job, the harder it becomes to get them into jobs-and that happens very quickly.

Although, as you were right to say, ILMs tended to focus on people who had been out of work for a year-it was not a lot more-we strongly supported the move to a six-month start point simply because of the damage that is done in that time.

Q44 Mr Heald: This is the best client group that you have ever had isn’t it?

Tony Hawkhead: We have only had 5% of people who are graduates into our schemes; the vast majority have been people who present us with some serious challenges.

Q45 Mr Heald: But you would agree, Jackie, wouldn’t you, that this is the best client group that you have ever had? You have even had graduates on it this time.

Jackie Mould: They were a very small percentage, though. On the question of six months, that is quite a long time for a young person; to me, it flies by-it seems to go quicker as you get older.

Q46 Mr Heald: But do you take the point that this intervention is normally used for people who have been out of work for a long time and who have real barriers to employment? Here we are using it for a group that includes all sorts of people who do not have those barriers, who are relatively close to the labour market when you start, so you ought to have fantastic figures of success for this group.

David Coyne: We found that 75% of our referrals were males with low or no qualifications, who were looking for basic, manual occupations. The critical point is that six months’ unemployment is much more damaging if you are under 25 than if you are over 25. You would want to use this kind of policy precisely, and on those who need it most-there are many more of those in the under-25 group and, particularly, in the under-20s.

Q47 Mr Heald: But of course a lot of the things that we have been talking about, such as explaining to young people how to do a job search effectively, are measures that work, and which you would often try with someone who had been out of work for only six months. To use the really top-of-the-range model so early will always be expensive, won’t it?

Jackie Mould: Some of the reason for it-and I suppose there are arguments about how you do it-is prevention, if I can use that word. It is a question of how you prevent a young person of 23 or 24 years old from getting into that lifestyle of being on benefits and being unemployed. There is an attempt to get young people on the right path while they still have some drive and some belief in themselves-before it becomes a way of life. That has been quite important.

Q48 Mr Heald: The other problem with it is that it is really directing young people into the public sector, rather than the private sector. There is no way around that, is there? The state aid rules, which we have to work on within the EU, mean that you can’t put somebody into a commercial enterprise and pay their wages as a Government.

Tony Hawkhead: First, I think it was not just the public sector. It did a hell of a lot of good for the charitable sector and that benefited very poor communities in a way that would not otherwise have happened. We need to recognise that, but you’re right: the community benefit problem got in the way. We really worked hard to try and get around that and, if we had had more time-it was announced in June and we had our first client in October-it would have been possible to find smarter, legal ways of getting around that. I really do believe that. We modelled the work with British Gas specifically to try to find a way that was not getting around the system, but that actually took advantage of what could be done. The direct answer to your question is that we must find a way around it, because if we can’t involve the private sector in a scheme like this, it is going to fail. It is just not good enough.

Jackie Mould: We had similar discussions with Jaguar-Jaguar Rover-as well. It has been very frustrating not being able to pursue those. But what we have been able to do is link people through the apprenticeship programmes, so maybe that is a way of doing it.

David Coyne: Where a private sector employer has a genuine vacancy that they are recruiting for, it is legal to offer a wage subsidy under the general block exemption regulation for recruiting disadvantaged workers. There are ways of working with the state aid regulations in a more creative way.

Q49 Mr Heald: Do you agree overall that if you look at the British economy, we’ve got a situation where gradually some jobs will sadly no longer be there in the public sector and we are looking for more jobs in the private sector? Yet this was a scheme that was directing young people into the public sector. Apprenticeships, which you mentioned, provide a much better focus, because they mean you can help young people into private sector jobs, which is the future.

Tony Hawkhead: Put very simply, because I know we are short of time, the Future Jobs Fund was set up to do a very specific job for a temporary period of time: to create 150,000 jobs in a hurry-let’s be honest.

Q50 Mr Heald: Ahead of the election.

Tony Hawkhead: I am not going to comment on that. There is a nervousness in Departments-perhaps too much nervousness-about state aid. Because of that nervousness, it was set up in a particular way. I do not think that the Department for Work and Pensions would have set it up and excluded the private sector without the state aid rules-it would have been crazy to do that. Perhaps the question is, in future schemes, if we do things around creating work opportunities and work experience, to make sure that we build in the best way of engaging all the sectors from the start.

Q51 Mr Heald: There are lessons for the Work programme there, aren’t there? Finally, the other question I want to ask you is about Jobcentre Plus and how good it was at matching and referring unemployed young people to Future Jobs Fund opportunities. Crisis UK has said that there was a lack of clarity and understanding in jobcentres. The national young volunteers service was critical, as was Oxford county council and so on. What’s your view?

David Coyne: We had a very positive experience. The district team in Glasgow responded early and robustly to the launch of the Future Jobs Fund and worked well with both us and the other national voluntary sector bids that were operating in the city. We had some technical difficulties early on, with the eligibility criteria relating to whether someone was only eligible between week 39 and week 42, or something. But we worked around that and the jobcentre response was good. We were very pleased with the relationship.

Q52 Mr Heald: What about you, Tony, were you happy with that?

Tony Hawkhead: If you’d asked me in the first six weeks, I’d have probably said what you just read out. But, we have to be honest and recognise what the situation was. I have never seen any Government programme in any Department set up at the speed this was set up. Let’s not worry about why that happened-the fact is it did. On that basis, one has to judge it a success in terms of its implementation.

The other problem for Jobcentre Plus colleagues at that time was that they were clearly recruiting very large numbers of people to cope with a large number of unemployed people suddenly appearing on their books. They were trying to run a whole new scheme, as well as deal with their own capacity. Once that had happened, our experience was, very much like David’s experience, that they were very good partners. They did a number of things-for example, having somebody we could contact if there was a problem, so that we could resolve such issues very quickly. And if they could not be resolved quickly, an escalation allowed that to happen. There are lessons for that in the Work programme.

Q53 Mr Heald: Jackie, are you happy with that?

Jackie Mould: Positive, yes. We had very good working relationships with the manager in Birmingham, and it was all about solving problems as we went along. If you have that attitude and you have the right people working with you to make it work, it will work; the problem is if you don’t have the flexibility locally to do that. So, on the whole-positive.

Q54 Chair: Can I just pick up something you said, David? Obviously, the state aid rules were a huge barrier to-in fact, a complete block on-getting the private sector involved. But you said that it is acceptable to have a job subsidy. If the private sector had been willing to put up, say, £2,000 of the £6,500 and had paid it directly to the young person, with the state paying £4,500, would that have been acceptable?

David Coyne: My understanding of the regulation is that if the private sector employer is recruiting for a real, existing job in their organisation-in other words, not an additional one-it is legal for the public sector to offer a wage subsidy of up to 50% for up to 12 months for the recruitment of disadvantaged workers, with "disadvantaged" being defined as long-term unemployed.

Q55 Chair: So, if there had not been the hurry to get the whole thing set up, there might have been a way of working around to getting the private sector more involved-there is a solution there.

David Coyne: I believe so.

Mr Heald: Possibly it was too early.

Q56 Stephen Lloyd: We are running slightly out of time, so I will drill down to two important, final questions. First, the Future Jobs Fund, as we know, is running until March 2011, and the Government have indicated that the Work programme will be up and running from summer 2011. How can the transition period be managed effectively to minimise any negative impact on young unemployed people? In other words, I understand where you are coming from in saying that there is real concern about that lag, but from what you have learned how can the Government manage that better?

Tony Hawkhead: I am happy to have a go first. The straight and honest answer is that that is a very unfortunate gap. The ideal solution would probably be to make sure that that gap does not exist. That would potentially mean extending the Future Jobs Fund by four months. Otherwise, there is a hole and it is difficult to see how it is going to get filled.

Q57 Sajid Javid: Or sign the Work programme earlier?

Tony Hawkhead: Yes, you could try to start the Work programme earlier. Bearing in mind how fast the Future Jobs Fund was got up and running, that is a good question to ask.

Q58 Stephen Lloyd: What about you, Jackie?

Jackie Mould: Coming at it from a slightly different angle, I agree with what Tony said, but one of the things that could be done is to make links locally with existing organisations and partnerships that are in place, so that we can try to join things up locally. It will be important for those organisations that win the contracts to be part of what is happening at a local level, because we can then learn the lessons and make linkages with the employers and, hopefully, with the young people who we are already working with. My plea would be for trying to get that connectivity at a local level-talk to us and we can help to make it work.

Q59 Stephen Lloyd: You have prepared a lot of the groundwork, so it would make sense.

Jackie Mould: Exactly.

Q60 Stephen Lloyd: David, do you want to add anything particular?

David Coyne: I have nothing to add, other than that it would be useful to get some of the potential primes on the framework involved in detailed discussions with us locally about how it is intended to get the Work programme up and running.

Q61 Stephen Lloyd: Okay. Secondly, Groundwork’s evidence highlighted how the Future Jobs Fund had been used to provide pre-apprenticeship training. You have already talked about that with British Gas. What lessons might we learn from the FJF as the Government increase the funding available for apprenticeships? We all agree that the increase of funding and of apprenticeships is a good thing but, given your experience of the Future Jobs Fund, some lessons can perhaps be fed into the DWP. What would they particularly be?

Tony Hawkhead: The first thing is to emphasise that reaching the hardest-to-reach costs money. The second thing is that at the time of a less than buoyant economy there is no great incentive for private companies to be involved with the public sector in recruiting and organising state-sponsored apprenticeships. The fact that we took all that off the hands of British Gas-we effectively acted as the intermediary-made an enormous difference to its willingness to get involved.

The lesson for apprenticeships is twofold: first, to keep the bureaucracy and demands on a private sector company to the minimum possible; and, secondly, when working with the hardest-to-reach, which is not a client group that most companies are necessarily going to charge towards, you make sure that the support for those people is provided outside the company so that they are then getting work-ready people-even from very difficult client groups.

Stephen Lloyd: I am fine with that.

Chair: Okay. I do not think that my colleagues have any more questions, so thank you very much for coming along. Your evidence will be very useful when we come to write to our report. Thanks again.

Examination of Witnesses

Witnesses: Neil Carberry, Head of Employment, Pensions and Health & Safety Policy, Confederation of British Industry, Tracy Fishwick, Associate, Centre for Economic and Social Inclusion, Professor Paul Gregg, Professor of Economics, University of Bristol, and Emma Watkins, Head of Public Services Policy, Confederation of British Industry, gave evidence.

Q62 Chair: Thank you very much for coming along this morning to give some evidence on the Future Jobs Fund and youth unemployment. Will you, individually, briefly introduce yourselves for the record?

Neil Carberry: Thank you very much. My name is Neil Carberry. I am head of employment and pensions policy for the CBI. Our director looks after all labour market work for the CBI.

Emma Watkins: I am Emma Watkins. I am head of public services policy at the CBI. We are responsible for the greater involvement of the private sector in designing and delivering public services, particularly in the area of welfare policy.

Professor Gregg: My name is Paul Gregg. I am Professor of Economics at the University of Bristol. Unemployment and unemployment policy, in particular, has been an area of research for me dating back to the mid-1980s.

Tracy Fishwick: I am Tracy Fishwick from the Centre for Economic and Social Inclusion. I am also here as a practitioner, having been involved in the Future Jobs Fund since the beginning in Greater Manchester.

Chair: Can I ask you to speak up? Although there are microphones, they are more for recording purposes rather than amplification for us. We sometimes find it a wee bit difficult to hear. Harriett Baldwin has some questions.

Q63 Harriett Baldwin: Professor Gregg, I know that you were very involved in designing the Future Jobs Fund. I just wondered if you could talk through for the Committee the rationale behind designing the programme and say whether you think that, since it was designed, anything has changed in terms of the economy, the labour market or the public finances that would change the rationale for the design.

Professor Gregg: I was an advocate of the youth guarantee before it was introduced, though I wouldn’t say I was involved in the design detail of what was put in place. The broad rationale is that since the 1970s we have slowly learned-with the emphasis on "slowly"-what kind of employment policy can make a difference to people’s unemployment patterns and the longer lifetime costs associated with that. We know that youth unemployment is associated with long-term scars in terms of unemployment, low wages, poor mental and physical health, and indeed early death. So there has been a history of evolution, which has broadly occurred across many countries. We moved from the early programmes, which were just job relief and gave people low-paid jobs. There were benefits for people in terms of work experience, wages, access to a decent reference and so on, but it was found that people didn’t move into work afterwards as quickly as they would have done if they were not going on the programme. That is because of what is called the lock-in effect. People don’t look for work when they are in a job, and that slows down the process of moving into work. So there are two dimensions. You want to give people work experience and the basic work skills-turning up on time-and a good reference, but if you delay the process of job search you actually slow the process of moving into the next job.

Policy intervened to try to do various things. It tried to make the jobs bloody awful-like the Community programme-to make people look for work, which proved unsuccessful. In a sense, it tried to emphasise the job search, as in the restart programme, and it was the logic behind jobseeker’s allowance, which does have some success. But, at heart, this programme was designed to try to minimise that conflict between the positive aspects of giving people work experience and getting in the way of job search. So, the sectoral routes had clear job prospects at the end. It was agreed that employers would take you on at the end of the training programme to reduce that conflict. It was the same with the Future Jobs Fund. The idea was that the employer-the provider-bid with a deal that asked what they were providing for that individual to help them move on into work after completing the placement. That was not as intensive as I would have liked. I would have liked active payment systems and active requirements on people and providers helping individuals move into work. But the logic was there. You were trying to give work experience but reduce that lock-in effect of people not actively seeking the next job after the placement.

I am a bit struck by the DWP evidence of likening the Future Jobs Fund to the Community programme. The analogous one here is the Community Task Force, not the Future Jobs Fund. When you are trying to do a youth guarantee, you are trying to make it so that someone has to move on-they can’t stay there for ever-and you’re trying to make it so that providers have to put something on the table. It is very hard to offer a guarantee out of only the best options.

For instance, the best deal that we have in terms of what we can offer people is work trials-a short programme of work experience with a regular employer. It is successful, but there are not enough places. What you have with the youth guarantee is almost a stage of options, which, to some extent, can fit the individual, but to some extent the likelihood of being effective is decreasing. Because of the guarantee of a job at the end, sectoral routes are at the high end. High-quality and long-term training for apprenticeships has good prospects. Future Jobs Fund is somewhere in the middle. The Community Task Force is least likely to be helpful to individuals. That is roughly the ranking that came out of the New Deal for Young People programme, although there were components that were very similar to these and in a sense had many of the features of this programme. So, we have learned a lot over the years. A youth guarantee or a guaranteed job is an important part of it, but you have to try to avoid the lock-in effect in those components. You have to try to motivate and create job search.

You asked what has changed. I emphasised that perhaps there was not enough on that job search element within the programme. The other thing that has changed is that this recession did not lead to as many job losses as we first feared. The labour market and the welfare system performed well. However, the people who have suffered intensely through this recession are young people. The increase in unemployment is heavily focused on young people. The first and best option is to get people into education. If you can’t do that, things such as sectoral routes and apprenticeships are a good step, but Future Jobs Fund was sort of solid in the middle, as the third best in the ranking of likely prospects.

Q64 Harriett Baldwin: So, your ranking, again, was the work taster-

Professor Gregg: First, just keeping people in education is a good start, keeping people on at 16 in full-time education as normal, or as a lot of people do. We saw a big rise in that. That was what was called the September guarantee-trying to keep people in full-time regular education. The next best is work with regular employers; even if it is temporary and unpaid that is the next best. Then you’ve got training and work experience connected to regular employers-the kind of experience that employers are going to be looking for-and things like the Community Task Force and the Environment Task Force. This had lots of community programmes and there is a long history of that kind of thing. This option is broadly making up the numbers and is the least likely to be effective, but within it you need to incentivise the providers to focus on helping the people get into work. The incentives structure there is important, but that is roughly the ranking.

Q65 Harriett Baldwin: It sounds as though the lessons that you say we’ve learned over a long period of time are lessons that remain valid irrespective of what kind of economic environment we’re in.

Professor Gregg: If you’ve got nearly full employment you don’t need so much of this kind of stuff to prevent that long-term disconnection from work. But the ranking is broadly there. I would say one other thing about this: there is a lesson that we consistently don’t learn. We tend to make these things up on the hoof when recession hits, rather than having a plan in advance, which means that everything’s done as high profile and with high energy, and mistakes fall into that process. We then try to tinker with it afterwards. It would be much better-the OECD has said this-if we had a plan there in advance for when the economy turns negative.

Q66 Harriett Baldwin: Does anyone else want to come in on the design question before I move on to other questions?

Neil Carberry: I would just like to say that we’d associate ourselves with much of the analysis that Paul has just given, particularly on the relation between the different programmes and their utility. I agree very strongly with that ranking.

Q67 Harriett Baldwin: I’d like to move on now to ask whether any particular kinds of young people were better helped by the Future Jobs Fund? Can you draw any conclusions about the kinds of people who benefited most, for example graduates, people with low-level skills and people with vocational skills?

Tracy Fishwick: In answering that I will refer to the Greater Manchester experience, and possibly to knowledge I have of Merseyside and Tyne and Wear. Everyone is broadly seeing the same kind of experience, in which the vast majority of people who are coming forward for Future Jobs Fund are the young people who have less than an NVQ level 2, and sometimes no formal qualification at all. As we know, they are referred by Jobcentre Plus, so we have to take who it refers and deems eligible and suitable. In the early days, we were getting people who were nine months’ unemployed and getting almost into the 10 or 11-month stage of unemployment. So we have young people who are pretty detached from work, if they have ever worked at all: young people who might be third-generation unemployed, very often from communities where mum and dad didn’t work and grandparents haven’t worked. The culture and ethics around getting up every day simply aren’t there for a lot of young people.

The range then goes through to other young people, a small number of whom are graduates, and those who perhaps have higher qualifications, perhaps at NVQ level 3. But the sorts of people we broadly get are those young people who, traditionally, we have seen are on ILM programmes and other interventions like this, such as New Deal for Young People. Over the 12 years that I have been doing this kind of work, I haven’t seen a vast difference in the kinds of young people. What we have seen is a huge difference in scale and in the volume of young people wanting this opportunity.

Professor Gregg: The bulk of young people who are facing long-term exposure to unemployment are the less skilled. Many of those don’t have the qualifications that would be suitable for getting on to the higher-level apprenticeships-the level 3 type apprenticeships. They are a long way away from the high-quality skills and so on that lead to long-term attachment to good jobs. They are, in a sense, the population that we have come to call NEETs; the early school leavers who are often less educated and drift between low-paid work and exposure to unemployment. In a sense, the Future Jobs Fund is focused primarily on that kind of population. It gives work experience to people who have not yet got the basic qualifications and haven’t worked previously.

Another area that has been contentious within this is that it tends to focus only on the duration of current benefit claim, rather than reflecting people’s past history of exposure. We know from research that it is the cumulative exposure to unemployment, rather than just the duration of the current spell, that is a good indicator of people who are in need. We would put it slightly the other way: there is a population that is not getting in because people are not on the right benefit for long enough. Those people would potentially benefit from these kinds of programmes. The net was drawn very close.

Neil Carberry: Much of the public debate in this area in the early part of the recession focused on graduates, and there was a lot of media debate about people coming out of courses. In our experience, what tends to happen during recessions is that graduates still find work, they just find work that is different to what they would have accepted in the good times. So someone is not on a graduate scheme with an employer; they are doing a job that perhaps an A-level leaver would have taken previously, and so on. It tends to be the same low-skilled group that takes the hit in any recession. For that reason, the right sort of active policies specifically targeting those groups, wherever they are found, not just in particular unemployment blackspots, will always be the most useful interventions.

Q68 Harriett Baldwin: In the CBI submission, you argue that the Future Jobs Fund programme was not effective in creating permanent employment outcomes. I wanted to ask the panel what evidence there is in terms of permanent outcomes. What does the panel suggest should be done differently to improve on the permanent outcomes?

Neil Carberry: Let me sum up where we came from in the written statement that we made to the Committee. Obviously, it is early to draw conclusions from this. A lot of data in the area will be gathered as we look at the experience of people who have been, and are currently, on Future Jobs Fund placements over the next few years. As Paul rightly says, it is cumulative experience that counts.

As we say in the evidence, we were supportive of the idea of the Future Jobs Fund because we think that that kind of programme is important, particularly in areas where other forms of intervention are not reaching. What worried us, and has continued to worry us throughout the bidding process, is the speed of thinking up and delivery of the programme-Paul alluded to that. It was very top-down in its design. It was driven from Whitehall on very short bidding processes. That tended to lead to a certain type of bid being successful which was predominantly public-sector led and did not really engage with the private sector in a way that a more effective programme might have done. That might be down to the fact that we left design so late. Most of these people, if they are going to build successful lives for themselves based on long periods of employment, will end up working in the private sector. Therefore, the skills associated with that, and the job experience that a well-designed programme can provide, would be important. We are not convinced that we have seen that being delivered through FJF. If you look through the bid details, you see a lot of people placed into jobs that in the delivery phase risk looking more like some of the less successful programmes of the past than what was set out as the aim of the Future Jobs Fund in the beginning. From our point of view it is still an early stage to judge, but we think that there is a significant risk that the performance of the programme will be very curate’s egg-ish. There are some very good programmes.

Q69 Harriett Baldwin: Do you have any specific statistics?

Neil Carberry: Statistics are very light in this area at the moment, to say the least. It is very early.

Professor Gregg: I want to just echo that. We don’t really know, because the evidence base has not yet been produced on the effectiveness. As an academic, I feel that culling this element of the programme so early is anti-scientific, because we will not ever learn how good or bad it was and which design features were good or bad. That is a shame, although it is perhaps not the Government’s main priority here.

As the CBI has said, you would want to build two features to make it as close to a regular job as possible. If it can be with the private sector or the near charitable sector, that is good. You want to get that organisation focused on getting that person into work afterwards. The employer is part of the deal, if you like, putting on the table the contacts, the networks and so on. I agree that the rapidity of the design meant that some of these features were not put in place on day one, but I suspect that you would rationalise that given time. You would try to move to the public sector more and you would try to involve employers more. That is part of the problem of trying to set up something in an emergency.

Q70 Richard Graham: Can I come in on that? If we look at the Future Jobs Fund and its impact constituency by constituency-where we all live and work-I know that in my constituency there is not a single job in the Future Jobs Fund that is being created by the private sector. Everything is public sector, quango or charity. This is an era where we know that the public sector, after a massive rate of expansion, will have to contract pretty sharply. We know that if growth is to start again then it needs to be led by business and the private sector. Given that, the whole concept of creating a six-month job will be fundamentally unattractive, particularly to smaller and medium-sized enterprises, which will just see someone coming in for a short space of time, with no real sustainability to it over a longer period.

Do you agree that that is the case, and that it is likely to be the case if you carry on with something like the Future Jobs Fund. Do you agree that pound for pound, the better investment would be in ways of freeing up bureaucracy and making it more attractive for private sector employers to take somebody on in the longer term? That might be through the apprenticeship scheme, or it might be through changing how people can take on additional young employees. What would your views on that be?

Tracy Fishwick: The restrictions around the kinds of jobs that could be legitimately created through the Future Jobs Fund, such as the state aid rules around not being able to create jobs in the private sector to scale, have posed problems for the people delivering it. The FJF can do that in small numbers and there have been creative examples of where that has happened. For example, you may see a job where the person is employed in the voluntary sector in a social enterprise, but is actually working with a construction company that is building a new school. That is a legitimate role to create through the Future Jobs Fund and we have examples of that across the country. In Manchester, for example, we have people employed working at Manchester airport, which is a private sector environment, but the airport is 51% owned by the public sector. Again, we can be creative around those rules, provided that we keep within some parameters. That has been helpful for us, but overall it has been quite restrictive.

How we morph the programme as it moves to the latter six months and beyond, to enable us to do more of that, would be a really interesting thing for us to debate. We could try to link jobs to apprenticeships in a structured way, so that people who start on the Future Jobs Fund move into apprenticeships, and do not dip in between. There are examples emerging of people moving into the private sector to do that.

Q71 Chair: May I ask Richard’s question, but in a slightly different way, to the CBI? If it had not been for the state aid rules, which seem to have been an incredible block on getting the private sector involved, would small and medium-sized companies have been happy to get involved in the Future Jobs Fund-had the state aid rules not existed or had a way around them been found?

Neil Carberry: I think there is more to it than just the state aid rules. The best example is probably on the apprenticeship side, but most private sector employers, and especially small and medium-sized enterprises, don’t really speak fluent public sector, in terms of bidding for state funding. The complexity of skills-support funding streams in particular has been significant over the years, with a number of bodies offering different support for different things. That has been an issue.

The Future Jobs Fund has suffered in a similar way. So, you had local authority-led partnerships, which were looking for input on the local employment partnerships basis from the private sector, but the complexity of what the scheme was and, in particular, the additionality rule caused significant problems. I think that, for employers, the idea of bringing someone into your business to do something that is not in the normal course of your business feels a little odd. You want to give someone a proper job-we have discussed the importance of giving someone a job that is a real job. That was a drawback in the Future Jobs Fund.

Q72 Harriett Baldwin: I want to conclude this line of questioning by looking at value for money and, obviously, scarce public money. How would the panel suggest that the money be spent more effectively? We have heard some suggestions in terms of alternative interventions.

In answering that, can you also talk about this particular category of people? You articulated very well, Professor Gregg, why it is so important to look at youth unemployment, but it would be helpful if you articulated the particular interventions that are most valuable and best value for money for this group of people.

Professor Gregg: What was the first bit of the question?

Harriett Baldwin: The first bit was about value for money and what would be the best use of scarce public funds.

Professor Gregg: Broadly, the best first step is trying to support people in active and productive job search. That is the cheapest and most effective way of support, but it doesn’t work for everyone. This has been done-it is kind of the logic of the Work programme and, indeed, of the old New Deal programme, which had this kind of gateway phase of intensive job search. What you are trying to do there is get people out through the low-cost route rather than spend big money on everyone. So, in a sense, you are focusing the money on the most needy by trying to reduce the population of need.

However, you cannot run with that model for ever, because you get the people into the scarring zone, if you like-the longer they are in unemployment, the chances of getting them out through just supporting job search diminish essentially. Damage is being done by the long exposure, so the youth guarantee offers a way of trying to break that scarring-type process. As we have discussed, you want to make the thing have features that are as close as possible to a regular job and to give the person the experience that future potential employers will find invaluable-and you need to maintain the job search. Those are the kind of features of a system that you would like-in a sense, a deflection strategy first, to try and reduce the total cost spend, then a focus on what is left, but keeping the focus on keeping the motivation to look for work. That is, broadly, the model that works.

Now, the issue for the Work programme and the future of where we are likely to be going is that the former feature is there, but it is not clear that providers will be using work experience as that kind of break within the system from the scarring-type effects, if they are just left to their own black-box devices. The incentives for them are just to work on what’s right for them, not necessarily what’s right for the individual, and certainly not what’s right for the state.

Creaming or skimming-focusing on the easiest to help; the ones, in a sense, you’re going to get the payment from-is the risk, and these guarantees put a brake in there and force providers to focus on everybody, and they force the individual to behave. They have to turn up; there’s some discipline within the system, so you can’t stay on unemployment benefits without activity for a long period. Those properties are the good design properties, as far as we know.

Tracy Fishwick: I’d like to just say a couple of things on that. One is I think it would be really helpful to have a proper cost-benefit analysis done of the Future Jobs Fund anyway, so when we look at the cost and see £6,500, we know that that isn’t the case for every single person, because not everybody stays for 26 weeks. It’s not always the case that everybody has cost £6,500, and also most of that goes into their wage packet, so they spend that money back in the economy-going shopping, using public transport and so on-so there’s a recycling effect there, involving that money, that wouldn’t have existed previously.

Professor Gregg: And they are off benefits. Some of the cost is actually lower benefits.

Q73 Sajid Javid: If I can just stop you, that would have existed anyway, because if the Government had not given it to them, they would have spent it somewhere else or given it back to taxpayers. It’s not fresh money.

Professor Gregg: Some of the money is actually what would have been spent on benefits-

Q74 Sajid Javid: I just think your point is not quite accurate.

Tracy Fishwick: I think the point is, if we could look at what the true cost is and what the wider benefits are of actually having a job-in terms of the economic benefit of that, and for communities-that would be something that was quite helpful for us to understand in terms of planning future policy and seeing what is worth spending on this kind of intervention. I think that in the broad range of interventions for young people there’s always a place for this kind of thing. The scale may have to be different, obviously, but the kind of intervention where you get young people in work, every day, doing something constructive, doesn’t really exist in most of the other kinds of intervention.

Q75 Harriett Baldwin: Neither of you has mentioned apprenticeships yet, in this context.

Tracy Fishwick: That was going to be my last point, which is, we recognise the move to apprenticeships, and I think that’s a really strong way forward. How we look at who gets those apprenticeships, moving forward, would be something to consider. Would employers normally recruit into those apprenticeships young people who’d been out of work for some time? They might not do. They might recruit from a different pool of people-maybe those leaving college, for example. So can we look at how those apprenticeships could be tailored or even ring-fenced in some way for young people who might have gone on the Future Jobs Fund, but could equally go on an apprenticeship?

Professor Gregg: Apprenticeships are fine. The problems, in a sense, are, can you get enough volume and are some of the people far enough advanced in their skills, in a sense, to get on to serious two or three-year apprenticeships for level 2 or level 3-type qualifications? There’s a sort of a shortfall there, in that you need some basic qualifications to get on to these-you know, to do a plumbing qualification you need basic GCSEs and a lot of the kids are a long way from that.

Q76 Richard Graham: One of the great things about apprenticeships is that they are as wide as any employer wants them to be. You don’t have to have any qualifications at all to do an apprenticeship in hairdressing, which is one of the best routes to setting up your own business. Do you think the question is more whether employers out there need to be, in a sense, encouraged to think more broadly about what training course they might want to help to create, in order to attract an entry-level employee under the apprenticeship scheme?

Professor Gregg: The description of apprenticeships depends heavily on what level of qualification you are describing. The stuff that leads to good employment and decent wages is level 3 and some level 2. Level 1-type stuff really isn’t worth a biscuit in terms of employment or wages. There are issues here about what you’re putting people on to. We want to get people on to some quality stuff. That can be done. We’ve a long history, dating way back, of not being able to generate enough of those higher-quality things. Now, this is all broadening out to a different debate about how we manage the school-to-work transition and how we get enough people into higher level or level 3-type apprenticeships, which we systematically failed to do-

Q77 Richard Graham: The other question is one of the things that has been completely forgotten, which is the whole business of work experience. If you talk to employers, the vast majority of them will say that they choose their apprentices and people they take on later based on their experience with people who have done work experience with them. In your experience, is there more that could be done with schools, especially schools in deprived areas and with difficult children, to set up links with employers, so that they get more people on to work experience earlier and therefore create more opportunities for those people to get known by a company and to start a relationship that leads on to a job? That would not or should not cost a shilling of Government money, but could more be done to help to create links between schools and employers?

Professor Gregg: I would have no problem with that-it seems a sensible strategy. In a sense, you are articulating what, to some extent, the Future Jobs Fund is trying to do a bit later, which is give people work experience and contact with employers. Obviously, if you do that earlier, you are doing it for everybody rather than the targeted few, who we are talking about here-the people at risk of serious, long-term exposure to unemployment. You won’t get all the people who would be going into that kind of category deflected by earlier intervention. We are talking about the most deprived, and it would be hard to get most of them into contact with employers who might take them on in advance of their entry to the labour market. But as a way of trying to improve the functioning of the school-to-work transition-fine, what you say is right.

Emma Watkins: Can I come back on the value for money point-how we ensure value for money moving forward-and on the apprenticeships point, as well? The Work programme, as envisaged at the moment, is being designed and delivered so that it has outcomes-based commissioning at its heart and so that a provider will gain the money only if it has ensured sustainable employment for an individual over two to three years. You may want to come on to the Work programme later; I know that you have a separate inquiry into that. We feel that the outcomes-based commissioning and the way the Work programme is designed to involve both the private and the third sector together-allowing for more innovation and tailored support, and hence more sustainable employment-will hopefully prove more effective in the future.

Q78 Harriett Baldwin: But you would accept that there might need to be a variation in the payments-given how far some people might be from the labour market, while others might be very near to it-to tackle the issue that Professor Gregg raised about skimming?

Emma Watkins: Potentially.

Neil Carberry: On the apprenticeships point, we have made it very clear in our evidence that we regard paths to apprenticeships as very important. The point that has been raised about what happens in schools is absolutely vital. It is vital to a range of issues about the paths that we steer our young people on to when they think about work. For instance, if we have a discussion about a gender pay gap, better careers advice for girls at 14 and 15 would be a key part of addressing that issue. We are strongly supportive of businesses becoming more involved with schools, schools opening themselves up a bit more to businesses for careers advice and work experience-hopefully, that will lead people down the route of thinking about apprenticeships-and a simpler funding stream, with more money in it. We saw the announcement last week on adult apprenticeships, of which we are very supportive, although in our policy proposal we wanted that money to be made available from 16 rather than from 19 to help people who maybe don’t see A-levels or post-16 education as being for them to make that transition into the work force.

I think Paul is absolutely right-what we are dealing with here is a tricky transitional labour market, where people are coming to work for the first time. If they make that jump successfully, once they are in that first job, a range of life outcomes for the next 30 or 40 years takes a significant uptick.

Q79 Harriett Baldwin: Can I ask one final question? Could the panel explain a Future Jobs Fund job compared with a level 1, level 2 or level 3 apprenticeship? Would you put it on that scale or are they such different things that you can’t really compare them to each other?

Tracy Fishwick: I think there will be some examples of Future Jobs arising from jobs that bear some resemblance to an apprenticeship. That is where you have a structured programme of skills development and qualifications that might be involved in a job, and such jobs do exist, but to confine a job to six months and to try to achieve a number of stages of qualification is quite difficult for most people, given that they might not have had a qualification before or if learning is a new thing for them. So, they are quite different in lots of respects. We see more that the Future Jobs Fund is leading into, or is a gateway into, that longer term.

Q80 Harriett Baldwin: Is it before a level 1?

Professor Gregg: It isn’t a qualification. What employers want is people with skills. They also look at other basic skills such as the ability to turn up on time and your attitude while you are at work. They want signals from other employers that this person is a good bet. It is giving you, in a sense, a different set of skills that employers really want and look for, but it is not an accredited level 1, level 2 or level 3. It is the kind of stuff that we all have in our reference that says that we are the good citizen who will be good as an employee. These kids don’t have that, and have little way of getting it.

Q81 Harriett Baldwin: So, it’s before a level 1?

Professor Gregg: It’s almost on a different scale. It’s a non-qualification-based skill that employers value and want positive signals of. They want people with positive work attitudes, who turn up on time and aren’t pissing about. It is trying to give the sort of work experience that employers look for before necessarily taking people on and offering the career-type training and development that is good for them in the long term.

Neil Carberry: Essentially, employer-led apprenticeships tend to be about competency. Picking up on that point, Future Jobs Fund is about workplace behaviours and attitudes and about someone being ready for the workplace. I agree that it is still a skills set; it’s just an attitude skills set.

Professor Gregg: It’s an accreditation as well. It is just an accreditation in a different way. You have an employer who says, "This person is all right." That is gold dust.

Chair: It’s often what the employers want.

Professor Gregg: And it should matter whether you get the incentives right. If they are just going to say that everyone is wonderful, it loses credibility very rapidly.

Q82 Karen Bradley: I want to turn now to look more at the implementation of the Future Jobs Fund and the lessons that we can learn from it. We have touched on several of those points already, but it will be useful for us if we drill down and summarise the specific points. The first point was about the lessons from the bidding process. You talked about it being very top-down, but perhaps you could expand on what you have seen so that we can learn from the bidding process.

Tracy Fishwick: I was involved in writing a bid in Greater Manchester. I had a month to do it. The whole experience of Future Jobs Fund has been a rapid one from the day it was announced. If we’d had longer-we would have liked longer-we could have engaged more with employers and figured out how we could do this kind of demand-led employment pathway that really would be the ideal scenario to deliver the Future Jobs Fund through. The speed with which we had to respond was unprecedented. Nevertheless, it galvanised everybody’s thoughts at a local level. The public and the voluntary and community sectors came together to figure out how they could do shared bids-collaborate and develop one bid for a sub-region-rather than run lots of separate bids in neighbouring boroughs and then waste lots of money on admin. That is what we have seen with Future Jobs Fund that we have not seen with other big programmes where lots of councils work together to create economies of scale.

Neil Carberry: When we looked at your call for evidence before the summer, we went away and talked to our members. What surprised us, although we were already beginning to be a little sceptical about the impact of the Future Jobs Fund in the private sector, was how few of them had had much to do with it. Essentially, if you have a month to prepare a bid, it is hard for our members because they have businesses to run and clearly that has to come first. I suspect that the speed of the timetable greatly restricted the number of private sector companies that could get involved, and that includes even those who were already involved in local employment partnerships, of which there were some really good examples in some of the key areas of the country for the Future Jobs Fund. Beyond that, we have discussed the additionality requirement, particularly among the national firms, which have a bit more capability to think about taking part in this and some idea of where they might be able to base a dozen or more people. Some of the geographical controls, based on the 1.5%, were further pull-back factors. I think that that’s what lay behind the lack of engagement on the private sector side.

Professor Gregg: I agree with everything that was said there. There was a sense of doing things at such incredible speed. There was a deliberate push towards sectors they felt they could get to respond quickly.

Richard Graham: A bit of national service.

Professor Gregg: It was in their control in a sense; they could get people to jump who could jump, and the private sector wasn’t part of that group. I always expected that that would be changed and that there would be a deliberate outreach to private sector employers after the first stage. This is very early in the cycle of a recession, relative to previous interventions, which have often come one, two or three years afterwards. That lack of disaster planning is being discussed. There wasn’t a plan there to be wheeled out. When we worked out that we were in recession, things were done through emergency planning, which is not the best way, but the view shouldn’t necessarily be that the first product is the end product. You would expect to evolve such a programme. They clearly wanted numbers very quickly, and that meant getting the people who were used to jumping to public sector calls to jump.

Q83 Karen Bradley: That was very helpful, thank you. We talked about state aid rules and additionality. Were there any other restrictions that prevented the private sector from being involved? I cite the example of my local citizens advice bureau, which managed to get the Future Jobs Fund to cover a maternity leave. I question the additionality there. What have you seen in practice?

Neil Carberry: From our experience-Emma might want to add to this-there has been so little engagement that what we have said so far is about the sum of it. Most businesses just haven’t been engaged in the FJF. Indeed, looking to the provider side, people are engaged in things like the Flexible New Deal. Even there, there wasn’t a lot of engagement among firms in making use of the Future Jobs Fund as part of the mix of tools that they were using to deliver. In particular, there is the issue of the relative strength of the funding stream behind the Flexible New Deal, which is about £1,500 on average, targeted at 50% of people still in a job six months on. Pound for pound, by comparison with the Future Jobs Fund, that is a significantly lower amount of funding for a not much higher target rate of retention of employment. Even on the provider side, where you would expect more engagement, it’s been quite limited.

Emma Watkins: I would just echo Neil’s point. Within our welfare-to-work grouping of members providing these services in the CBI-it has been a very active group in putting together our original evidence and, just over the past couple of days, trying to gather anecdotal evidence-so few providers are used to the market and involved in the process that it is hard to gather evidence.

Tracy Fishwick: I come back to the points that I have made already. State aid is the biggest barrier, coupled with the community benefit criteria. While we understand where those things come from, and we have had to work within them, they have been a huge obstacle, which we have not been able to overcome, unless we have been able to be quite creative and track jobs back to public spend through things such as construction works.

Q84 Karen Bradley: What I’m taking from this is that the barriers included speed of delivery, state aid and additionality issues, and the lack of evolution in the programme because it was such early days.

Professor Gregg: Can I just say one thing? There is an interesting contrast with what was done under the New Deal for Young People, where the employer option was almost entirely private sector, with very little public sector. This is completely the reverse. That makes a point about some of the rules. I don’t know whether the rules have changed in the meantime. It isn’t impossible to get private sector involvement. The old programme in ’98 did it, but this one didn’t. I think it’s not because it’s impossible, but because the kind of stuff we’re describing was, in a sense, designed to get a rapid response from the people who could do it very rapidly and not a lot of thought was put into how to get the private sector engaged.

Q85 Mr Heald: I don’t know whether Professor Gregg would agree, but I think the problem may be this: if you have an intervention that comes in at 12 months and is to help somebody who is long-term unemployed with barriers to employment, I think you can offer them a subsidised job, but if it’s six months and there isn’t that history, the state aid rules make that impossible in the private sector, or difficult anyway.

Professor Gregg: I was trying to articulate that you probably want an intensive deflection process first, before you deliver something like this, in terms of getting the numbers down and raising the case of targeting on the most needy.

Mr Heald: I fully agree.

Q86 Karen Bradley: I have a final point on implementation. I would be interested to hear about the experiences you and your members have had of interaction with Jobcentre Plus and how useful that has been.

Neil Carberry: It’s very interesting. In the past, our members have been somewhat cynical, to be honest, about Jobcentre Plus, but many of them had very good experiences during the recession. It’s on a patchy basis, but there are good examples from certain areas of the country. The collapse of Woolworths is a classic example. Certain parts of Jobcentre Plus got into Woolworths stores very quickly and did a lot of real "action this day" work to try to get people into other retailers in the local area, and very successfully. A lot of it seems to be driven by the management structure of Jobcentre Plus at local level. People may be fostering good links with local employers and helping with the understanding of local labour markets. There was a strong streak of very good performance during the recession. In some areas, it was still a case of going to Jobcentre Plus with a job and getting 60 applications, 45 of which were not appropriate, but that was less prevalent than maybe it was in the previous decade.

Tracy Fishwick: I really felt for Jobcentre Plus in the early days, because it had a lot on its plate at that time, a year or so ago, with increased volumes of customers coming in and people trying to get up to capacity in their own offices. Also, it seemed to be a while before it got its guidance on the rules about how it could engage with the Future Jobs Fund, what "eligibility", "suitable" and so on meant, how you physically refer a person sat in front of you, how you use the system and how they then end up going for an interview. All those things needed to be worked out and, as it happened, most organisations that were running the Future Jobs Fund worked it out together with Jobcentre Plus. That’s partly why you end up with slightly different versions of what’s happening across the country. Different partnerships agreed on different mechanisms to do things, but once we got over that, the process was fairly good.

If we’re talking about the volume of people who are being referred in some areas, we can take the Greater Manchester experience, which involves 8,000 jobs in total, or that’s what it will be. The number of people who end up being referred every day and every week is in the hundreds all the time. It is quite a mammoth task if you just break it down to that one area. Then you get people not knowing quite what the job is that they’ve come for, or people being referred who are probably not that suitable for the job that they’ve come for. Keeping employers on board in those situations can be difficult, but mostly everybody understands that scale and volume will create these things. Overall, I would say Jobcentre Plus has done a very good job.

Q87 Karen Bradley: In Greater Manchester, you went for 35-hour jobs. Is that right?

Tracy Fishwick: Yes.

Q88 Karen Bradley: Was there a reason why you went for 35 hours rather than the minimum?

Tracy Fishwick: Yes. The bid was developed at the highest level in Greater Manchester. It involved the chief executives of all 10 councils. It was a very strategic decision to get involved on that scale. It sat alongside the other efforts on how we tackle worklessness, how we look at getting people out of the poverty trap and how we got as much as possible of the six and a half grand into their pockets to spend, rather than being tied up in administration and other things. It was a deliberate strategy, which has proved challenging to manage financially-but, yes, it was very deliberate.

Q89 Chair: The bell is ringing and we are not quite finished. Perhaps we can roll up the last set of questions into one question with a few parts, because I am conscious of the time.

We know that Future Jobs Fund is coming to an end-there will be no new entrants from March 2011. It was mentioned in the earlier session that the Work programme does not come into place until the summer at the earliest. There is clearly a gap, so is there room for evolution or can that not happen because the programme will come to an end? Is there room for some evolution because some of the lessons that have been learned from Future Jobs Fund could sit easily within the Work programme?

The Government say that they will fill that gap because of the increasing number of apprenticeships, but those are for 19-plus, so is that a different cohort from those who have benefited from Future Jobs Fund? We know that the apprenticeship guarantee applies only to England anyway, because that is a devolved issue in Scotland and Wales, so are there gaps there?

To roll all that into one question, what advice should our Committee be giving to the Government? If they are not going to continue with Future Jobs Fund, what should they be doing to fill that gap, to make the transition, and to keep the good stuff that is already happening in Future Jobs Fund? What should they be wary of to make sure that they do not make any mistakes as they introduce the new programmes? That is quite a lot in one question, but hopefully you get the gist of what I have asked.

Tracy Fishwick: Youth unemployment is still with us-a third of all jobseeker’s allowance claimants are aged 18 to 24, and in some areas it is getting into 40%. It is still a huge issue. There will be a significant gap in many areas, especially in the north and in areas where the impact of public sector job cuts will be bigger, and so on, bearing in mind the readiness of the private sector to fill that void in terms of creating new jobs. People are worried about what is likely to happen to a large group of young people.

I would like there to be some kind of temporary extension to Future Jobs Fund, even if it is sat within the Work programme, ultimately. There might also be a way of looking at some of the unused, what is called rolled-up, weeks. While we create jobs for 26 weeks, not everybody stays for that long, so there is some money, potentially, still in DWP that is not being drawn down for every single person. Is there a way of using that to subsidise other jobs in that gap period? That would be a request, or something that DWP could look at.

Ultimately, how will the lessons that we can learn from Future Jobs Fund be morphed into Work programme? A huge infrastructure has been created just around work placements; around managers who are turned on to the idea of having young people in their offices, their businesses, and their social enterprises; and around the voluntary and community sectors, and so on. It is a huge infrastructure and there is a willingness and an appetite for this, so how do we get that lasting legacy into the Work programme? Can we make sure that the Work programme providers talk to the big LABs-lead accountable bodies-which have been running Future Jobs Fund, so that we can join all that up where possible?

Q90 Richard Graham: We have talked a lot about Future Jobs Fund and different programmes. From all the evidence that we have heard, it sounds as if Future Jobs Fund was a well-intentioned, spur-of-the-moment, desperate attempt to try to get young people off the unemployment register, with mixed results and not much involvement from the private sector. The bottom-line question to all this is why are there so many young people who are NEETs in this recession? Why is the number so much bigger than in previous recessions?

Professor Gregg: It’s not. It is not bigger than in previous recessions.

Q91 Richard Graham: Yes it is. We have record young unemployment at the moment, whereas employment figures were much higher in the early ’90s.

Professor Gregg: The gap relative to older people is higher, but the number of NEETs is not.

Q92 Richard Graham: But the percentage is much higher. Is there not a wider question in there? Why is it that employers are not taking on young people? Is it that they have lost confidence in what people are coming out of school with? Are they preferring to take on someone who has had a job already-almost whatever job-because, as a point of reference, it is something that shows that they are capable of doing a job? What do you all think? Or do you think that this is all perfectly normal, and that we should expect to have record youth unemployment?

Professor Gregg: Young people always suffer more in recessions. Firms do not shed labour that they have got, which is valuable, experienced and trained, unless they are desperate. In this particular recession, what has been very successful is that firms have not done as much of that emergency shedding of labour-the panic stuff-because they are going out of business. They have done shrinkage by not recruiting, a recruitment-freeze type of shrinking.

Q93 Stephen Lloyd: Also wage cuts. Everyone has taken wage cuts.

Professor Gregg: Yes, I’ll accept wages. All that means is that the people who bear the brunt are those trying to enter the labour market rather than those who are there already, suffering large-scale displacement. That is why it falls on the young. This time, the gap between the older and the young is more acute than in previous recessions, but it is slightly less as a share of the young person’s population. More are in education now. Far more young people are staying on in education, so the share is of those who are not staying on in education. That is where the unemployment rates are high. That is high, relative to previous recessions.

Let us take the young person population. Because there are more in school, what you are dealing with is a more acutely deprived group than was previously the case. It echoes a deeper point, which has been made once or twice. The school-to-work transition isn’t working well. For many people leaving school with low qualifications, the transition into work, which is important in respect of getting on that ladder, isn’t working well.

Q94 Richard Graham: So that’s where the departure is.

Professor Gregg: Connexions and that kind of stuff need to be looked at. The Connexions service isn’t working well in terms of getting people from deprived backgrounds into work at the first stage. As the economy picks up, some of that will be solved. The deepest problem has been gathering pace prior to the recession since about 2004, but I would like to make the split between that deeper problem with the school-to-work transition that is not working well, and how to deal with the people who fall through-there will always be some-and who end up at risk of long-term exposure to unemployment.

You can’t catch everybody with the first net in this case. The lives of some people go wrong afterwards. You need something built within the welfare system, and I advise that some form of requirement for work experience-maybe not six months, but much shorter-is embedded within things like the Work programme. As we discussed before, you may use Work programme first-it’s low cost-to get people out. But at some categorisation of people in the most needy group, you must get some kind of work experience embedded within the programme, not pure black box.

Q95 Chair: I am very keen on the CBI speaking, and that we don’t lose track. We need points made about what needs to be in the future in terms of what the Government will do, either to carry on what was good about the Future Jobs Fund or make sure that it is more effective.

Neil Carberry: One of the advantages of the early proposals for the Work programme is that they are a bit more bottom up. There is a lot more of sitting with someone, thinking about what interventions they need and at what point the practical work experience that Paul has identified is useful. I also echo the point made about labour conservation. There has been a strong stream across the private sector- probably based on the experience of the ’90s recession when some executives felt that the axe was taken a bit far, a bit early and the firm was not then prepared for the recovery-to control wages as the method to cope with conserving labour. That means that there is quite a lot of excess capacity in terms of human resources within members. That is one of the factors that is driving lower hiring. As Paul says, lower hiring does affect the issue.

Q96 Chair: If that’s the case, and there is less hiring, will there be a problem with employers taking on apprentices, which is clearly the new Government’s preferred route?

Neil Carberry: It takes a long time for employment to recover from a recession, but we are now beginning to see some of that apprentice spend returning. Apprenticeship programmes seem to be somewhat more resilient to recessions than less formal arrangements. If you as a firm take in two or three A-level leavers every year for a more on-the-job approach, that is more open to being cut back than if you are engaging in a two or three-year apprenticeship programme. Therefore, we hope that apprenticeship numbers are more resilient on that basis, and that funding can be used to encourage apprenticeship development in key areas, and particularly at younger levels than 19.

Q97 Chair: There’s going to be a four to six-month cohort who will not get on the Future Jobs Fund from March and won’t get into the Work programme until it is up and running at some time in the summer. That is key to us as a Committee, and you have the chance to give us suggestions for what we should recommend.

Emma Watkins: It’s probably not entirely our place to comment on the transitional arrangements.

Q98 Chair: Please do.

Emma Watkins: There obviously need to be some to avoid a substantial gap. We hope that some of those people might be picked up through existing Flexible New Deal contracts to bridge the gap.

Q99 Chair: But they’ll have gone by then, will they not?

Emma Watkins: We’re not entirely clear.

Q100 Chair: It doesn’t cover Aberdeen, for instance. I know that it is only partial across the country.

Neil Carberry: Certainly, there is a range of tools that will remain in place. The question is whether they will be resourced in a way that helps that particular cohort.

Q101 Chair: Is there a danger that that won’t happen, because all the energy and focus is going into the Work programme?

Professor Gregg: There is a big risk. It is very hard to get the capacity. When developing a whole new system, a lot of energy will be focused in that area by central Government and Jobcentre Plus. It will be hard to maintain or catch the people who are in that kind of gap. We have seen it every time there is a new programme. The old staff diminish in quality and volume ahead of the arrival of the new programme.

Q102 Chair: But some kind of carry on, whether it’s Flexible New Deal or Future Jobs Fund.

Professor Gregg: If it’s an apprenticeship guarantee and if you have enough places and can make it stick, fine. But some kind of guaranteed option place is-

Q103 Chair: On apprenticeships, could someone answer my question about whether it is the same cohort getting apprenticeships? I think you mentioned that before, but perhaps a different cohort might get the apprenticeships as opposed to the Future Jobs Fund, and what happens to the guarantee in Scotland and Wales?

Tracy Fishwick: In terms of cohort, I think there is a really big risk of young people not getting into an apprenticeship either because they won’t see themselves as being able to get one, so they select out, or they won’t have the prerequisite basic level of education-five GCSEs or similar. That is where the Future Jobs Fund and other things in the past filled the void.

The other thing I would like to add, which does not necessarily help, is that other local funding is about to stop, such as the working neighbourhoods fund and objective 1 areas in Liverpool, and other places in the country where the European Social Fund will stop. A lot of that added capacity locally for this kind of programme delivery-ILMs or other kinds of employment support with mentoring and coaching and that really intensive stuff that you don’t see with the broad brush Jobcentre Plus interventions, and the £1,000 interventions. You don’t see that level of input, so there is a building gap that isn’t just about the Future Jobs Fund.

Q104 Chair: When will ESF stop completely?

Tracy Fishwick: Some of it will have gone, some of it will go in December and some of it will be some time next year-the same time scales.

Chair: Any other questions? Well thank you very much for coming along, and thanks for your evidence, which will be really useful when we come to write our report.